2001: ZDNet UK's Christmas Day broadcast to the nation

At the close of a bad year for the tech sector, ZDNet UK has a Christmas Day message for all our readers -- a gift of 12 reasons to be optimistic about 2002

The Queen will celebrate two important anniversaries in 2002. The main event will be the Golden Jubilee celebrations over two special bank holidays on 3 June and 4 June. Much less a cause for celebration will be the tenth anniversary of her famous "annus horribilis" speech in November 1992. ZDNet UK has identified a correlation between the Queen's level of happiness and the state of the technology sector. In 1992, while Queen Elizabeth ruminated darkly on her children's failing marriages, the fire at Windsor castle and her sickly corgis, the tech sector was similarly in a state of deep gloom. UK unemployment hovered around the 10 percent mark and Silicon Valley was in a deep slump. Economic history teaches us that downturns do not last forever, and that the length of recessionary troughs is getting shorter. ZDNet UK believes that the tech economy will start to recover in 2002. There have been several signs of recovery in the last few weeks. As a festive treat, here are a dozen signs of recovery, and reasons why tech will bounce back in 2002 -- one for each of the 12 days of Christmas. 1) It's another anniversary
This is an important anniversary. In 2002 we'll be able to say that the bursting of the Internet bubble was two years ago. And guess what? We are all still here, and using the Internet and other technologies more than ever. The world has now been through a proper period of mourning and reflection for all of that excess. But life must go on. What are investors going to do? Leave their money in the bank earning the lowest level of interest in 50 years? The Internet is not going away, and it still represents a tremendous, life-enhancing opportunity for everyone -- users, investors, and workers alike. The Internet businesses that have survived the shakeout are stronger than ever -- and in 2002 will start to deliver on some of their promises. 2) 2002 is a corporate buying cycle year
Most large companies upgrade their desktops, notebooks and servers every three years. The last time many companies did this was 1999, as a part of a strategy to deal with the Y2K bug. That means that 2002 is likely to be a replacement year for many companies and, given that XP and Pentium 4 PCs have now been tested by the market for a while, the wave of upgrade cycle purchasing in 2002 could be a particularly strong one, offering a boost to the hardware sector. 3) 3G
For most people, getting online while on the move is a right royal (sorry your Majesty) pain in the arse. 3G holds out the promise of always-on, reasonably fast (fast enough for email and Web surfing) Net connectivity. It will be simple to use and its content and applications (many of them not yet dreamed up) will be compelling enough for people to pay for them, thus sustaining a content and applications business for 3G. Even if 3G slips into 2003, the preparations for it will be one of the main tech stories of the year. ZDNet UK predicts the voices of the doubters will be drowned out by those who start to appreciate the true value of robust mobile data services. 4) Microprocessor industry recovery
Intel reported a better final quarter in 2001, and several independent analysts have predicted a slow recovery in the chip sector next year. The microprocessor business is the key component industry for the tech sector. If, as predicted in (2) above, we see a recovery of the hardware industry, then this will provide an immediate boost to chip manufacturers. As chips are deployed in more mobile and consumer devices, the microprocessor industry's dependence on the computer industry is reduced, boosting its potential for longer-term, sustained growth, and higher margins. 5) Rising expectations of customer service levels
Consumer experience of excellent customer service from some firms is boosting the expectation that all firms will behave similarly. Providing real-time customer account management (the kind of service where when you phone up they know who you are, which of the firm's products or services you are using, the last time you called, and why) takes sophisticated CRM software, and the integration of legacy business systems. Competitive pressure to deploy CRM solutions in business will boost the business applications market in 2002 -- with the CRM market alone worth an estimated $25bn in 2001, and set to grow at 29 percent a year through 2005. 6) Broadband rollout
No doubt the inclusion of broadband in this list will produce deep scepticism in many -- but it is here for one powerful reason; the Internet is hugely popular, despite its excruciatingly slow performance on a 56k modem. Broadband is a fifth gear that will accelerate its usefulness for everybody. ZDNet UK believes that the cost hurdle will be solved in 2002. Other European countries have already struck a 'lift-off' price point (in most cases sub-£20) and are seeing strong growth as a result. Remember also, that the Internet is not the only route to broadband (depending on your definition). Satellite and cable TV companies now offer interaction with their full video content offerings. Sure, the up-channel is limited by phone line speed and a snail-like modem in the set-top box, but world-beating expertise in building interactive TV applications could see the UK quickly make up lost ground in broadband in 2002. 7) Tech titans sound more positive
It started with Cisco's chief executive, John Chambers, telling a Goldman Sachs conference in October that he was "very comfortable" with the firm's Q1 estimates. Intel and AMD added their voices in December, saying that Q4 sales were stronger than expected -- announcements that followed swiftly after the Semiconductor Industry Association reported sales growth in October, a 2.5 percent increase from the previous month. 8) Business IT spending will grow next year
Businesses will spend more money on IT in 2002 than they did this year -- and this year they spent more than last year, according to recent reports. Projections of increased growth vary from between 5 percent and 10 percent -- but most analyst firms expect growth to be higher in Europe than elsewhere. Consumer spending on computers and Internet services is also predicted to grow. 9) Investors can't stay away forever
Rates of return for non-frontline, business investment are falling to historic lows. This provides a strong incentive for investors to return to the stock market -- in the hope of higher, albeit riskier, returns. Sky-high share prices for technology firms are a thing of the past, even if by conventional measures of valuation, some companies still look fully priced. You can argue about the price, but what is undeniable is that there has been a shakeout in the tech sector and many of the weakest firms have already gone to the wall. ZDNet UK expects investors to return to the tech sector in 2002 -- not just because returns will recover, but because technology remains the dominant industry of the 21st century. Nothing that has happened in the past two years has changed that. 10) Amazon might turn a profit
E-commerce is starting to happen: it was up 142 percent in the UK in 2001, despite headlines that suggested e-commerce is dead in the water. But perhaps the world will only really believe e-commerce is here to stay when Amazon turns a profit. The jury is still out on whether Amazon can achieve long-term profitability, but there are encouraging signs -- with sales in the all-important fourth quarter substantially up on last year. Closer to home, Lastminute.com is growing revenues and boosting subscriber numbers. Lastminute.com chairman, Alan Leighton said in August that the firm was "on track to deliver break even in the UK and France at an operational level in nine months' time." 11) Windows XP and Pentium 4 factor kicks in
There are those that believe the old Wintel double act doesn't work like it used to. Microsoft brings out a new operating system that, surprise, surprise, requires a new, whizzier microprocessor to really make it sing. Intel brings out a new microprocessor that, surprise, surprise, requires a new whizzier operating system to really make it sing. Throughout most of the late 1990s, the old Wintel combo worked a treat. Despite a growing level of cynicism about upgrading just for the sake of it, there are signs that the old double act is starting to perform again with XP/P4. Many firms will be upgrading hardware this year (see second day of Christmas above), and those that don't already have Windows 2000 deployed, will almost certainly go for XP running on a fast microprocessor, in most cases a Pentium 4. 12) Convergence, convergence, convergence
At the CES show in Las Vegas in January, Bill Gates will talk about the importance of the networked home. Interoperability of devices -- and in particular their ability to sync with PCs -- will be a powerful force next year. It will be led by PDAs -- where we already see Sony's Clie being used as a TV remote. There will be phones that sync with your PC, just like your Palm, and the car will become the next frontier for the PDA crowd with Compaq and other vendors offering in-car navigation through Pocket PC 2002 devices. The real convergence market is the market for the smart home -- which will be the real theme of Gates' keynote at CES. 2002 is the year that networking in the home, and the convergence of consumer entertainment products with information appliances starts to happen - and you will see it happening in real products too, not just in predictions about the future. We can't say for sure when the tech recession will lift, or whether 2002 will be an annus fantasticus for the Queen and those of her subjects who work in technology. What we can say is that technology has never offered more value and productivity to businesses and individuals than it does today. In the past that has proven to be a compelling proposition - and it will again in the future. Oh -- and if all that doesn't cheer you up, England are going to win the World Cup and JK Rowling will take the Nobel Prize for Literature. See ZDNet UK's Christmas & New Year Special for our look at the tech world in 2001, and what's coming up in 2002, plus a shopping guide with reviewers' best buys. Have your say instantly, and see what others have said. Click on the TalkBack button and go to the ZDNet news forum. Let the editors know what you think in the Mailroom. And read other letters.

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