Tech Trends: Year in Review

Nearly one year ago, I wrote a column detailing 10 tech trends that I expected to play out in 2006. It's time to revisit that piece and see how accurate those predictions turned out to be.

1. Merger mania

I'd say I got this one right, on the basis of the huge amount of M&A activity in the tech sector this year. However, I was surprised to see how much of it came out of the private-equity market.

One deal I expect to bear fruit is Qualcomm's (QCOM - commentary - Cramer's Take) purchase of the WiFi company Airgo, which, according to a very credible PC-industry source, has the best wireless technology in the market.

2. Slow growth, more outsourcing

Well, growth didn't seem to slow appreciably this year, but outsourcing stocks have been booming. Offshore IT-outsourcing stocks such as Cognizant (CTSH - commentary - Cramer's Take) and Infosys (INFY - commentary - Cramer's Take) were up huge this year, as companies, particularly in the financial services and health care sectors, rapidly offloaded projects to Indian companies in an effort to restrain costs.

However, I believe business-process outsourcing (BPO) companies, to whom companies offload core company functions such as customer service and accounting, will be the real winners in 2007. Names to look at include TeleTech (TTEC - commentary - Cramer's Take), Convergys (CVG - commentary - Cramer's Take) and WNS Holdings (WNS - commentary - Cramer's Take).

3. Video games to be loved again

This prediction was largely a wash, as Electronic Arts (ERTS - commentary - Cramer's Take) has been an underperformer, weighing down the group.

For 2007, keep your eyes on Take-Two Interactive (TTWO - commentary - Cramer's Take), which will unleash a new Grand Theft Auto game for next-generation platforms in the fourth quarter of 2007. I plan on doing heavy research on this, as the stock could easily double from here if the company gets its act together.

4. Music phones to get bigger

Companies such as Sony-Ericsson and LG posted very strong sales of their music phones, as carriers continued to roll out MP3-enabled models. However, people still love their iPods, and I don't expect phones to replace them anytime soon.

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In keeping with TSC's editorial policy, Michael Comeau doesn't own or short individual stocks. He also doesn't invest in hedge funds or other private investment partnerships. Comeau is a research analyst at TheStreet.com. In this role he performs stock analysis for TheStreet.com Breakout Stocks, and is also a regular contributor to RealMoney.com. Prior to his arrival at TSC in June 2004, Comeau worked as a Consultant to Toyota Motor North America, performing in-depth research on automotive industry issues, primarily in the areas of alternative engine technologies, competitive analysis and macroeconomics. His primary market interests include consumer technology, specialty retail, and small-caps. Comeau received a bachelor's degree in Finance from Brooklyn College, and has completed Level 1 of the CFA program.. He appreciates your feedback; click here to send him an email.