Well, it's again come to this: it's time to stick one's neck out a bit, take a stand on some things obvious (although not perhaps in timing or degree), and some not so obvious. The purpose here is not to be novel, as much as to actually lay out trends and events that will happen, so that members and readers may benefit.

As usual, we will come back and grade these next year.

How did we do last year? Members can do their own grading, of course; by my count, with ten prediction sections for 100 points, I ended up with ten points undecided (needing final GDP figures for 2005 from several countries), and about 97% correct of those events already decided.

This year, we released this list at the first annual SNS New York Dinner, held at the Waldorf=Astoria, which feedback to date confirms as a great success. In addition to drawing many Members in New England financial and technology circles (and a few from Europe, Texas, Florida and elsewhere) together for their thoughts and comments, we also had the pleasure of the company of Barron's, the Wall St. Journal, the NYTimes, Fortune, Forbes, BusinessWeek, Reuters TV, ZDNet/PC Magazine, and other media stalwarts.

Before getting to this year's list, I thought I should share the same Areas of Concern and Areas of Encouragement that I discussed that evening. Members know that I believe in establishing the landscape before getting into predictions. This year, it strikes me that almost everything we discuss will be seen within the context of "The Post-Broadband Era"; that is, we have now passed that time when bandwidth is the primary constraint on our plans and products.

Areas of Concern.

1. My first concern is one I have stated before, but it cannot be over-stated: There appears to be "A General Lack of Intellectual Honesty and Rigor" afoot in the land. The President lies about spying on his own people, and nothing happens. Secretary of State Condi lies about torture, and even my teenage son picks it up off the radio: "She's lying," he says, and I sadly agree.

Here is a just-released Gallup Poll asking Americans to rate, on a scale of one to five, the honesty and ethical standards of those in 21 professions; it again placed nurses at the very top, with U.S. senators and congressmen trailing badly.

Nurses 82
Druggists/Pharmacists 67
Medical doctors 65
High school teachers 64
Policemen 61
Clergy 54
Funeral directors 44
Bankers 41
Accountants 39
Journalists 28
Real estate agents 20
Building contractors 20
Lawyers 18
Labor union leaders 16
Senators 16
Business executives 16
Stockbrokers 16
Congressmen 14
Advertising practitioners 11
Car salesmen 8
Telemarketers 7 

Of course, it is well-known that our teens now get most of their daily news from comedy channels. Here is a recent excerpt from one of the more humorous sites on the Web, Andy Borowitz's The Borowitz Report:

"CHENEY RECEIVES FACE TRANSPLANT; NOW HAS THREE FACES

"Unveils Newest Face on NBC's "Meet the Press"

"Vice President Dick Cheney received a face transplant over the weekend, bringing his total number of faces to three, a spokesman for Mr. Cheney confirmed today. ---

"In his first television appearance with his newly transplanted face, the vice president indicated that he would use one face for talking to the American people, one face for talking to executives of the Halliburton Company, and one face for passing information to people he referred to as "secure and undisclosed members of the press." ---

In my opinion, the current levels of intellectual dishonesty among many of our so-called leaders, from business to politics, does more than casual harm. I had a chance to talk about this with a select group from Warburg Pincus while in New York, and I had the impression that the group saw traction in the idea that injecting bad data into markets would increase their volatility, and therefore reduce their efficiency. I expect it also drives retail investors out of the market altogether (who wants to be a sucker?), into places like real estate, where they at least have something more tangible than Enron or MCI stock to hold.

Here, very quickly, are other Areas of Concern going forward:

Areas of Encouragement

1. Corporate earnings are at or near all-time highs.
 

2. Global equity markets are at or near all-time highs.

3. Venture Capitalists have record amounts to spend, and are spending it.
 

4. Oil prices are high, providing an umbrella for alternative energy research and development.

5. The Global Consumer Explosion is under way.
 

6. The K-12 education technology market is taking off.
 

7. Country reviews, GDPs for 2006: 

India, 8+% GDP

China, 11.9%

Russia, 8-%

ASEAN, 6-7%

Europe, 2.5%

Japan, 1%

U.S. 3.2-3.6%

8. This is the best time in a lifetime for new company formation.

9. The same is true for providing global financial services; just ask Goldman Sachs.

10. There are several new technologies about to create real results: protein-based medical diagnostics, materials science, holographic storage, integration of biological attributes into engineered systems.

11. And, as an added benefit: if we do fix our healthcare and educational business models, the country will see an immediate boost in productivity. Just doing simple things right (like reading the medical charts, transferring medical records with the patient, not killing patients with bad meds or med combinations) could save us 20% or more off the top. And not driving U.S. companies into bankruptcy would be an added benefit.

Alright, that's enough landscape. Here are my predictions for 2006:

TEN PREDICTIONS FOR 2006

1. Americans Reject U.S. TV News in favor of the Net. By almost any metric one chooses, 2005 will have been the last year when Americans turned to television as their most trusted, or often-used, news source. News has anchored television economics since Murrow's days at CBS, but those days are now over. Jon Stewart is right: this isn't news. The relative amount of news per minute one can get on a given event will continue to rise for the Net, and to fall for TV. More important, the relative quality and depth per minute will favor the Net logarithmically from this time forward. 

The Net is for news, TV is for entertainment. Fox is for propaganda.

2. Online ad dollar flows jump 40-50%, as advertisers flee print and TV for increasingly effective one to one customer touch. A secondary result from this trend is the destabilization of TV networks and print empires. We will see myriad new networks formed at the bottom of the IP pyramid, from blogger gangs to mashed web-based news aggregates. Another collateral result: the art of advertising will be revolutionized during this year, with a new generation of young shops taking the lead.

3. The Real outsourcing numbers for India are discovered by the U.S. public, and they don't like any part of it. When this happens, the figures will approach an order of magnitude larger than current expectations, and some of the U.S. economic angst focused on China will turn to India.

4. Pipe names stop mattering; bit rates are everything. What is a cable co vs. telco? It won't matter to users more interested in $/bits/second. AND the whole idea of bundling, which has driven the cable and telecoms companies' sales promotions and billing until now, will begin to go away.

5. These bit delivery companies take a dominant position in global investment and as enablers of platforms. The day of Vint Cerf's favorite T-shirt has arrived: "IP on Everything."

6. Flat screens in multiple rooms become the new driver for residential broadband. Because you can't fake video streams, the U.S. finally arrests its fall in the global panoply of broadband providers.

7. Location matters. The insertion of GPS into mainstream phones closes the loop begun with local directory services and expanded by the various Earth servers. The Earth II vision of GIS-based knowledge map overlays is achieved during 2006. Databases begin to regularly carry GIS tags, and the image is one of connected Nextel users pushing to talk while viewing their locations. Locating people will be more important than locating the shoe store near them, but the first will be the killer app, and the second will pay for it. People want to know where their people are.

8. Toyota surges beyond GM in sales, and becomes generally accepted as the best-managed company on the planet.What is this doing on a tech list? Cars are among the most important future technology platforms, in arenas ranging from environmental cleanup to fuel cells to stereo, radio, security, wireless LANs, on-demand video, satellite communications. And who owns the international car market drives many other markets, including steel, components, electronics, etc. Finally, this will presage the global emergence of other Japanese companies, including Canon, as being global leaders heads above the rest in management.

9. Refi-driven markets will hold on for one more year, based on investor preference for something they can touch vs. equities and bonds. Although we have now passed the housing bubble peak, the decline in pricing and increase in inventory will be surprisingly slow for the first 12 months. This will have the secondary effect of leading to a more pronounced collapse in selected residential real estate markets in the following 2-3 years.

10. The Global Consumer Explosion will begin, in serious numbers, next year, and will change the nature of global economics, from the bottom up. Now it is Asia's turn to be the global consumer, and not just the low-cost producer. Asia will become Wal-Mart's biggest customer during the next two years, with huge advances in 2006.

Is Earth ready for 300-500MM new consumers over the next decade? 2006 will be the year when we will start living the answer to that question.

Your comments are always welcome. 

Sincerely,

Mark R. Anderson

Quotes of the Week

SNSers heard this meme here first, years ago. Now the rest of the world is saying it:

"Poor James Buchanan, the 15th president, is generally considered the worst president in history. Ironically, the Pennsylvania Democrat, elected in 1856, was one of the most qualified of the 43 men who have served in the highest office. A lawyer, a self-made man, Buchanan served with some distinction in the House, served as chairman of the Senate Foreign Relations Committee and secretary of state under President James K. Polk. He had a great deal to do with the United States becoming a continental nation -- "Manifest Destiny," war with Mexico, and all that. He was also ambassador to Great Britain and was offered a seat on the Supreme Court three separate times.

"But he was a confused, indecisive president, who may have made the Civil War inevitable by trying to appease or negotiate with the South. His most recent biographer, Jean Clark, writing for the prestigious American Presidents Series, concluded this year that his actions probably constituted treason. It also did not help that his administration was as corrupt as any in history --- his real failures were in refusing to move after South Carolina announced secession from the Union and attacked Fort Sumter, and in supporting both the legality of the pro-slavery constitution of Kansas and the Supreme Court ruling in the Dred Scott class declaring that escaped slaves were not people but property.

"He was the guy who in 1861 passed on the mess to the first Republican president, Abraham Lincoln. Buchanan set the standard, a tough record to beat. But there are serious people who believe that George W. Bush will prove to do that, be worse than Buchanan. I have talked with three significant historians in the past few months who would not say it in public, but who are saying privately that Bush will be remembered as the worst of the presidents.

"There are some numbers. The History News Network at George Mason University has just polled historians informally on the Bush record. Four hundred and fifteen, about a third of those contacted, answered -- maybe they were all crazed liberals -- making the project as unofficial as it was interesting. These were the results: 338 said they believed Bush was failing, while 77 said he was succeeding. Fifty said they thought he was the worst president ever. Worse than Buchanan."

-- Richard Reeves, "IS GEORGE BUSH THE WORST PRESIDENT -- EVER?", quoted in Yahoo! News.

"Willful disregard of a law is potentially an impeachable offense. It is at least as impeachable as having a sexual escapade under the Oval Office desk and lying about it later. The members of the House Judiciary Committee who staged the impeachment of President Clinton ought to be as outraged at this situation. They ought to investigate it, consider it carefully and report either a bill that would change the wiretap laws to suit the president or a bill of impeachment.

"It is important to be clear that an impeachment case, if it comes to that, would not be about wiretapping, or about a possible Constitutional right not to be wiretapped. It would be about the power of Congress to set wiretapping rules by law, and it is about the obligation of the president to follow the rules in the Acts that he and his predecessors signed into law."

-- Barron's article: "Congress Should Consider Bush Impeachment"

"We don't know what we are talking about."

-- David Gross at the 23rd Solvay Conference in Physics in Brussels, Belgium,
during his concluding remarks on Saturday.

He was referring to string theory - the attempt to unify the otherwise incompatible theories of relativity and quantum mechanics to provide a theory of everything. "The state of physics today is like it was when we were mystified by radioactivity."

Gross - who received a Nobel for his work on the strong nuclear force, bringing physics closer to a theory of everything - has been a strong advocate of string theory, which also aims to explain dark energy. "Many of us believed that string theory was a very dramatic break with our previous notions of quantum theory," he said. "But now we learn that string theory, well, is not that much of a break."

He compared the state of physics today to that during the first Solvay conference in 1911. Then, physicists were mystified by the discovery of radioactivity. The puzzling phenomenon threatened even the laws of conservation of mass and energy, and physicists had to wait for the theory of quantum mechanics to explain it. "They were missing something absolutely fundamental," he said. "We are missing perhaps something as profound as they were back then." all of the physics above, from New Scientist magazine, 10 December 2005.

For SNSers following our Resonance thread, this may be a watershed moment: Resonance Theory claims to be the only string theory based on physics fundamentals, and now those string theorists arising purely from re-purposing the Euler Formula are paying for this lack.