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2004 outlook: VoIP to rise, Sun to set

TechTarget editor in chief Paul Gillin makes his annual predictions, and this year's batch holds high hopes for voice over IP and Linux, and caution for Sun Microsystems and grid computing.

It was a year when the bleeding stopped and the vital signs stabilized. There were no big bankruptcies, few bold business initiatives and little new technology to get excited about. But 2003 did give us a few reasons to cheer. Linux had a great year. Wi-Fi networks got cheap. The biggest tech vendors returned to growth. Microsoft got serious about security. Smart phones and PDAs kept alive our lust for new tech.

Have three years of pain taught us a lesson? Nah. We'll just lose our heads again when The Next Big Thing comes along.

That probably won't be in 2004, but there are a few events and trends that are likely to keep us interested. Here are some predictions:

  1. The year of VoIP -- This stuff finally works, and with companies like 3M and IBM making corporate-wide commitments to route voice traffic using Internet Protocol, the stage is set for this much-anticipated technology to move into the mainstream. VOIP's cost-saving benefits will be dwarfed by the technology's potential to reshape the way organizations communicate. When VoIP finally takes off, it's gonna be big. And this is the year it takes off.
  2. Linux begins to look like Windows -- SCO is trying to make you pay to use Linux. Red Hat just toughened up its license fees, and HP is muttering that it would be a good idea if users paid more of the bills. See a pattern there? The free ride is over as the Linux market consolidates and the winners start to charge for what they used to give away. While Linux will never be as expensive as Windows, the fees are going to take on more and more of a Microsoft-ian quality.
  3. Sundown -- My boldest prediction last year was that IBM would buy Sun. Now I have to wonder why anyone would want it. This once-proud company increasingly looks like the Digital Equipment Corp. of the '00s. Low-cost commodities invariably push out high-ticket specialties, and Solaris is Mercedes in a Toyota market. Sun may still stake out a profitable position as a boutique technology supplier, but its days as a market heavyweight are over.
  4. China's outsourcing star rises -- The pursuit of cost savings favors China's rise as an international power in technology outsourcing. The company already has 400,000 IT specialists and is undercutting India by a third on outsourcing contracts. The language barrier will prevent China from becoming a major business process outsourcing force for some time, but the country's cheap, educated work force will make it a top destination for software development projects.
  5. Siebel becomes acquisition bait -- Could IBM's partnership with Siebel be a precursor to a Big Blue takeover? Or will Oracle abandon its pursuit of PeopleSoft and set its sights on the smaller CRM specialist? One thing is clear: It's going to be difficult for Siebel to continue on its own. SAP CRM is eating Siebel's lunch in its core market, and Siebel's commitment to the hosted software model rings hollow in light of its reliance on expensive software licenses. Customers should take heart in the fact that whoever buys Siebel will probably put major stock in keeping them happy.
  6. Year of the Tablet -- After chunking away at tablet computing for about eight years, PC makers have finally got it figured out. The new models are sleek, lightweight and gorgeous. Ink capture is the killer app, and Microsoft has got a hit with OneNote. Tablets are beginning to appear in the arms of techno-enthusiasts everywhere. From there, it's only a short hop into the mass market, and this is the breakout year.
  7. RFID catches the hype wave -- It's basically a bar code on steroids, but RFID technology has the chance to revolutionize the supply chain. Never mind that real change is years away, the emergence of a disruptive technology -- any disruptive technology -- will be celebrated by a media and analyst community that's starved for something new. Wal-Mart and the Department of Defense will both require suppliers to use the tiny tags by early 2005. But don't bet on those deadlines to hold. Many small suppliers can't even spell RFID, much less implement it, and the applications that take advantage of data always lag behind data collection itself. RFID will be big because it's a truly disruptive technology. But don't count on reality to catch up to the hype for years.
  8. Grids go bust -- Grid computer networks are hard to build and operate, but you wouldn't know that from the vendors who are already hyping their products as grid-compatible. This is a good concept that will become so overused by tech marketers that it will be meaningless within a year or two. Grids are the artificial intelligence of the '00s.
  9. Microsoft hit with liability suit -- User outrage at security holes in Microsoft products has grown, despite Redmond's efforts to address the problem. The battle reaches a fever pitch in 2004 as a user launches a liability suit at Microsoft for business damages caused by software flaws. The legal action is prohibited by the license agreement, of course, but the case makes a dramatic point that users want software vendors to take more responsibility for the quality of their products.

Trends and technologies to watch: Systems management evolves into application management, with the goal being adequate software performance. It's about time ....Hosted services will be hot, with's anticipated IPO sparking interest in this rejuvenated market .... The costs of accessing Wi-Fi services will drop to near zero in many urban locations, as merchants decide that an Internet connection is a cheap way to keep customers sipping lattes or munching McNuggets .... People will be griping about Windows security just as much in a year as they do now.... Microsoft .NET will have a huge year, as a bunch of new Microsoft products support it. Never mind that its definition is fuzzy; people are using it.

Stuff to avoid: Blogging's wave has already crested now that millions of online diarists are realizing that not that many people actually read this stuff .... Social networking sites like Friendster. Puh-leeze. Don't we have better things to do? ...Linux will fail on the desktop outside of a few cost-sensitive academic and government institutions. On the server, Linux is huge, but on the desktop, it's OS/2.

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