What Wonders Will 2001 Bring?

In his crystal ball, seer Steve sees less froth and more focus on building good products

Looking backward is humbling for anyone who has risked a prediction, but it puts things in perspective. So as I take a look at the year ahead, I thought I would leaven my predictions with a look at how last year's forecast fared.

I was right that Y2K would be no big deal. Even the "minor but annoying" problems that I predicted turned out to be mostly nonexistent.

I was premature in my prediction that simplified Net appliances would make big inroads into the PC market. True, lots of appliances appeared this year, but they ranged in quality from flawed-but-intriguing to awful. The market is starting to get a lot more interesting--with new hardware designs and browsers and other software from Netscape (AOL), Microsoft (MSFT), Opera Software, and Be Inc. (BEOS) With the PC market showing signs of saturation, especially in the U.S., appliances could be a big story of 2001.

MIRED DOWN. I also got ahead of myself in forecasting rapid progress for high-speed Internet access. As I noted a few weeks ago ("Why most of us can't have broadband," Technology & You, Dec. 4), cable and fast phone-line access is mired in technical and financial problems. With new technologies such as two-way satellite, high-speed access will grow, but I would consider it a success if 5 million U.S. households are added by the end of 2001, up from about 3 million now.

My prediction of advances in wireless was a bit closer to the mark. The wireless Web has become widely available on telephones. While tiny displays and the difficulty of entering information make phone handsets pretty dreadful tools for sending and receiving data, experiments with somewhat larger devices, such as Handspring's (HAND) Palm-based VisorPhone and Microsoft's Stinger concept phone, promise big advances. Meanwhile, Europeans should start seeing medium-speed (around 64 kilobits per second) data service on their wireless phone systems during the year. The U.S., however, continues to lag badly.

One happy surprise was the explosion of wireless local networks. Companies and schools are installing cheap and flexible wireless technology in offices and classrooms. Laptop makers will be replacing PC card add-ons with built-in wireless adapters in new models coming out early in 2001. With simplified base stations from Lucent Technologies (LU) and Apple Computer (AAPL), today's dominant standard can create an instant home network, though Intel (INTC), Proxim, and other promoters of a rival technology promise to strike back next year with improved offerings that include integration with cordless phones. Also look for growing availability of wireless connections in hotels and airports.

Another wireless technology faces a less clear future. Blue Tooth, a short-range wireless link backed by nearly every hardware and software company, didn't make it out of the lab this year, but it should appear in a variety of products by mid-2001. Backers push it for everything from wireless networking to an alternative to a cable when linking a music player to a headset. My guess is that Blue Tooth will be most important as a way to let laptops and handhelds use wireless phones as modems, in effect cutting the cord for any mobile device. Right now, the technology is too expensive for anything but laptops and high-end phones, but if chip manufacturers deliver on their promise of a dirt-cheap version, Blue Tooth could turn up everywhere.

In PC hardware, the coming year is likely to bring mainly stability. Intel will come out with both power-saving chips for laptops and faster processors, but the extra speed will be of little value to the mass of buyers who already have all the performance they need. Both Microsoft and Apple plan to offer major new operating systems, including the long-overdue Mac OS X. Around yearend, a new version of Windows, code-named Whistler, would be the first major offering for home users since Windows 95.

Overall, the industry will see a lot less froth and a lot more focus on building products and services that work and that people will pay for. This will be a painful adjustment for many, but it is a good thing for consumers.

I want to thank my readers for their interest, support--and criticism. A happy and prosperous 2001 to all, and keep that e-mail coming.

Before it's here, it's on the Bloomberg Terminal.