2005 is expected to be a year of change. It will see the Longhorn Beta, with Longhorn being the most important OS change in Microsoft’s history and likely the last time the OS will ever be this important. It will see the maturation of the Media Center and the emergence of the true major conflict between the Cable and Satellite companies with the High Tech industry, and it will either showcase an Apple repeating their mistakes of the past or a new Apple that is more of a Consumer Electronics company then it is a PC company. This will be the year the White Goods vendors get a chance to provide their counterpoint to the attempt to take over the Consumer Electronics industry by the technology vendors, and we will know by the end of the year whether HP’s move into this space was very wise or very foolish.

This will be a make or break year for Intel recovering from a dismal 2004 and finishing 2005 with what is expected to be a brand new executive team. Companies like SCO, PeopleSoft, and Sun may not end the year independent or at all. The continued drain on the work force by the Iraq war will be felt and technologies that allow people to stay connected over long distances increasingly favored. We should also see dramatic advancements in autonomous products coming out of the defense market.

Google sees its first significant competitive challenge and their acquisition path may include AOL and Novell as they gird for the increasing battle with Microsoft. XBox and Play Station are revised this year and, for the first time, both platforms run at each other with current versions with the advantage to Microsoft in integration, and the advantage to Sony for mobile with what is likely to be the hot product in 2005 the Portable Play Station.

Email will be under increasing pressure and for the first time we will be asking ourselves broadly if it is worth it given the incredibly fast ramp of Spam, products like Mail Frontier who lead in dealing with this problem should do very well in the interim. 2005 will set the tone for the rest of the decade and 2006 will likely be even more interesting with the arrival of Longhorn and true 64 bit desktop computing.

Specific 2005 Predictions:

1. Hardware Virtualization: Driven largely by the combination of the need to create a standardized platform that can more easily, and quickly be patched, and a surplus of performance 2005 will likely be the last year when the majority of machines are shipped with operating systems running directly on hardware and from 2006 on virtualization will likely be the norm for both desktops and servers.

2. Low Heat and Sound replace performance as the key driver for the desktop market and products that would typically be more appropriate for mobile platforms predominate. This is driven by the combined need to lower office noise and electrical expense coupled with the need for consumer products to be seen and heard less over time.

3. Services, particularly as they relate to Security and Patch Management, will drive the consumer and SMB markets as more and more people look to overcome the pain associated with increasing virus, phishing and hacker attacks. Vendors who don’t add strong, integrated, and easy to use security components to their offerings will fail in the consumer and SMB markets which will favor vendors with strong solutions in this segment.

4. Computerized Multi-Media moves to cars with at least one (and probably several) automotive manufacturers offering MP3 based networked and/or hard drive based music offerings completing the last leg of the Media evolution which now encompasses home stereo, personal audio/video, and personal computer. Initial offerings will be inconsistent, somewhat unreliable, and about as far from standards as possible given the standards based industry they will largely be based on.

5. LCD based displays drop, particularly in the large sizes, dramatically in price and displace Plasma based products broadly in the market. Increasing concerns about CRT disposal drive dramatic shifts to this technology driving CRT based products out of the market except at the very low end and for specialized products. In addition, laptop prices are driven down as well in the process as more people shift away from desktop systems to laptops with these less expensive displays.