Silicon Insider: 2008 Tech Predictions

Michael Malone says: recession, Apple stumbles and Google tumbles this year.

ByABC News
January 3, 2008, 11:41 AM

Jan. 3, 2008 — -- Happy New Year I guess.

I can't help thinking that 2008 is going to be a strange year, filled with far too few wonders and a whole lot of the unpleasant and unexpected. And nowhere will that be more true than in Silicon Valley and high technology.

Here are my predictions for the coming year in Tech:

Recession Early last year, I predicted it for late 2007. And I think we'll look back this year and see that, at least in high technology, it did indeed arrive about last September, if not even earlier. This downturn in tech is hardly unexpected: It typically comes every four years or so, and though unwelcome, usually has the beneficial effect of killing off the old and feeble companies as well as the uncompetitive new start-ups. This frees talent and money to go elsewhere usually into the creation of the next generation of hot new companies.

I've been smelling recession in the air here in the Valley for months now. People are tired, the money is getting distorted, and most of all, a lot of people who shouldn't have jobs are being snatched up by companies desperate for warm bodies.

I also think that the reality of this recession has been largely masked by a handful of great companies HP, a resurgent Dell, Google, Microsoft and most of all, Apple swimming against the trend and posting numbers that not only makes the Valley look healthier than it is, but also buoys up the entire U.S. stock market. As we'll see in a moment, that won't last much longer.

I once predicted that this recession would be deep, but short. Now I'm of a different mind: Because it has taken longer to unfold, I also think it will take longer to end. On the other hand, I also think that the larger U.S. recession, which despite recent GDP numbers, also seems under way, may not be as bad as I first thought, as the slow slide downward will help reduce the damage of the mortgage mess. So, look for a shallower recession in both the U.S. economy and in high tech, but also expect it to last into late 2009, with tech coming out of it first at midyear.

Apple Stumbles Hard as it is to believe, the Apple iPod is now 6 years old, being first introduced just weeks after 9/11. Add to that the introduction of the first iMac a couple years before that, and the iPhone early last year, and Apple has enjoyed one of the most spectacular and innovative runs in U.S. business history. In the process, the company has transformed not only consumer electronics, but also the culture itself. That's no mean achievement for a firm that was at death's door a decade ago.

The question now is whether the company can keep going, pulling still more rabbits out of Steve Jobs' hat. The answer, I think, is probably not.