Seven Predictions for 2006

It is the time of year for predictions. I have seven predictions, ranked in descending order of confidence, that I would like to throw out for consideration. I will have a separate post reviewing last year’s predictions and perhaps a separate post on M&A combinations that might occur.

1. Windows finally makes real headway in the smartphone market. Aside from the impending launch of the Treo 700w for Verizon, I expect that at least one other major handset manufacturer will release a Windows smartphone that makes a real splash in the market. It could be along the lines of something like the 700w or it could be something targeted more at the low end, like the SPV C500/C550.

2. There will (finally) be a cool Windows-powered MP3 music player to compete with the iPod. I am not sure who will make it or how, but the stakes for not getting this right are too high. Somehow Micorsoft, Real, and the rest of the people left out in the cold in this market will finally organize and bring something competitive to market. I don’t think it will be enough to change the balance of power in 2006, but it will make things more interesting.

3. Firefox gets very close to 25% market share in the browser market. Is this crazy? Maybe. Reliable accounts suggest that Firefox is 8-12% of the browser market. Can they double or triple in one year? Absolutely. Why not? It is a great alternative to IE and has enough critical mass that getting distribution deals and application support will be a lot easier.

4. Vertical search shakeout. I think 2006 will be a big year for vertical search shakeouts. This will happen for one of two reasons. First, some of these companies will achieve the scale where they need to have more clearly defined business models in order to get access to expansion capital. Second, one of the majors (GYM) will introduce a successful, focused vertical search offering in a key category that sends shockwaves through the vertical search market. Some players that exist today will survive and some will perish.

5. Video is still the hardest form of content to monetize on the web. Video is tough. And when I say video, I mean both professionally-produced content from the networks and user-generated content hosted and distributed by emerging players. There will be a lot of thrashing about in this space, but no major moves will be made to come up with winning business models in this space aside from early moves from Yahoo! and Apple.

6. The Sony PS3 will absolutely crush the Xbox 360 in terms of sales and buzz. The PS3 will be a huge hit. It will beat the Xbox in terms of marketing buzz and sales. The key differentiator will be that the PS3 comes to market with a much larger stable of winning titles from Day 1 in typical Sony fashion.

7. Tagging expands its reach, but is still a niche activity. To date, my impression is that the strongest collection of taggers exists in the high technology world. In 2006 there will be a few other areas, namely politics, news, and user reviews (restaurants, products, etc), where tagging takes on a more prominent role. Still, it will not be a mainstream activity.