In what should become an annual tradition, here are some predictions for 2009. I should evaluate them a year from now alongside my 2010 predictions.

There are several axes used to measure the value of a prediction (and thus whether it’s even worth writing about), the most important of which are the evaluation criteria (subjective judgements like “the world is friendlier in 2009” are low-value) and degree of difficulty (“iPods will outsell Zunes” is not an impressive prediction). Ideally degree of difficulty would be measured by market forces, but I’ll just include the degree of difficulty as a number between 0 and 1 myself. The scale is arbitrary and probably nonlinear. Difficulties below 0.3 are seldom worth mentioning, and difficulties above 0.8 are really just for fun.

Sport

1: Usain Bolt sets 100m record at 9.62 (difficulty 0.7)

The best science I’ve found suggests a “perfect” race from Bolt could come in as low as 9.60, and the over-under I picked right after the Olympic finals was 9.63, but that was considering the chance that Bolt wouldn’t even be able to compete during the 2009 season. No major drug investigations and no reported injuries, so I’ll move it down to 9.62, with a difficulty of 0.7 for picking the exact time. At a difficulty of 0.5 I’ll say that he’ll manage between 9.60 and 9.64.

Politics

2: Russia tones it down (difficulty 0.4)

There were predictions during the campaign that Russia would “test” Obama early on by instigating a crisis on par with the Georgia incident. I’m sure the anti-American bluster and rhetoric will continue, but I think a weak economy and low oil prices have seriously undermined the Russian appetite for such antisocial behavior. I don’t think Putin will sacrifice money and international goodwill for more regional influence; he’s low on both.

It’s hard to come up with objective criteria for this; evaluation will be somewhat subjective. Let’s say that I don’t expect Russian military action to appear in many New York Times front-page headlines.

3: Blagojevich cleared (difficulty 0.7)

This is a pretty outlandish prediction given the current sentiment against Blagojevich, but it seems to me that he just got caught on tape being particularly crass and overt about a process in which all major politicians engage. I know very little about the law in this area, but the tape I’ve heard seems enough to ruin a political career but not enough to get a conviction.

Tech companies

4: Netflix starts to slip (difficulty 0.6)

I was trying to come up with a measure for the theme of “physical media gives way to electronic distribution” but had trouble coming up with objective measures. Netflix does already have an electronic delivery component, but DVD delivery is their bread and butter, so I guess they can serve as a proxy for best-of-breed physical media rental services. The prediction is that they post a loss through Q3 2009 (Q4 results won’t be out by time of evaluation). Note that I wouldn’t consider such a loss an effect of a weak economy: I’d expect that lower disposable incomes would increase the market for cheap stay-at-home entertainment.

It will still take a long time before most consumers have a direct pipeline from electronic delivery to their big-screen TV, but it’s pretty clear that Blu-Ray is already a legacy technology. I rent through iTunes and it’s orders of magnitude more convenient than Netflix ever was. The DRM issues with electronic distribution aren’t that big a deal for rentals, and how many films have you really watched enough times for buying to be more cost effective than renting? Physical media will be mainly for collectors in the future.

5: New iPhone model from Apple (difficulty 0.3)

A new product release every year seems a pretty safe bet, but there are some points for this as a prediction just because I don’t see any glaring flaw in the current hardware offering. With 3G, GPS, bluetooth, and a touch screen most iPhone improvements can come via software upgrades.

To me the amazing thing about the iPhone as a product is that Apple is selling full-fledged general-purpose computers with no mention whatsoever of technical specifications beyond secondary storage capacity: you’ve got to be incredibly geeky to have any idea about the processor speed (620MHz ARM hardware underclocked to about 400MHz to save power) and RAM (128 MB, 11 of which are dedicated to graphics) of an iPhone.

It’s about time to up these specs: on wifi (and probably 3G as well) most iPhone lag is due to processor-intensive work (like web page layout) or the need to reorganize memory (which often means quitting background applications), and of course improved battery life would make everyone happy. I’m curious how Apple will market new iPhones (will they attempt to break the market into “pro” and “consumer” segments?), but I fully expect to see models with faster processors and more RAM in the next 12 months.

6: Microsoft continues to fade away (difficulty 0.3)

Let’s take stock: Microsoft’s flagship is Windows, which is losing market share to Mac OS X, and their main revenue stream is from Office, a product whose relevance has been declining for a decade. Their major new ventures have been the XBox, currently in third place behind the casual-gamer Wii and serious-gamer PS3, the Zune, which certainly hasn’t caught on as realistic competitor to the iPod, and (I couldn’t have made this up) a big-ass table. Most of Microsoft’s industry influence is now exerted through their control of Internet Explorer, almost universally regarded as the worst browser in wide use and one that most everyone not working at Microsoft would rather did not exist. (Would any users really be upset if their Windows machine shipped with Firefox, Safari, or Chrome instead of IE?) People once hated and feared Microsoft; these days it’s tough not to feel sorry for them. I honestly wish they’d do better, if only because I think Apple does a much better job when they need to (Mac OS X; Safari; iPhone) than when there’s no legitimate competition (iPod; iTunes; Apple Mail).

The fact that every new PC needs some OS (and that Linux still isn’t a viable option for most users) and that .doc files are still a standard of sorts in the business world mean that Microsoft will print money for some time to come, but I see no long-term strategy from Microsoft. Expect further stock declines relative to Google and Apple. (Note the evaluation criterion is relative to those two companies, which should adjust for to strength/weakness of the economy as a whole. This is also a prediction I can put real money behind by going short on MSFT and going long on APPL and GOOG.)

7: Yahoo broken up and sold off (difficulty 0.4)

The Yahoo board may not yet be desperate enough to take the lowball offers that they’ll get in this economy, but a breakup of Yahoo seems to be the plan. I’ll take partial credit if the company is sold in its entirety, but I consider this much less likely.

Economy

8: GM and Chrysler file for bankruptcy (difficulty 0.7)

The “bailout” was/is just about buying time. I worry that is will be politically difficult for Obama to let the United Auto Workers die, but I think he has the integrity to do it.

Chrysler and GM epitomize everything wrong with big business. Modern technology means that companies just don’t need to be this big any more, and we’d be much better off with a dozen Teslas (most of which do only design in-house, outsourcing manufacturing to independent factories bought from the corpses of the big three), each so scared of falling behind that they’re afraid not to innovate. It’s innovative American startups that truly outcompete companies from other countries; American big business only ever has an advantage against China/India/Japan when it can exploit the first-mover advantage from its startup phase. Chrysler and GM just aren’t as good as their Japanese and German incarnations.

If only one of the big three files for bankruptcy then I’ll call that success at a difficulty of 0.6.

9: Stock markets tread water (difficulty 1.0)

Market predictions are a crapshoot every year, but this year I’ve seen confident estimates from experts that differ in absolute terms by well over 100%. Luckily, I’m no expert.

I can’t see investor confidence coming back to support any big gains, but then I’m not sure how much worse things can get. Much pondering and my conclusion is this: in twelve months’ time, the DJIA, Nasdaq, and S&P will be at roughly their current levels, with cash-rich companies slightly higher. I’ll set my numbers at 8600, 1700, and 880, respectively. I’m claiming this as a hit at difficulty 1.0 if I’m within 1%, 0.7 if I’m within 10%, 0.5 if I’m within 20%, etc. (Difficulty is given by e^(0.03963(1 - percenterror)).)

Personal

10: My own research output (difficulty 0.4)

My plan has been to submit my doctoral thesis in 2009. The difficulty for doing so should probably be set far higher than 0.4 based on how much work I have left, but I’ll say that I’ll get it done before 2010.

I’ll also predict that I get three “major” papers of original research (not just multiple variants on the same theme) published in 2009, which I think is considered a reasonable output for a professional researcher. That would make 2009 the first year I’ve achieved that standard.