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 THE STAT 26Percentage of wireless customers who use their cell phones to take picturesMore Vitals
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JANUARY 11, 2005
The Shape of Tech This Year Though plenty of uncertainty remains, we've pinpointed seven trends likely to play out during 2005 that will make the year memorable Welcome to 2005, the year the high-tech industry does...something. Truth is, you won't find an awful lot of agreement on how things will turn out for tech this year. The most enthusiastic of forecasters say capital spending growth on tech could hit double-digits this year, while more dour Wall Street analysts say that's just plain bunk. Certainly, plenty of excitement surrounds consumer technologies like liquid crystal and plasma TVs and wireless technologies like Wi-Fi. But for every high hope, there's a gloomy forecast of weak corporate spending and merger failures or continuing price pressure from China. This much is known: After nearly three years of declines, 2004 was a ray of hope for tech. Business spending on technology was up, somewhere in the range of 5%. Venture capitalists started taking entrepreneurs to lunch once again. Tech employment picked up, despite competition from international outsourcing outfits. And tech stocks outpaced the rest of the stock market. PLUSES AND MINUSES. Will those happy trends continue this year? Well, tech spending should keep pace with 2004. VCs look like they're ready to put money behind the young turks they've been lunching. The high-price products coming from the convergence of consumer electronics and the tech industry look like they're about to lose the ugly "high-price" moniker. Wi-Fi is about to go from cool-to-have to must-have. But worries remain. While tech companies are hiring again, they don't seem particularly eager to increase wages. Many economists are concerned that tech salaries will stay flat or even drop this year. Either way, they certainly won't keep up with the cost of living. Meanwhile, investors happy about the software industry's merger mania may get a rude awakening: These deals may look great on paper, but they're awfully hard to pull off for a whole bunch of reasons, ranging from cultural to technical. Most of all, investors fear that the stocks of tech bellwethers like Microsoft (MSFT ), Cisco (CSCO ), and Intel (INTC ) may take a big hit. After all, these companies have enjoyed premium share prices over the years because they were considered "growth" stocks -- companies that expand far faster than the rest of the economy. FROM WALL ST. TO CHINA. Now that the tech industry is so big and these companies have such dominant shares of their particularly industries, it may be unrealistic to expect them to keep the growth pace of their younger days. Maturity. It's not a bad thing. But it sure will take a lot of getting used to. In this special report, BusinessWeek Online predicts seven big trends for the coming year. We'll explain why tech bellwethers may have a tough year on Wall Street, why venture capitalists are showing some moxie and investing in new ideas, and why Wi-Fi will soon be found in places unimaginable just a year or two ago. We'll look at tech employment trends, salivate at the likely prospect of big price drops for high-tech TVs, cast a wary eye toward software mergers, and count the ways China is having a big impact on the semiconductor industry.  By Jim Kerstetter in San Mateo, Calif.
BW MALL
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