Finding that winning touch

The Apple iPhone helped bring about a revolution in mobile internet, providing an easy-to-use interface and a large, readable screen.

Every year is a good one for technology, which by definition keeps on getting better as time goes on. The safest prediction you can make is that a great advance will be made in the coming year in technology and how we use it. You would have been as right in 1898 as you will be in 2008. With that said, predicting which actual technology or theme will dominate the industry is a more difficult proposition. Looking back on this year, there are dozens of stories that could be considered the most important. But we think three stand out, for their impact both on how we live and how the industry works.

Most important is mobile internet. The internet has been available on mobile phones for almost a decade, but it was not until Apple released the iPhone that people began to take it seriously. Along with Research in Motion (RIM) and its hugely popular BlackBerry e-mail phone, Apple has brought mobile internet to the mainstream in a way industry leaders such as Nokia and Motorola failed to. Now that Apple has exposed the form factor - large touch-screen, full keyboard - that we were all waiting for, every mobile maker has a look-alike device that is either on the market or soon will be. The trend is clear, and there will be no turning back: the internet will be part of our mobile phones from here onward.

Handset makers played their part in making this happen, but equal credit should go to the mobile network operators. Looking to diversify their revenue from simple voice calls and text messages, most have made massive investments in rolling out internet-friendly 3G networks. The availability of high-speed connections changes mobile internet from a fun gimmick to a must-have for connected professionals.

Once it can be assumed that a large segment of the population - and the most technically savvy - has almost ubiquitous access to the internet, it changes, in many ways, the fundamental meaning of the web. We may still be a year or two away from that point, but 2008 was the year that getting there became inevitable. On the industry level, one deal stood out. In becoming the world's second-largest manufacturer of microprocessors, Abu Dhabi's Mubadala Development Company made the boldest, riskiest and potentially most transformational technology deal of the year.

The Advanced Technology Investment Company (ATIC), a Mubadala subsidiary, will become the majority owner of The Foundry Company, a new business that will operate the entire manufacturing system of California's AMD, the world's second-biggest chip maker. More importantly for the UAE, it could mean microprocessor fabrication plants (fabs) being built here, which would transform the local technology sector. The kinds of jobs available for skilled technology professionals, the kinds of new services in demand, the profile of national research and development efforts - all would change dramatically, and quickly, if a fab made its way to Abu Dhabi.

Globally, the deal could change the economics of the microprocessor industry, freeing up chip designers to invest more time on their core business without the massive financial burden of operating the world's most complicated and expensive manufacturing facilities. An immediate challenge will be the future of AMD itself. The company's share price, and the value of Mubadala's investment in it, has crashed even harder than most other companies in the sector, and it is now valued at less than 1 per cent of the dizzying highs reached during the dotcom bubble.

Arabic will become increasingly prevalent on the internet thanks to two big decisions that were made this year. First, the agreement to implement internationalised domain names (IDNs) means that entire web addresses, and e-mail addresses, will be able to be written in Arabic. Second, the decision to permanently open applications for a potentially unlimited number of the global top-level domains (GTLDs) means that web addresses currently ending in .com or .ae will soon be able to end in almost anything, in any language.

A number of Arab-world internet businesses are hoping to build new hubs around Arabic-language web domains. Letting hundreds of millions of internet users finally access the web in their own tongues will lead to a boom in new content, made by and for users in the region. Internet use grew by more than 1,000 per cent in the Middle East in the past decade, mainly because it was starting from almost zero. Because of what happened this year, the next generation of 100 million Arab users will find a web that is written in their language.

What will shape the technology sector, and the way it affects our lives next year? Looking forward is obviously harder than looking back. But here are three predictions. First, as property agents love to say, location, location, location. Internet and GPS navigation are both useful tools to have on a mobile. Combine the two and things get interesting. Combine them with well-made applications that capitalise on both and you have a whole new ball game.

Imagine walking into a restaurant and being alerted to what your friends have said about it. Or searching for coffee shops and getting results based on how close the store is to your current location. Or only seeing advertisements for products that are being sold in your neighbourhood. This is just a taste of what is already possible with the applications being written for GPS and internet-enabled mobiles such as the iPhone 3G and the Google T-Mobile G1.

Next year, the flagship device of every major handset maker will include both GPS and advanced internet applications. Social networking services, search engines, websites and advertisers will all look to offer a more compelling service based on integrating the two systems. Second, on a business level, the trend will be entrepreneurs and start-ups. Economic downturns present the best opportunity for entrepreneurs to gain a foothold in the market. Big companies get cold feet and cut investment in new products. Brilliant people get laid off and enter the job market. The cost of goods and services drops, particularly the kind of services targeted at businesses.

All of these factors point to a good year for entrepreneurs next year. On top of the big-picture economics, there are more practical reasons. The popularity of smart phones such as the iPhone and BlackBerry has created a whole new market for mobile applications, while Apple's iTunes Application Store is a new platform to distribute and sell software at almost no cost. As other handset makers replicate Apple's store, the opportunities will multiply.

The steady decline of traditional media also means more advertising dollars will make their way online, supporting the business models of small, nimble internet start-ups. And a general climate of fear and uncertainty benefits small, ambitious businesses with nothing to lose. Their sales might not boom until 2011, but the next wave of start-up success stories will emerge next year. Thirdly, while entrepreneurs innovate, the giants will consolidate. Instead of taking risky bets on entering new markets, the big technology and telecommunications companies will spend next year acquiring or merging with small and medium players.

In IT, this will mean big, deep-pocketed companies such as Microsoft and Google choosing to swallow competitors such as Yahoo and Facebook rather than invest in new products to beat them. Tightening debt markets mean it will become difficult for cash-burning companies to stay independent In telecoms, the trend will be to acquire successful operators, rather than build new networks from scratch. In the Middle East, the number one target will be Orascom Telecom, the emerging markets specialist from Cairo. The company is well managed and exposed to high-growth economies, but will struggle to service a growing debt burden next year. Look for a cash-rich, government-backed operator like Saudi Telecom to snap it up. [e-mail]