Julie Rosien

Bill Gates will be the country's first chief technology officer.  Google's stock will tumble to $275 per share. And Microsoft will buy Adobe.

That was some of the crystal-ball gazing that took place tonight at the WTIA's annual predictions dinner. Matt McIlwain of Madrona Venture Group, Mark Anderson of Strategic News Service, Ben Elowitz of Wetpaint and Kelly Smith of Curious Office Partners shared their insights on where they think the tech industry is headed in 2009. I moderated the panel, soliciting some great questions via text message from audience members.

I even had a chance to rib Smith and McIlwain on their Google stock predictions from the previous year (Smith predicted $901 and McIlwain $725, far above the $311 close Tuesday). McIlwain took it in good stride, noting that "predictions are a dangerous thing."

Given that caveat, here are some of the panelists' prognostications for 2009:

On Obama's choice for CTO:

Anderson: Eric Schmidt, Meg Whitman.

Elowitz: "I threw my name in the hat and so far I haven't heard back yet."

Smith: Bill Gates, Jonathan Schwartz. "I think what both of these guys share is they understand how to think about technology on a massive scale."

McIlwain: John Stanton, Jonathan Schwartz. "Schwartz would be an inspired choice because Sun (Microsystems) might be one of the next ones asking for a government bailout." 

On the most important tech issues facing the country in 2009:

Anderson: Energy, Broadband. "We have no policy whatsoever for bandwidth.... It is the enabling characteristic for economic development."

Elowitz: Economy. "The No. 1 thing on the agenda for every single tech company is the broader economy."

McIlwain: Education/Talent. "If we can't ... educate people in our country to have absolutely the best opportunities... to be contributors to the innovation economy, it is going to be very hard for us to continue to be the market leader in technology-driven innovation."

Smith: Education, taxes, batteries. "One thing McCain said that I agreed with ... He wanted to have an X-prize of sorts for battery development. It is absolutely brilliant. It is absolutely necessary.... If you can get batteries to last longer on half the power consumption at half the price, that is kind of a big deal."

On Google's stock price at end of 2009:

McIlwain: $450 per share.

Smith: $400 per share. "In general, people are predicting a relatively flat-to-down year in online advertising."

Elowitz:  $500 per share. "I like to say that flat is the new up. Google is absolutely, without question, dominating performance advertising. They are the one and only dominant force in that market. And performance advertising... is the critical segment in the next year and it will absolutely do the best."

Anderson: $275 per share. "I figure things are going south from here and people are not giving enough credit to the general going-south nature of our economy." 

Who will buy Yahoo?

McIlwain: "Nobody probably should." (Laughs) "I actually think the most logical buyer is Disney. And the rationale is that Yahoo for the last six to eight years has focused hard on being a content company and a manager and leverager of content assets."

Smith: Viacom, CBS or Microsoft. "Microsoft has been very adamant that think they have figured this out and they don't need Yahoo. I am not so sure. I think at $33 they didn't need Yahoo. At $10, it gets interesting. Remember, when stock prices start to fall, people's mentalities start to change."

Elowitz: Microsoft. "Price is a great negotiating tactic for Steve Ballmer right now, but at some point he is not stupid and it is a good-enough bargain to help them meet a strategic objective in a marketplace that they absolutely are dying to win."

What tech company is best positioned to thrive in this economic climate?

Anderson: Microsoft.  

Elowitz: Microsoft. "They have an ungodly amount of cash."

McIlwain: Amazon.com. "When you have fat and happy gross margins like Microsoft does, you don't have it within your DNA to run a cost-efficient business. And, in a downturn, you need to be able to do that."

Smith: Microsoft. "Microsoft can go bargain hunting for other companies that are now half price ... and buy monopolies at half price. For example, what is a monopoly in the tech sector? Adobe.... Microsoft could, basically, take out animation on the Internet, graphic design, Web page development without even blinking an eye."

What tech company will get taken out in 2009:

Anderson: "I am pretty clear that there will not be a Nortel when we next get together."

Elowitz: "I know Yahoo can't stick around as an independent company."

McIlwain: Sun Microsystems.

How many iPhone applications will be downloaded by the end of 2009?

Smith: "The app store does well. It is, frankly, the definitive example of doing e-commerce with mobile applications right now. It is going to double, at least. Maybe triple."

Will Sprint, led by Dan Hesse, remain a standalone company?

McIlwain: "You have seen the (Sprint TV) ads. Not too many CEOs put themselves on the ads and that probably says that there is probably a big self-confidence issue there. So, I would guess that they remain independent even though maybe they shouldn't."

Will Steve Ballmer remain CEO of Microsoft through 2009?

All panelists agreed that he would keep his job.

McIlwain: "In a down economy, when you are good at winning ground wars and have lots of cash, comparatively speaking it is going to be a good year for Microsoft. Secondly, there is no immediately obvious ... successor."

On big tech trends for 2009:

Anderson: The integration of biology and chips. "Software and hardware integrating with animals at first, and then with human beings.... It will fit our growing knowledge of how the brain actually works and how nerves actually work."

Smith: Cloud computing and virtualization. "It is not an exciting answer I understand."

McIlwain: Tax shelters. (Laughs)

Elowitz: Measuring online advertising. "2009 is not going to be a sexy year. It is not going to be a year of hype and buzz. It is going to be a year of basics. And the basics are around ROI, that is what is on everyone's mind."

On who is best positioned to win the battle in the cloud computing area:

Elowitz: "It is super early stages, but so far the one I am most impressed with is Amazon."

Anderson: "I think there is going to be tension between the corporate clouds and these remote clouds for rent."

McIlwain: "What Google is doing, what Amazon is doing, what Microsoft is doing, each and everyone of those is very different from each other. All of them are proprietary frameworks. All of them want you to build, host, run your software on their operating system in the cloud. To the extent you are willing to do that as a company, as a developer, as an enterprise they are going to be really happy because they are going to win the battle of the cloud (operating systems.)...I am not even sure we know how to frame this question yet, but going back to the Amazon model, it is going to be important to be a low-cost, on-per-unit-basis delivery provider."

Smith: "At the end of the day, Microsoft wants you to launch their applications from their cloud. They don't want you to launch any word-processing application from their cloud. That is different from what Amazon wants, so their interests and their desires are totally different."

What company would you buy in 2009 if you could take it in any direction?

Elowitz: Blue Nile. "I would love to take it private and to make that an investment for the future. I think there are number of opportunities like that where you could eliminate those public company costs, invest for the long term, bear out the economic cycle and come out in a much, much stronger position." (Elowitz co-founder Blue Nile)

Smith: RealNetworks. "It is a great brand, trading at the value of money they have in the bank account. (That) just tells me that some new exciting innovations, some sort of new direction and the market might respond favorably to that. I don't know exactly what I would do there, but you have a company trading publicly at the amount of cash it has in the bank."   (Smith used to work at RealNetworks)

McIlwain: EMC. "I would maybe divest some of the software acquisitions and focus hard on the cloud if I took over EMC."

[Flickr photo via JuliaRosien]