The year in preview: Google goes evil; Mixed source rules; Microsoft buys Yahoo

Wondering how 2007 will turn out? Look no more. Here are a few fearless predictions to ponder.

1. Google goes evil. OK, well maybe not totally evil. But this is the year the perception of Google changes. In its 2004 IPO prospectus Google said:

Don’t be evil. We believe strongly that in the long term, we will be better served—as shareholders and in all other ways—by a company that does good things for the world even if we forgo some short term gains.

This is an important aspect of our culture and is broadly shared within the company. Google users trust our systems to help them with important decisions: medical, financial and many others.

Our search results are the best we know how to produce. They are unbiased and objective, and we do not accept payment for them or for inclusion or more frequent updating...

The question: Is that realistic these days? Google doesn't have to be evil like some pro wrestler that goes from the people's champion to a villain overnight. All it has to do is slip a little. And every move Google makes is magnified.

And the early returns are in--Google is slipping. As TechCrunch's Michael Arrington notes Google is alienating some folks by plugging its own products in its text ads. Meanwhile, Google lost some Gmail accounts and has peeved developers with API changes.
For other companies Google's moves are non events. But then again other companies didn't set themselves up with a don't be evil mantra.

Does any of this matter? Not yet. Google is still raking in dough. But at some juncture Google will have what I call its Yahoo 2001 moment when advertisers get annoyed and the company has to eat humble pie. Remember Yahoo peeved advertisers before Terry Semel rode in to save the day.

2. Yahoo's Panama project will deliver. In fact, Panama will be such a success that Microsoft will buy Yahoo. Last year's whipping boy, Yahoo, will rebound in 2007. Will it have the page monetization that Google has? No. But it doesn't have to since it has such a huge audience. Yahoo's narrowing of the Google gap makes Microsoft realize it doesn't know what it's doing with MSN and its other properties. Microsoft then buys Yahoo, hands the Yahoos its properties and lets the revamped media division operate unfettered.
3. Microsoft's partnership with Novell actually works for customers--everyone else hates it. Say what you will about the nuances and motivation of the Microsoft and Novell Linux pact, but it does touch on a key theme--mixed source environments are here to stay. Proprietary code such as Microsoft's is going to coexist with Linux. No CIO is going to rip out years of infrastructure for open source religion. The reality: CIOs want some reassurance open source software and proprietary code will play nice. Microsoft's deal with Novell plays to that need. If Novell gains any business--I'm doubtful since Novell has more lifelines than I can count--perhaps Red Hat and Microsoft also do some sort of interoperability agreement.
4. The cooling sales pitch gets cold. For the last year, the power consumption pitch is all we've heard out of data center vendors and chipmakers such as Intel and AMD. It's no coincidence that worry about power consumption has lined up with a spike in natural gas and oil prices. Since natural gas runs many electricity plants prices of both correlated. What happens if utility costs fall? Don't look now, but oil prices have been struggling. If electricity bills stay static or even fall, the rush to save computing power may wane. My bet: CIOs are no different than the folks that will go rushing back to the SUVs once prices stabilize.
5. America will suffer its first cyberterrorism attack. With 90 percent of U.S. infrastructure residing in public hands, the Department of Homeland Security--which hasn't exactly been proactive on cyberterrorism in the first place--has a real problem coordinating security. The chances of the DHS preventing a cyberterrorism attack are nil. In his 2007 top 25 surprises column on TheStreet.com, Doug Kass, a founder and president of Seabreeze Partners Management, wrote:

America's growing dependency on convergence and connectivity (computers control power delivery, communications, aviation and financial services) becomes a battleground and launching pad for a series of cyberterrorism acts by a terrorist group in early 2007.

The first few virtual attacks are ignored and have no effect on the market or on the Internet. However, during a chaotic weeklong period after the July Fourth holiday, an attack renders the Internet partially ineffective, threatening to eradicate crucial information storage bases and to stop commerce and communication.

The big question will be who will behind such an attack. Chances of cyberterrorism attack happening:  40 percent.

6. Enterprise IT spending will be stronger than expected and approach double-digit growth. There's a ton of infrastructure that needs to be refreshed. Once it's clear the economy is steady CIOs will open up the purse strings a bit more. Meanwhile the Vista upgrade cycle will be a big catalyst in the second half of the year.

7. Blogger's adopt a code of ethics. The flap (see Techmeme discussion) over Microsoft's attempt to give away a fancy Vista laptop to bloggers reminds me of a journalism ethics debate in college. Actually, it wasn't much of a debate since it was clear that you shouldn't take pricey freebies from companies. Do you take the laptop and keep it? Do you keep and disclose? Do you review it and send back (that's what most reviewers are supposed to do)? As a result of the Microsoft PR incident--and ones that will inevitably follow as bloggers get more credibility--a group of key bloggers will draft a code of ethics. Chances are it'll have excerpts something similar to this and bloggers will put badges on their sites to show they are believers. The code will be a living document.
8. The page view metric will go away. An emergency meeting of online advertising honchos and rating services such as ComScore and Nielsen/Netratings results in more nuanced reports. Why? AJAX screws up ratings of Web titans that use it. AJAX is better for customers, but doesn't result in pretty reports. The stand-in for page views initially is unique users. By year end, customer loyalty becomes a key metric and demographics begin emerging based on individual clickprints.
9. Software as a service goes offline. Offline uses for on-demand software will become increasingly important. By the end of 2007 the lines between traditional application providers and on-demand software rivals will become blurred. For more on this topic see Phil Wainewright's recent post.
10. Apple will finally launch its iPhone (or whatever you want to call it). And when Apple does it's going to really hurt carriers. Why? Apple's phone-thingy will be unlocked as a default meaning it can work with any carrier. As a result, unlocked phones will become the norm upend wireless carriers' business model, which depends on multiyear contracts.