charlesarthur.com: My predictions and recommendations for 2005

(If you want to comment on this article, there's a link at the end.)

At the start of this year it wasn’t obvious just how important security was going to be. According to some reports, 80 per cent of Windows PCs now have some sort of “spyware” or “adware” � almost certainly unwanted � on board. Although my predictions for the year just passed (which you can re-read at http://www.charlesarthur.com/predict2004.html) have been largely borne out (of 18 predictions, only one is definitely wrong and five “unclear”), the security issue � while important � took on a key role in 2004. So what’s ahead for 2005?

The inexorable rise of spyware and adware, plus the explosion of “Trojan diallers” which stole more than �5 million from more than 50,000 Britons earlier this year, should have made everyone aware that your computer is far less safe when online than you ever thought.

Microsoft did acknowledge this with its introduction, in September, of “Service Pack 2” for Windows XP, which bolstered the defences of Internet Explorer, which increasingly looks like the Achilles heel of the whole operating system. But that isn’t a huge help to half of the world’s Windows users, who use earlier versions than XP. Worse, hackers are moving towards “zero-day” attacks on Windows, whereby if a flaw is announced, a virus or worm pops up within 24 hours to exploit it � faster than many people run their updates. This trend will, if anything, get worse.

The coming year will see lots of promise on the home front � it could even be the year when we finally work out if we really do want our TV to talk to our PC.

So here are my forecasts:

Internet Explorer’s market share will fall below 75 per cent (from 95 per cent last May) and keep falling as users of older systems and companies shift to safer and more flexible alternatives such as Firefox and Opera. When that happens, Microsoft will hint at a crash program to update IE; nothing will come of it.
Status: Wrong; and right. Though IE's share fell to somewhere in the 80s, it didn't go further down. Firefox got about 7 per cent (though the number varies widely; and I could take comfort from this guy, who confidently predicted that right now "IE will no longer be people's internet browser of choice". Which is sort of true; people who choose a browser don't choose IE). However Microsoft did start updating IE: details about version 7 began leaking in March.
As we store more data locally, “desktop search” will become essential. Tools from Google. Microsoft, Yahoo! and Ask Jeeves will compete for a place on your computer. Google’s will dominate.
Status: Right. See data like this:
According to Comscore, one of my portfolio companies, Google's US market share is 38% and Yahoo! is 35%. So between the two, they own 73% of the US market. Worldwide, Google is stronger, with 47% to Yahoo!'s 27%, but even worldwide, the two of them capture almost 75% of the market.
Microsoft will lose a big, and public, contract over concerns about the security of its software.
Status: Wrong. Nope. Didn't happen.
More court cases in the US will convict and lock up spammers � but the volume will not fall, because China will continue to sit on the fence over its legality.
Status: Right, certainly about the spam convictions (see this lot). The China stuff? Well, the spam volume is hard to measure (tell me about it). And China is still a major source.
Enterprising Linux resellers will start selling USB memory sticks with USB-bootable Linux distributions (such as Knoppix) stored on them for the same price as “blank” memory sticks. They’ll make profits while spreading Linux to Windows users.
Status: Wrong. And people wonder why Linux on the desktop is still hard to find? Still, plenty of people are now selling stuff on USB sticks. (Of course, it's hard to boot a PC from a USB stick. Durr - not the greatest prediction, was it?)

Spyware and adware will continue to flourish. Your PC will become the battleground between rival antivirus and anti-spyware companies. There will be casualties, some of it being your data if you’re using any flavour of Windows.
Status: Right. "Spyware Problems Cost Enterprises Hundreds of Thousands of Dollars Each Month" says the press release from August 2005. I think that sounds about right.
“Phishing” will be used for industrial espionage rather than trivial stuff like getting bank details.
Status: Right. Well, saved by the bell if nothing else: this Guardian article about a phishing attack on the House of Commons relates to events in 2005.
“Malware” which pretends to be Google’s desktop search will begin circulating. This will search your hard disk and send the results off to criminals while appearing innocently to do what you want. (Moral: type in the URL of the site you want to download from � don’t click on a link in an email or third-party web page).
Status: Wrong. Happily, this didn't happen.
The number of Britons with broadband whose PCs are silently compromised by hackers will rocket too, because people don’t realise how difficult it is to secure a computer against outside attack.
Status: Right. Things got so bad that a government-police-private company initiative, Project Endurance, was set up to encourage people to secure their PC. You've heard of it, right? Right?
Financial losses from phishing of all kinds (including emails, fake “search” tools and spyware) will grow, perplexing the banks, which will blame their customers and be much less forgiving of people who have lost money in this way.
Status: Right. It was fish in a barrel, of course. Here's APACS on it:
Banking online fraud losses have also increased. These totalled �14.5 million in the six months to the end of June 2005 compared with �4 million in the same time period last year. Both online card fraud losses and online banking losses have grown hand-in-hand with the number of Internet users and huge volumes of online card transactions and banking transactions.
Hackers will switch their attention away from headline-grabbing email viruses to more subtle ways to infect PCs. Some will put “infected” pictures in public photo sites. Some will infect adverts served up to web surfers (as happened to The Register in November � see this story). Some will put corrupt data into databases to infect machines which read their output. Hackers now have a big financial motive � they get paid by spammers and underworld operatives. Thus, they will try all manner of attacks.
Status: Right. And wrong. Well, the infected pictures thing happened, but it's not clear that there were infected pictures in photo sites, or databases. Might have been. But certainly can't point to any proof.
Governments will warn that because they can’t tap “voice over internet” communications, terrorists might use it. They’ll seek to legislate to control it � to little effect.
Status: Right. They did.

UK broadband use will rocket as prices plummet. More than 95 per cent of the population can already get broadband on their phone line if they want it; but only 15 per cent have.
Status: Right. Not a hard one to predict. Ofcom said:
The number of new broadband connections per week has increased almost fifteen-fold in three years - from 5,500 per week in 2001 to 73,800 per week in 2004. This rapid acceleration in take-up has led to a (provisional) total of 8.1 million connections as of June 2005, more than double the number of connections at the end of 2003.
Broadband providers will offer deals including a voice-over-internet package. (BT already does this.) Others will follow, probably bundling the Skype program, which can call internet, land and mobile numbers too.
Status: Right. BT, for example.
The rise of broadband will lead to “internet devices” � simple things which can do a limited range of things (such as internet radio, or a bar-code reader that can “Googlefridge” a recipe from whatever objects you scan past it).
Status: Right - sort of. Does Delicious Library count?
Broadband will also lead to more peer-to-peer sharing of music and films.
Status: Right. Uh-huh, BitTorrent, and all you guys.

Weekly legal downloads will outstrip CD singles sales during 2005. But record labels will insist on keeping CD singles in the radio charts because downloaders buy such a broad range of content that they dilute the marketing push behind new artists � which the labels need to survive.
Status: Right. Already true (9 January). The BPI announced that downloads outnumbered CD single sales in the last week of December 2004. They're hardly going to fall (though single sales have picked up).
At least one site will start selling music videos for download to PCs for between £5 and £10 for a 50MB download. The demand exists. (You thought people bought Eric Prydz’s CD single because they liked the song, not the near-porn video it included? Dream on.) Likely contenders are Apple and, more likely, Microsoft through its MSN franchise.
Status: Right. Not only Apple (in October), but before it - in April, no less - Wippit. (I've no idea where the "50MB" figure came from. Brainfart, most likely.) And as for £5 - hey, would 99p (Wippit) and £1.99 do?
Those video sales will drive sales of handheld “video players”, finally providing a market for Microsoft’s “Portable Media Centre” product.
Status: Right, but also wrong. Yes, it drove sales - of the Apple iPod Video. But few PMCs were sold.
“Comment spam” on blogs will threaten to strangle discussion there as it has on the Usenet newsgroups.
Status: Wrong, though blog spam is still a big problem. Spammers changed their attention to splogs, using full RSS feeds.
DVD recorders will be more widely bought than PVRs, which will acquire an “upmarket” label � though their makers would prefer them just to be popular
Status: Uncertain. I have no idea how many DVD Recorders are sold, and have never met anyone willing to tell me, despite asking a lot of people. My guess is that they sell better than PVRs, judging by the number of blank DVD disks you see in all kinds of shops. But..?
Hybrid DVD recorders and PVRs will begin to sell in volume as their price falls, because they offer the best combination of convenience (PVRs) and permanence (DVD recording).
Status: Uncertain. See above.
“Media Center” PCs won’t gain much market share because a DVD-R/PVR is much cheaper and doesn’t require antivirus software.
Status: Uncertain. Curse your laxity, DVD-Recorder market statistic gatherers!
More “Trojan horse” programs and security weaknesses will come to light for Apple’s OSX operating system. However, there will won’t be a bona fide virus or worm for it by the end of 2005.
Status: Right. There were loads of security things - not sure about the Trojan horses - but still no viruses.
Apple Computer will get more revenues from sales of its iPod music player than its computers, raising questions about which it should focus on. Sales of its computers, however, will continue to rise.
Status: Ummm...Uncertain. Apple had an amazing Christmas 2005 quarter, selling a huge number of iPods (especially compared to "computers"):
Apple shipped 1,254,000 Macintosh� computers and 14,043,000 iPods during the quarter, representing 20 percent growth in Macs and 207 percent growth in iPods over the year-ago quarter.
But there's nothing on revenue breakdown. My guess is that it's coming very, very close though.
Apple still won’t release a tablet computer, or an Apple-branded phone.
Status: Right. When will people realise that for all its sales success, this is a company which doesn't spread its design effort widely because it's very thinly staffed?
Apple will release an iPod with wireless capabilities.
Status: Wrong. When will I listen to the point I just made? This felt a bit of an obvious one at the start ofthe year, but was shot down in flames in September; which probably means it's coming in about March. (At the same event Steve Jobs was pretty unconvinced about downloading video to handhelds.. then six weeks later..)
After IBM, at least one more of the top ten computer companies will exit the PC manufacturing business. (My money’s on one of Toshiba, Gateway, and HP.)
Status: Wrong, though right if you count Granville Technology (it was the UK's largest PC maker..)..
Finally, really good text-to-speech and speech-to-text programs will emerge, using the enormous powers of the fastest chips. You’ll get email read out on your phone, voicemail turned into emails, and be able to interact via Bluetooth headsets with your machine from a distance.
Status: Wrong. Damn it. Could someone sort this out, please?
3G phones will start to sell big, but video calls won’t until screens get a lot bigger. “Viral” film clips for phones will be a huge hit, but sent by Bluetooth rather than expensive video messaging � to the dismay of the operators.
Status: Right about sales of 3G phones. Right about viral clips sent by Bluetooth. What else did you think happy slapping was, exactly?

And how can you best survive the coming year?

Go wireless. When you get broadband (or if you already have), get a wireless router that sits between you and the link. This has two benefits: it’s harder to hack; and it’s easier to move the computer around. But ENSURE you password-protect your network and, if possible, the router.
Status: you did this, right?
If you’re using either Internet Explorer or Outlook Express, switch. Free alternatives such as Firefox and Thunderbird do more, with greater security. (I’m not saying this just to make my predictions come true.)
Status: and this?
Be less trusting online. Turn off the display of images in email and adverts in web pages (modern browsers like Firefox can). Turn off Windows Scripting and ActiveX (Google for how). Be obsessive about checking for software updates.
Status: ..and this..
Experiment with "voice over internet” (VoIP). The more people use it, the more useful it is.
Status: It seems like everyone tried VoIP in 2005. Once.
If you’re buying a new computer, factor in the extra ongoing cost of antivirus and anti-spyware required for a Windows machine, and see whether it still works out cheaper than an Apple computer, or switching to Linux. (The latter costs time rather than money.)
Status: People stuck with Windows.
Try reading some of the licence agreements you normally click on so impatiently. Do you really understand them? Are you sure you agree to their clauses? Plenty of spyware gets onto peoples’ machines when they click on such “agreements”.
Status: People stuck with clicking the "Agree" button.
Wait, wait, wait before buying a 3G phone. They’ll get desperate soon to get you to buy them and the prices will drop.

I make that 21 "right", 10 "wrong" and 4 "uncertain". (Some are both wrong and right, of course. And some of the wrongs are very wrong, ameliorated only a little by little rights.) Even so, that's mostly better than a coin toss. Though I suppose I should now embark on a set of predictions for 2006..

Got a comment? Go right ahead here. Comments about an earlier version of this article are here on my blog.