Year 2009 *Painful for some* , **Excruciating for others**

Year 2009 is few minutes away. I can not help but to make some predictions for the high tech and IT industry. The year will be very painful for some companies and less painful for others. Those who do not have cash will have a tough time competing with new products.

Being specific in the war for processor supremacay, luck is on Intel's side in 2009 as the company has >$10 billion in cash and can claim the performance crown for the year. It is still at least one node a head of AMD in process technology and has a much bigger capacity than the competition. It has put great products in Nehalem and Atom which have no serious competition in the segments they compete at.

Being strapped for cash and undefined restructuring, AMD will continue conceding supremacy on the processor performance side but may claim performance / watt or performance / dollar here and there but nothing serious. This is not because AMD does not have the competency to design and produce a better product, but it is becuase it does not have enough cash to spend on R&D and process technology to catch up with Intel during this recession.

So, if I am in the shoes of AMD decision makers (and thank God I am not), I would really focus on survival rather than competing head on with the bull at least for the next 2 years. AMD's competitive advantage is not in their product at this time, it is in the market! In other words, major OEMs and the Japanese, will continue offering products based on AMD just to keep it afloat and to prevent a scenario of one provider of CPUs. So AMD should focus on getting a "good enough" product to the market during this year to pay for the bills (Immediate strategy) and to rebuild that credibility Barcelona destroyed.

Long term strategy of AMD should be on focusing on the ATI artery because it is a good and a healthy one. ATI should not exist to exclusively serve AMD CPU division but should be semi-independant arm which has its own products as well as a coordinated products with the CPU division. AMD also needs to minimize or cut the number of designs and products; i.e., make few good ones rather than many bad ones. AMD strategy of competing with Intel on every market segment is a bad one because it failed. It should stop at once. Remember how Intel Viiv and AMD Live tanked. The difference is Intel can afford to lose few million dollars but AMD can not.

nVidia is playing a dangerous game and needs to refocus in 2009. This 2008 soldering defect needs to not happen again. ATI recent products seem to have given them a low blow. It seems nVidia is gettig itself distracted from competing in what it does best and is focusing on an unwise PR fight with Intel. The nVidia CEO needs to chill because he can not hurt the feeling of Intel no matter how much he tries.

HP will not feel as much pain as Dell and others because they are more focused and their product does not break as easily. HP seems to transform more of itself to the services side and that will be kinf of immune to the pinch of the recession. But HP employees in the USA will feel the pain. Hurd's knife seems to always cut from this side. IBM is less vulnerable to the recession as it got out of the PC business a while ago.

The "used to be" gaming companies such as Voodoo and Alienware will continue to be diluted in 2009 simply because they are being decimated by big corporations and people do not have enough money to spend on new rigs. You can sense the decimation by their recent products and the talk from their "used to be" owners. Read Rahul's blog to find out he is not talking like an HP old executives; he talks about cost effectiveness and configurations that "make sense"; not what the customer wants!

Other companies: Apple will find less customers willing to pay much for iPhones and iPods. Microsoft will continue to make money and will not be hurt as bad since it does not make much hardware. Micron and memory companies will continue to suffer as memory has to get cheaper.

On the none high tech or IT industry, things will be mixed up. Expect Starbucks to keep the nose dive as $4 coffee cup will find less and less customers. Walmart, Target, Ross, Marshal will thrive as more people will turn a way from department stores and brand names such as Abrecrombie, Old Navy, Macys, and so on.

American car companies will find it very tough to survive in 2009. Having non competitive products will drag their offerings to the ground and they will have no choice but to lose money on almost every car they sell to empty 2008 inventory.

Restaurants profitability will go down for sure and may be Americans will get healthier ;).

Couple of places will be profitable for sure: The health and military industries. If you are a stock investor, health and military stocks are your best bet.