COMMENTARY | COLUMNISTS | PHIL BAKER

Product predictions for 2004

This is the time of year when all the news pundits make their predictions for 2004. Here are my predictions for consumer technology products that will make an impact in 2004. I'll evaluate the results this time next year to see how I did. The prediction I am most sure of is that we will see many new technology products at lower prices with longer waits for service.

Digital imaging

2003 was the year in which digital cameras outsold conventional cameras and more cameras were sold as part of cell phones than stand-alone units. 2004 will see more than a half dozen new serious SLR cameras for advanced amateurs, with interchangeable lenses and resolution of 6 megapixels and higher, all selling for under $1,000, following the lead of Canon's hot new model, the EOS Rebel.

Digital entertainment

Apple's iPod will continue to dominate with a new model introduced at under $250. Online music purchases will soar with Microsoft (Nasdaq: MSFT), AOL, Dell (Nasdaq: DELL), HP (Nasdaq: HPQ) and others joining the fray, but Apple (Nasdaq: AAPL) will maintain the leading market share. In-store purchases of CDs will drop significantly in 2004 and the music industry will finally embrace online music purchasing. Look for Blockbuster (NYSE: BBI) rentals to suffer as Netflix (Nasdaq: NFLX) and Wal-Mart's (NYSE: WMT) version of DVD by mail grow by double digits. New digital video players will be introduced as video versions of MP3 players.

Mobile phones

Cellular service providers will introduce new phones with features such as built-in MP3 players, higher resolution cameras, and even TV and video. Because they are focusing on the teen and young adult market, there will be little improvement in the areas that business people care about most, dropped calls and battery life. Mobile phones will be introduced that can make calls using both conventional cellular networks and over the Internet using a Wi-Fi connection.

GPS

New consumer products using GPS technology will be introduced to track your kids and pets. GPS on mobile phones will allow you to see local maps and get location-related information.

Internet tax

Continued pressure for taxing purchases made over the Internet will become a campaign issue in the fall, but we will leave 2004 without these taxes implemented.

Storage products

Expect new, easier-to-use automated solutions for backing up computer files on home computers, including hard drives and home servers. With more users saving more files, particularly huge image, music and video files, easy-to-use back-up solutions will become increasingly important.

Large-screen TVs

The boundary between home computing and home entertainment will continue to blur in both function and branding. Joining the conventional TV brands will be HP, Dell and others, following the lead of Gateway (NYSE: GTW). Prices for 42-inch plasma TVs will fall to $2,000 by the end of 2004 and 70-inch plasmas will be introduced at more than $6,000. LCDs will become the preferred choice for high-end flat TVs in the 30- to 40-inch range. Some of the large Taiwanese-based notebook computer manufacturers will start producing large-screen LCD TVs.

Spam

The new anti-spam law passed by Congress will have a negative effect, pre-empting the stronger laws of states like California. Expect a major breakthrough solution to come from Microsoft, one of the companies that suffers the most from this problem.

Wireless connectivity

Wi-Fi hotspots will continue to increase in popularity with more than 33 million notebooks sold this year, 24 percent Wi-Fi enabled, and 50 percent next year, resulting in 25 million new Wi-Fi users. We'll see Wi-Fi in schools, college campuses, on trains and even in planes with an airline offering this service in 2004.

PDAs

PDA sales will be nearly flat in 2004 because of the proliferation of phones with similar capabilities. Expect to see the first $149 color unit. The Palm OS will continue to lead in the battle with Microsoft's mobile OS with about twice the market share. Microsoft will lose interest in this category and shift resources to developing smart phones.

Computer companies

Dell will continue to dominate the business computer market and will become a major reseller of consumer electronics. It will also open its first retail outlet in 2004. HP's computer hardware division will lose money in 2004 and there will be new criticism of the HP-Compaq merger and its management. Apple's Macintosh will continue to grow in popularity and make 2004 a banner year for Apple. Apple will introduce a new tablet computer. Microsoft will lose its lawsuit with the European Union.

Bluetooth

Bluetooth will still be a year away from major adoption.

VoIP

Voice over IP, the technology that lets you make calls using your broadband connection, will hit mainstream in 2004 with at least four conventional phone companies and cable companies jumping in with their own service. Vonage, the startup that has pioneered this technology, will be acquired. In spite of FCC Chairman Michael Powell saying the FCC prefers not to regulate VoIP, there will be a heated battle as the states are threatened with the revenue loss from the phone companies' conventional phone services.

Google

Google will go public, but will see new competition from Microsoft and Yahoo and stock will languish after an initial spurt. That is, if I've bought it. If I haven't, it will soar.


Baker has developed and marketed consumer and computer products for Polaroid, Apple, Seiko and others. He is the holder of 30 patents and was named San Diego's Ernst & Young Consumer Products Entrepreneur of the Year in 2000. He can be reached at phil.baker@sddt.com.

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