Blog of Intellectual Capital

Here is a good article written by Chris O’Brien, San Jose Mercury News.

“Last week, I reviewed my predictions for 2009. And by grading myself generously, I got 3.5 out of 9. So now it’s on to 2010, when hopefully my foresight, and the valley’s economy, will improve.

It’s tempting to pick some easy targets to inflate my score. But instead, I’m going to make some daring picks, again, because when it comes to punditry, it’s always better to wrong than boring. Or something like that.

So, onward:

1. Palm will be sold.

Sad to say, but it’s inevitable. This will be the year this valley icon ceases to be an independent company. The launch of the Palm Pre and Pixi were valiant efforts. They created an exciting mobile platform and should be valuable to someone else. But sales of the Pre are already stalling. And so is cash flow.

There are plenty of potential buyers out there, from other mobile companies like Motorola and Nokia to other tech biggies like Hewlett-Packard and Dell, which need to get deeper into the mobile space.

2. There will be at least four valley-based green-tech IPOs.

Everyone is predicting a big comeback for the IPO this year. I don’t think that will happen for Silicon Valley. But I think green-tech will be the exception. I had started writing this before Solyndra filed for its IPO. So I’ve only got three to go! Who are the other candidates? Tesla and Silver Springs Networks seem to be increasingly good bets. The fourth will be a dark horse.

3. Intel settles

everything.

The deal with AMD was the first step to putting Intel’s long-running legal feuds in the past. Yes, the legal thicket seem to be getting worse with the filing of the Federal Trade Commission’s case against Intel. But the economy is warming back up, and so are computer and chip sales. Intel will make the smart move by settling these cases so it can focus on reaping the benefits of an improving economy.

4. The mythical beasts will arrive: the Apple Tablet and the Google Phone.

My colleague, Troy Wolverton, says nay, the Google phone will remain a mirage. Indeed, the existence of these two products has been long rumored and much denied. But the increasing chatter about both leads me to believe we’ll see them in 2010.

The intriguing question is: How much will they cost? Apple has recently overcharged for new products like the iPhone, and then brought the price down. I wouldn’t be surprised if the same happens with the tablet.

For Google, there’s a radical notion making its way around the valley: What if Google gave away its phone for free, hoping to make money off mobile advertising? Now, that would be truly disruptive. It has the billions in the bank to underwrite such a plan for several years. But does it have the guts?

5. Facebook and LinkedIn won’t go public.

These social networking companies are in no hurry. Facebook is still tweaking its revenue model, as is LinkedIn. When their revenues pick up steam, they’ll eventually bump into some federal rules that require certain financial disclosures, just as Google did early last decade. But they’ve got at least another year before they have to worry about that. In the meantime, their founders are in no rush to give up the control they would lose by going public.

Indeed, I think that sentiment is widespread among many tech startups. Why rush into an IPO? And this is part of the reason why I don’t expect tech IPOs to come roaring back this year. Even Zynga, the social gaming company and long-rumored IPO candidate, recently took a big investment from a Russian firm so it could reduce pressures to go public. Don’t expect to party like it’s 1999.

6. Jobs will post a slight gain.

As a guide, let’s look at the last two recessions in Silicon Valley. The one in the early 1990s was relatively shallow. The number of jobs peaked in August 1990 and then declined for 18 months, before beginning a rebound that lasted the rest of the decade.

Following the dot-com bust, we hit a job peak in December 2000, and then hit bottom 37 months later, in January 2004.

This current downturn falls in between at the moment. Jobs in Silicon Valley peaked in December 2007, so we’ve been headed down for about 23 months. Though that’s complicated, because in recent months, the job numbers have bounced up and down. Still, this downturn feels less severe in the valley than the dot-com bust. So I expect that 2010 is the year we see a net gain in jobs for Santa Clara and San Mateo counties.

7. Twitter.

Can I do a predictions list and not say something about Twitter? Probably not, so here goes. Twitter’s traffic will decline this year. We’ve seen it stall already in the U.S. and it’s begun to flatten around the globe. I say this, though I remain completely obsessed with Twitter and consider it indispensable at this point.

Unfortunately for Twitter, I never actually visit its site. Rather, I use one of the many third-party applications to write, view and filter tweets. That’s good for me. Bad for Twitter, because it will make it harder for them to make money from me. There’s mumblings recently that not only is Twitter getting revenue, but it may be nearly profitable. But the upside may be limited if Twitter’s traffic is flattening.

8. Google gets hit with an antitrust suit.

The company narrowly skirted a federal anti-trust action in 2008 when it scuttled a search deal with Yahoo. But even though it’s doing its best to cozy up to the Obama administration, and trying to play up it’s “do no evil” motto, there’s some indication that federal antitrust regulators have Google in their cross hairs. Maybe it will be over the controversial Google Book settlement. Maybe it will be over its acquisition of mobile advertising leader AdMob. Or with Google going on an acquisition binge, it could be over some other deal on the horizon. But expect Google and the feds to lock horns in 2010.

9. The number of public companies in Silicon Valley continues to fall.

It’s been falling since 2000. And I see no reason that it will stop this year. That means that acquisitions will rise and consolidation will continue. And while IPOs will reappear, they won’t be enough to make up for the number of public companies that are acquired or go bankrupt.

10. And finally, I’ll end by going way out on a limb: Cisco Systems will buy Dell.

Think about it. Hewlett Packard has been gearing up in recent years to invade Cisco’s turf by moving into the networking space. This is Cisco’s greatest challenge in almost a decade. Cisco will need to respond by buying a PC company both to achieve greater scale and to match the range of products it can offer customers. Cisco has about five times as much market value as Dell, which has been struggling for years to regain its leadership in the PC business, which it lost to HP.

Put Cisco’s line of networking equipment and annual revenue of $36 billion with Dell’s PCs and $61 billion in annual revenue, and you still have a company a bit smaller than HP and its $118 million in annual revenue. But it gets them close.

Cisco’s Chambers has also recently ruled out launching or buying a mobile computing device. But, never say never in the tech world. This an area where both HP, Cisco and Dell need to be in the coming decade.”

This article was posted originally in American Chronicle.

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