We're midway through the first decade of the new millennium, but first a bit of recent history. 2004 picked up where 2003 left off: The economic recovery continued, with strong corporate earnings and a surging job market. However, unlike '03, political concerns, high oil prices, inflation and the war on terror held equity markets back in '04. Nevertheless, Bush was re-elected and Martha Stewart went to jail, so we're hopefully safe from terrorists and homemaker merchandise moguls.
In the tech world, chip stocks were down, Internet stocks were up, and two years into the recovery, telecom is still in the dumps. Intel lost more ground to rival AMD; Dell marched toward world domination, and our computers continued to be assaulted by viruses, worms, scams and Windows security updates.
I'm sure you're all wondering what lies ahead. While my crystal ball isn't necessarily better than anyone else's, I am willing to risk ridicule and scorn and provide you with Tobak's Five Predictions for 2005:
Voice and data will converge. Among home, office and on the road, you have isolated wired and wireless phones, data networks, desktop and notebook computers and handheld devices. Could it get any more complex and confusing? Verizon and SBC will be the first major players to offer consumers truly integrated voice and data communications solutions, wherever you are. It won't be pretty, but it will be a first step in the right direction.
There's a robot in your future. Someone you know will buy a robot or robot kit, signaling the official beginning of the hobbyist phase for personal robots. The computing, communications, sensor and material technology is there, and we could all use some help. So, it's just a matter of time before personal robotics becomes a killer application.
The Playstation 3 cometh. The big event in the consumer electronics market will be the debut of the Sony Playstation 3. The PS3's unparalleled computing and memory bandwidth-based on the Cell processor jointly developed by IBM, Sony and Toshiba-will enable real-time distributed gaming and content distribution over broadband networks.
The world becomes flat. Now that the desktop PC is truly dead-or at least terminally boring-all PC makers will emulate the iMac's integrated LCD panel to rejuvenate sales. Add that to everybody, even my mother, owning a notebook PC, and the revolution in flat-panel TVs becomes inevitable.
The chips will be down. I hate to burst the bubble, but the parallels with 2000 are just too obvious to ignore. Coming off a year of high growth, the chip industry will experience a downturn in 2005. Growth in consumer electronics and corporate spending will not be enough to offset increasing PC and wireless handset inventories, excess manufacturing capacity and a confluence of macroeconomic factors.
Fortunately, a broad range of hot consumer products-game consoles, MP3s, DVRs, flat-panel TVs, handhelds, digital cameras and notebook computers-combined with increasing corporate and telecom spending, will drive demand in '06 and keep this downturn short-lived. So aside from this blip in '05, I'm bullish on chips and the broader electronics market at least into '07.
Steve Tobak can be reached at email@example.com.