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In the last year, economic woes and a sombre outlook translated into slagging profits and layoffs across technology and media industries.

But what does 2009 hold for these sectors? How will tech companies be affected by the downturn? As organizations retrench, what kind of innovation can we expect to see? What are the prevailing trends in telecommunications? Deloitte Canada Research in in the business of answering these questions. In their just-released 2009 Canadian Technology, Media & Telecommunications Predictions , the company outlines a dozen predictions, from the rise of the netbook to a decimated media landscape and digital communication in the age of information overload.

Duncan Stewart - Director of Deloitte Canada Research in the areas of Technology, Media & Telecommunications (TMT), Life Sciences and GreenTech - joined us to discuss what the future holds for technology and media in Canada. Please feel free to leave a comment and continue the discussion.

Mr. Stewart is a member of Deloitte's national TMT executive team and is a co-author of Deloitte Research's annual Predictions report on trends in Technology, Media and Telecommunications.

He has almost two decades of experience in the industry. As an analyst and portfolio manager, Mr. Stewart has written research on names such as Nortel and Celestica, and been a venture capital investor in Research in Motion, among others.

Mr. Stewart is a Chartered Financial Analyst and holds a B.A. in Political Science from the University of British Columbia.

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Matt Frehner, Globeandmail.com: Thank you for joining us today Mr. Stewart. Let's get right to the questions.

SA from Toronto, Canada writes: if I'm in the market for a new computer, what do you recommend: laptop or one of these new netbooks?

Duncan Stewart: It really depends on your needs. If you are playing high-end video games, working with big spreadsheets or doing anything else that requires cutting edge processing, then you really need to pay the extra money for the "latest and greatest" notebook. If you are an Apple fan, then you have to go notebook since they don't make a netbook version…yet!

If, on the other hand, you are buying it for your kids (or your parents) and all they need to do is surf the web and check their emails, a netbook is the perfect device. Even for a "power" user a netbook is a great second portable machine. They are so light (and cheap!) that they make flying a breeze. And unlike some bigger laptops, you can open them fully even when the "inconsiderate-jerk-in-the-seat-in-front-of-you" reclines his or her seat 5 minutes into the flight!

They are particularly useful if you want a home machine (or extra one) and have a wireless network set up. Bring it to the sofa and surf while watching Lost, or bring it up to bed in case you want to do some online reading before turning in for the night. (Warning — that last idea might turn out badly if you are married — netbooks may be small and light but I am sure they would still be painful if your spouse clobbered you with one!)

Globeandmail.com: With the iPhone, BlackBerry Storm and countless other smart phones coming to market and offering so much wireless multimedia, will the networks start getting bogged down with too much data this year, or will we really see a jump in speeds with 3G technology?

Duncan Stewart: The networks are already starting to slow down, but not always where you would expect. Yes, when 3 million people tried to email a picture of the new president on Tuesday that caused some problems.

But many of the bottlenecks are occurring even when things aren't quite that historical. More and more mobile phone/smart phone users are part of the problem, but it is also people with laptops and wireless modems. The cellular networks can (almost always) handle the number of users accessing the system. They can also (some of the time) handle users downloading megabytes of data. Where they have problems — because they weren't built for it — is in uploading data from users and sending it upstream through their networks. That "backhaul" congestion needs to be solved by hardware and software.

Which is where Canada comes in. We don't have the same sort of congestion problems on our cell networks that they do in the U.S. or in Europe. (Yay Rogers, Telus and Bell!) But there are a bunch of Canadian companies like Bridgewater, Sandvine, Redknee, Dragonwave, Belair (and others) that are helping the carriers worldwide solve these challenges.

LOU Padula from montreal Canada writes: Prior to the teck blowout in 2000, voice-recognition technology was all the rage. Today it seems to have found a very small niche in the automotive accessories command recognition area. What's happening in areas such as dictation, smartphones, web navigation, keyboard-less devices? It seems to me that this technology is needed now more than ever with the proliferation of RIM and Apple smartphones, and miniature laptops.

Duncan Stewart: A lot of analysts/prognosticators have looked pretty silly about voice recognition being the "next big thing." One joke about it is that "it is the technology of the future…and always will be!" But there were optimists in 1994 who thought it was just around the corner. Is 2009 going to be the breakout year?

At Deloitte, we don't think so. We would never argue that it isn't a potentially huge market, currently badly served and is (as you say) needed now more than ever.

The problem is that the technology just isn't there yet. Human speech, especially in a multicultural world with many speakers having accents as they speak second languages, is a surprisingly difficult problem for computers.

I think this problem will be solved one day…but probably not until 2011 at the earliest. But (speaking as a frustrated user) I hope I am wrong!

Bob Katayama from Toronto Canada writes: My question is this. Seems like whenever a great technology is developed in Canada, it eventually winds up in foreign ownership or moves to the United States. Like ATI, the makers of PC video cards for example, used to be a great Canadian company. Also I hear 30-plus per cent of employees at Microsoft in Seattle are Canadians. Research in Motion is the only big company that I am aware of that is still Canadian. Also there is a small company in Quebec that manufacturers camera lenses for the NASA Mars rover program but we only hear about this company from sources in the United States and not from Canadian sources. Are there any incentives or investment fund strategies that currently help to ensure that technologies developed and incubated in Canada stay in Canada?

Duncan Stewart: There are some things that Canada already does well to encourage the 'next' ATI/Cognos/etc. We have a program of R&D tax credits that are among the best in the world. We also have a great, livable, multicultural, safe country with excellent universities. But we could do more…

1) We need more incentive for Venture Capitalists and angel investors both inside Canada and from outside our borders. Better tax breaks, easier legal issues are a start — but the big thing is restarting retail venture capital funds. The old Labour-sponsored funds had their problems — but the answer should have been to fix the problems rather than cancelling the program and the tax breaks outright. That early stage funding is crucial — it is like watering your seedlings as soon as you plant them. Without those funds we will have fewer tech leaders in 2020 than we do today.

2) If we are going to spend billions on infrastructure and bailouts, let's spend it on the future, not the past. Building bridges and highways is great — and of course the auto sector is important to our economy. But the high tech sector employs hundreds of thousands of Canadians too — in strategically important areas, and our electrical grid is just as important (maybe more so) to the productivity of our economy. We hope to see SmartGrid technologies supported in Canada — Mr. Obama has already committed $32 billion to the electrical grid in the US and we should have a proportional commitment up here too.

Thuy Anh Nguyen from Toronto Canada writes: RE: Media prediction #5 that in 2009, 'one in 10 will cease print publication entirely'. And 'cost-cutting and online strategies have not been enough to change losses into profits so far'.

Question 1. Have you seen a trend or can you predict which types of newspapers and magazines will be more likely than others to become the ONE in 10 to cease printing entirely?

Duncan Stewart: Any publication with a weak balance sheet is an obvious candidate. I think the others are those who are trying  to be "go up the middle." One model is to be like the Economist (for instance) and try to provide insight, opinion and analysis rather than just reporting the facts. The other is to be an aggregator, and provide some local content and have everything else from outside sources. Publications that go to either extreme seem to be doing better financially than those that are somewhere in between.

Question 2. Which types of print publications have been and will be more successful than others with their online strategies?

Duncan Stewart: So far, one of the leading examples is the LA Times. Their online site is MUCH more than just a digital version of the print edition. All sorts of software, graphics, rich media and mashups make the online site the (it is rumoured) most profitable online edition in the world.

Question 3. What part(s) of the publishing industry's online strategies have to change/improve in order to change losses to profits?

Duncan Stewart: I think we are going to see more publications charging for online access. The pure "ad-supported" model just doesn't seem to be working. While we are at it, I think more papers are going to follow the NY Times' lead and start increasing the price of the print version as well.

Thuy Anh Nguyen from Toronto Canada writes: What are the trends for video advertising, both online and mobile, in 2009?

Duncan Stewart: Video continues to be the killer application in 2009 — as the recession continues to bite consumers continue to cocoon — which means more time in front of the telly! But it's not always the television, sometimes it is the PC or the mobile.

At Deloitte, we think mobile TV is still not ready for prime time. The bandwidth isn't there, and most Canadian consumers won't pay enough to watch a lot of video while mobile. But mobile advertising doesn't always have to be video — simple pictures or even text can often be just as effective and are much cheaper.

Online video advertising is growing, but free video online remains a puzzling market. Lots of consumers are watching, but not enough are paying. We think we may actually see a contraction in free online video until the business model gets fixed.

Northern Dancer from Outside of Toronto Canada writes: What will happen in the following area: 1) Will there be any further break up of the major telco stranglehold on cellphone communication and Internet usage?

Matt Frehner, Globeandmail.com: I'd like to add to this: How do you see the market changing as a result of smaller players entering the field?

Duncan Stewart: Without in any way validating that "stranglehold" term (I think we are actually pretty well served), the new entrants should be a big win for consumers in Canada. We will have at least one more choice in most markets, and it will probably improve pricing and wireless penetration and data usage. The existing carriers will need to be nimble, but I don't think they will be as badly hurt as some observers expect.

Bob Katayama from Toronto Canada writes: Are there any products in the PDA or handheld computing area that is currently in development in Canada that could see some commercial success in 2009 besides those from Research in Motion?

Duncan Stewart: As we mention in our Predictions for 2009, we see smart phones and netbooks as being two big trends for this year. Aside from RIM (and to some extent wireless modem maker Sierra Wireless) there aren't any other major Canadian hardware players. But on the software and services front there are a ton of companies who stand to benefit: Intrinsyc, MyThum, Impact Mobile, Oz…and those are just the ones who have won Deloitte Technology Fast50 awards!

Moira Granger from Halifax Canada writes: Newspapers aren't making (much) money from their websites yet, but print advertising is continuing to fall, in many cases freefall. Given that the work that so-called print journalists do is important, how can newspapers best stay afloat while they're in transition to whatever comes next? For most, staff and page-count cuts have meant quality/content cuts. Is it time to start charging for web content that you can't get anywhere else? It costs money to gather the news and present it in a professional manner. But newspapers have failed utterly to communicate this -- we have a society where people will pay two bucks for a bottle of tap water but think that newspapers (on the web) should be totally free.

Duncan Stewart: We already sort of answered this today, but 100% agreement from Deloitte. As a society with even more news sources than ever, and living in a globally interdependent world, our need for top flight journalism and editorial has never been greater. We think that many online editions will start charging for premium content, and that will help pay for the product. The current model (to quote Simon Avery of the G&M, who was one of our guest speakers at our Prediction launch event on Tuesday) is broken and needs to be reworked.

dave charlston from toronto Canada writes: I am not so sure about these tiny screen sizes as being a long term success. As people age their eyes just don't focus on objects close at hand as they used to. I suppose they will be ok for those under 40 but the biggest part of the population are above 40 and becoming more computer illiterate. They will demand the larger screen sizes. I would say anything below 15.4 inches won't be tolerated by this group.

Duncan Stewart: Interesting point — last year one of our Predictions was for devices and services that would cater to the needs of that older demographic. We called it "the Rise of the Silver Surfer" — catchy, eh? But so far there has been little demand for those products, and despite weaker eyes and arthritic fingers I see a lot of older smartphone users.

But your argument makes sense and I am sure that for at least a portion of the population big screens will be a must.

Matt Frehner, Globeandmail.com: As we wrap up the discussion, I'd like to pose a final question: Given the economic climate and recent bad news from companies like Intel and Microsoft (among others) should we be lowering our expecations for new, innovative technology in 2009? Or is there an opportunity in this as well, perhaps to deveop products that appeal to the price- and time-conscious consumer?

Duncan Stewart: It sounds like a cliché…but "the bigger the cloud the bigger the silver lining."

Historically, recessions have acted like incubators for innovation. Tough economic climates change business models and create opportunities for companies with new and exciting solutions to respond to those changes. Google came out of the tech wreck, and Microsoft came out on the 1980 recession.

I expect to see MORE innovative technology in 2009 and 2010. Some of it will cause a Schumpeterian "creative destruction" of old business models, but that will be a good thing for the global economy over the long run.

Anybody who has ever trained for a marathon or similar event knows that you accomplish the most progress on the runs that hurt the most. This recession may not be fun to live though for the tech sector, but it will build new muscles and new endurance for the next decade.

Matt Frehner, Globeandmail.com: With that, our time is up. Thanks for your time today, Mr. Stewart.