Crowds Expected to Flood South by Southwest

Source: Bobby Longoria | sxsw.xcom

The annual South by Southwest Interactive festival, which begins on Friday, is anticipated to be bigger than ever this year. About 25,000 people are expected to attend, which is 5 percent more than last year.

The five-day festival, which includes presentations by tech leaders, networking events, and a "Startup Village" that showcases startups, has become a can't-miss destination for entrepreneurs looking to introduce their products or draw buzz.

However, SXSW's massive size has also made it a marketing destination for major brands, including Nintendo, AOL, Yahoo, Macy's and Absolut Vodka.

The event is considered a smart way to reach early adopters and influential consumers, who are likely to Tweet, share photos on Instagram, pin on Pinterest, or post on Facebook or Tumblr about the latest product that's grabbed their attention.

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But with the crush of people and litany of big brands, many Silicon Valley veterans are questioning whether the festival has "jumped the shark" by no longer being an intimate environment for a select few. Many in the blogosphere are warning that it's a tough place to launch a new app or product amid all the noise from the crowd.

Still, many investors and entrepreneurs alike are eager to see which trends and startups will break out this year.

That's precisely why it's drawing the likes of Steve Case, who invested in a startup after seeing a presentation this year, Yammer CEO David Sacks, who sold his company to Microsoft, and Spotify CEO Daniel Ek. And many venture capital luminaries, like Kleiner Perkins' Bing Gordon, will be speaking on panels and hunting for investments.

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Andreessen Horowitz's Scott Weiss, who calls the event the "burning man of technology," projects that a lot of the new apps launching at SXSW this year will be focused on trying to make use of the GPS in smart phones. He said to look out for more photo-sharing social apps that leverage information about where you are. Weiss also projects the rise of a whole slew of companies that are "the Open Table of X"—meaning cloud-based services to help every variety of business.

"For every single small business category there's going to be an iPad app that connects to a cloud service for marketing, inventory, loyalty, etc," Weiss said.

He points to two Andreessen Horowitz investments that are part of this rising trend: customer loyalty service Belly, and Shoptiques, which helps boutiques sell their inventory online.

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Ben Lamm, CEO of Austin-based Chaotic Moon, a mobile app and game development company, expects a surge in activity around the maker/do-it-yourself movement. Lamm points to the number of sessions and events built around MakerBot's 3-D printers— Chaotic Moon owns own to prototype hardware pieces it uses in its projects.

"Keep an eye on the Internet of Things as a strong theme, since more and more products become more and more connected. All of our largest clients are asking for strategy and software development on products ranging from tablet and phone accessories to smarter homes to connected cars," he said.

This year Lamm said he's keeping an eye on Leap Motion, GetAround, and Umbel.

One thing's for sure—throughout the conference, from the panels to the parties, everyone will be glued to Twitter, looking to see what the new best product is they should be downloading to smart phones and trying out.

—By CNBC's Julia Boorstin; Follow her on Twitter: @JBoorstin