As this is our last issue for two weeks we thought now would be a good time for a summary of what was big, what was disappointing what was significant in 2005.
And we would like to confess to a little disappointment. Some of the big technology stories we reported in 2004 have not yet materialised into cold products.
WiMAX promises to change the world of mobile telephony, bringing VoIP to mobile phones and representing a massive threat to the business models of the giant wireless operators. And yet, to slightly misquote HG Wells from the War of the Worlds, “analysts are carrying on as if the next few years will be just like any other period.”
Then there’s the Cell chip. Developed by IBM, Toshiba and Sony this chip is supposed to represent an acceleration of Moore’s Law, which says processors double in speed every 18 months or so. But the first mass consumer product to contain this wonder chip, the Sony PlayStation 3, will not be launched until next year.
Finally, there appears to have been little to report on the next standard of DVD. The war between Sony and allies Versus Toshiba and chums, would appear to be no closer to a solution.
The sexy techs had another year of raunchy good results: Google and Yahoo with their key word sponsorship, Apple with its little music player.
But technology saw its most interesting developments in convergence.
Perhaps the eBay purchase of Skype was the most important corporate purchase of the year. Internet TV, video iPods, and now, TV for Mobile phones made the headlines.
BSkyB bought Easynet, NTL wants to buy Virgin Mobile, Cable and Wireless has its ultra fast broadband, and BT is quietly beavering away.
2006 could be a big year for the former state monopoly with its mobile dual phone, which combines traditional mobile technology with WiMAX, and its move into TV.
Maybe some of the world’s richest companies could learn a lesson or two from BT. It has faced up to a massive challenge and embraced it. Unfortunately, if the WTO talks are anything to go by, the same cannot be said of most of the EU countries, and perhaps US. Rather than seeing the rise of the Chinese dragon as an opportunity, many want to hide behind subsidies and tariffs. While in the US, China and its policy of letting the yuan shadow the dollar seems to be getting the blame for just about all of Uncle Samâ€™s ills. Although no one has yet suggested China was to blame for the hurricanes.
In fairness, the UK would appear to be just about the most outward looking member of the G8. And certainly cannot be blamed for the shameful Common Agriculture Policy, as it vainly tries to use the carrot of reducing its rebate to see reforms to that anachronism of the post war. Not that the US, with its cotton subsidies, and food aid – criticised because the aid provides a boost to US farmers at the expense of farmers in the developing world, is any better.
Talking of China, the consumers from behind the Great Wall were blamed for the high price of oil, which, it is argued, poses the single biggest threat to inflation. But they are wrong to say this of course. The Chinese economy is booming and consuming lots of oil because the world is buying its cheap goods. Cheap Chinese goods are perhaps the single biggest reason why inflation is so modest and interest rates consequently so low.
The UK property market saw the much heralded soft landing, and many argue that this proves there will never be a crash. We have warned that average house prices in proportion to average wage will remain well above historical average for many years. And for as long as this is the case the property market is vulnerable. So many factors, including China moving up the value chain, leading to more expensive products; Sterling crashing, thanks to the massive UK balance of payments deficit at a time when we are running out of oil, a crash in the dollar; all could change the economic environment, and house prices will then go south faster than a swallow in winter.
The UK sneezed this year. Whether it was down to higher interest rates, higher taxes, or simply because the UK consumer has borrowed too much depends on your point of view. It appears next year will see falls in the UK rate of interest, which in turn will lead to an improvement in the outlook. But whether this proves temporary remains to be seen. The EU seems mired in economic backward thinking, and trade with our cousins across the channel is unlikely to come to our aid. And with Gordon’s golden rule, either broken or close to it, government spending is no longer there as an option.
When Gordon came to his throne at number 10 (no typo- he does live at number 10, because the Blair’s with their family needed the extra space number 11 afforded) he made the Bank of England independent. Now he plans to make the Office of National Statistics independent, but others want to see an independent body for quantifying the golden rule.
The Golden rule is of course Gordon’s own baby. It would be a strange quirk of fate indeed, if this proved to be his undoing.
Finally, no doubt with Band Aid getting it usual share of radio play this festive season, just r/emember, “there wonâ€™t be snow in Africa this Christmas.” Bob Geldof, Gordon Brown, Bono and Tony Blair, fought a good fight. But the concessions won in the summer must be backed up. Allowing developing co/untries access to markets un-tampered by government regulation is the best thing we can do to help relieve global poverty. And frankly, the signs from the WTO and EU are not good.
© Investment & Business News 2013