Tech Silver Linings for 2009

I decided not to do a predictions post this year. My predictions for 2008 were reasonably good in my opinion, but review them here and make your own judgment.

I grew up in Michigan and just got back from vacation over the weekend. My home state is in a difficult place right now, so I figured I would focus more on talking about things that I think are positives for the tech industry next year instead of contributing to the pervasive sense of doom that’s out there (not that it isn’t warranted – 2009 will probably be tough). So here are my four “silver lining” guesses about good things that could happen in web technology for 2009.

The tenuous economy means technology that is “good enough” will get much more serious consideration from both enterprises and consumers and prove its mettle – It’s pretty clear that big businesses, even the likes of GE, are considering some very meaningful deployments of web-based office suites. I use Google Docs all of the time and while it’s not perfect, it works great and takes care of most of the things I need from a word processor. Even better, because these tools are built to be collaborative from day one, there’s no need to layer on collaborative capabilities after the fact. Given the cost pressures facing enterprises today, I think a lot of them are going to look at these systems and decide that they are good enough. I believe the same is true for consumers, especially given the growing robustness of netbook sales. Cheap computers need cheap software and you can’t beat the prices offered by most web-based software suites. The same will be true of other classes of web-based software applications beyond office tools.

Freemium will be misapplied by many in the web 2.0 arena, but we’ll learn a lot in the process – If the first 9 months of 2008 were about growth, the last 3 months were most surely about finding a revenue model and cutting costs in advance of 2009. There are a lot of companies out there who appear to be considering various freemium business models. I continue to believe that freemium is much harder to apply after you’ve achieved scale (more on that in a post that I should have done later this week) than it is from the beginning. Retrofitting any business model to a site with scale, let alone a freemium model that introduces a paid version of the service, is fraught with risk. While a lot of people will misapply the freemium model in the desire to put a revenue model in place, we will learn that there are some segments of the market where consumers are willing to pay and where the model does make sense. Moving from a model where ad-supported free offerings to a world where there’s more diversity in how services are priced to consumers will help create an umbrella where new entrants can be experimental. I don’t believe that everything in the consumer web space should be ad supported and I don’t believe everything on the web has a freemium play – it’s about time we start sorting out which services fall into which category.

Acid test for large, established social media companies – There are a lot companies in the tech space that fascinate us (Facebook, Digg, Twitter, etc) where the amount of time we spend noodling on them is largely out of whack with the current business opportunity for those services. I think 2009 will be the year where we really get a sense for how successful some of our tech darlings are as businesses. If they don’t work out, I think we’ll all have to rethink how big the near-term business opportunity is around these things.

Lots of small companies will “aim small” and do some impressive things – I think there are going to be a lot of small companies (small in terms of number of employees and capital at their disposal) that are going to build some very solid businesses in 2009. I’m not talking IPO-scale businesses, but businesses that generate millions of dollars a year, allow the team to cover burn, and leave enough left over to continue to invest sensibly in R&D. These companies are going to come out of the downturn in good shape because they’ll have had to figure out how to make the business work as they grow, as opposed to growing first and finding a business model after the fact. And some of these companies that start off trying to do one or two things really well at small scale will learn that they’re really good at doing that one thing and that what they thought was a small market is a lot bigger than they thought. Looking for some examples of what I mean? Facebook application developers who have apps that are working fall into this category. Ditto on iPhone application developers. I’ll even toss in a handful of web app developers who are building services that monetize without using ads. It’s happening already and I think these kinds of success stories will attract a lot more attention next year.

There you have it. There are enough negative things to dwell on so let’s not do that -feel free to leave a comment if you have other ideas about silver linings for the tech space.