Red Frog, Inc.

by The staff and contributors of Entrepreneur

While much about the future will always be uncertain, one thing is crystal clear: There's still plenty of money to be made by smart entrepreneurs with a knack for predicting what's next. And even if you don't have a nose for what's new, our annual predictions for the hottest business ideas can help. We've done the research to help give you a clearer picture of what's in store for 2004...and beyond. In our Hot Center, we spotlight the markets, industries and trends that hold the most promise. Check out our predictions, and you're sure to find a niche that can pay off for you.

Hot Biz: Online Learning

Take online learning, mix in some video, audio and other offline methods, and you have the latest wave in the booming Web-based instruction trend: blended learning. "Blended learning is better, faster and cheaper than traditional methods," says Tom Graunke, the 37-year-old co-founder of KnowledgeNet, a Scottsdale, Arizona-based provider of e-learning solutions.

He should know. Graunke and co-founder Mark Rukavina, 38, started KnowledgeNet in 1998 with the $2.5 million they earned from selling their previous company, Mastering Computers, a corporate training company they'd run for 10 years. Today, Graunke's company boasts more than 7,200 clients, including Cisco Systems Inc. and McDonald's.

According to research firm IDC, the training industry overall is estimated to hit $60 billion worldwide this year, with $6.6 billion coming from e-learning. The e-learning market is expected to reach $23.7 billion by 2006.

"Blended learning is the fastest-growing area of e-learning in the last 18 months," says Brandon Hall, CEO of www.brandon-hall.com, an e-learning consulting service in Sunnyvale, California. Hall says three segments in particular are moving to blended learning: IT training is the first, regulatory training and safety training is the second, and the soft-skills market—management training, sales training and other people skills—is going to see the next big wave.

John Alonso is the founder of Boston-based OutStart, makers of Evolution software, which allows the authoring, management and delivery of educational content. He has watched his company grow from four employees to 100 since launching in 1999, and he estimates 2003 sales will more than double 2002 sales, to be in excess of $10 million. Says Alonso, 36: "Blended training is the ability to create a training program that says 'We think this part of the training program is good with an instructor, but we're going to augment the classroom experience by having you watch a video before you come to class and continue learning online after you leave the classroom.'" For a growing number of entrepreneurs, this mix is obviously making the grade. —Steve Cooper

Hot Biz: Mobile Gaming

For those with a cell phone and a few spare minutes, a quick game of poker might be the perfect escape—especially if they draw a winning hand. That's certainly the hope of Oliver Miao, CEO and co-founder of Centerscore Inc., a mobile-gaming development company in Palo Alto, California. With mobile gaming the hottest growth area in the online gaming industry, Miao has good reason to be optimistic.

Eighty percent of all mobile phone users in the United States and Europe will play online games using wireless devices by 2005, according to technology research firm Datamonitor. That's more than 200 million people. Creating and distributing games is where the opportunity is in this fledgling market.

Miao, 28, along with friends Justin Min, 28; Leighton Kan, 27; and Winston She, 28, started Centerscore in 2000 to create online browser-based games. Then the dotcom implosion nearly sank them. "The day we were deciding to stop, we fortuitously got a contract to do one cell phone game," Miao recalls.

Miao and his partners weathered the storm and have since developed games such as Jeopardy and Wheel of Fortune for Sony Pictures Digital Inc. The company's revenues will reach six figures this year, Miao says, and he expects them to triple in 2004.

Fabrice Grinda, CEO of mobile games distributor Zingy, is also glad to see the mobile gaming market arrive. The New York City-based company, launched in 2001, also sells ring tones, wallpapers and other mobile entertainment solutions. "In the U.S., game-compatible phones only really reached the market in December of last year," says Grinda, 29, who predicts mobile games will be Zingy's largest revenue generator next year.

Grinda isn't the only one predicting success in the mobile gaming market. Research firm The Yankee Group expects the U.S. mobile gaming market to hit $1.2 billion in 2006—a royal flush. —S.C.

Hot Biz: VoIP

Ravi Sakaria is hearing voices, and it's a good thing. The 33-year-old co-founder, president and CEO of voice-over-IP (VoIP) provider start-up VoicePulse Inc. is a trailblazer for a technology that is rapidly gaining mainstream acceptance. Homes and businesses around the world are leaving their regular phone service behind to make their calls for a fraction of the price over the Net. That the North Brunswick, New Jersey, company came into existence in January of this year serving eight area codes and now covers 30 shows how fertile VoIP can be for entrepreneurs.

"The growth rate is tremendous. As it becomes known that the quality is equivalent to traditional telephone service, the features exceed it and the cost is lower, then that uptake is only going to increase," says Sakaria. Julia Mermelstein, senior consulting analyst with research think tank ABI Research in Oyster Bay, New York, also sees a trend of steadily increasing sales in 2004. While large enterprise will likely be slow to adopt VoIP, consumers and small business will be on the forefront. That's where companies like VoicePulse are focusing their business models.

Entrepreneurs don't have to look into becoming service providers to get into VoIP. Both digital phone hardware and custom software applications based on VoIP standards will be important components for the burgeoning technology. Mermelstein also sees great potential for entrepreneurial technology resellers to add VoIP to their service offerings.

Sakaria has advice for those looking to get into VoIP: "If you don't look at the promise of the technology and how you're going to add value as far as features go, then you're really missing out on rounding out your business plan. That's where the opportunity lies."

With VoIP still in the process of proving its mettle, now is the time for entrepreneurs to get in on the ground floor and start hearing voices for themselves. —Amanda C. Kooser