The Year Ahead in Tech

Retail

Gap(GPS Quote) CEO Paul Pressler will be replaced by midyear, and the company won't post a single month of positive comps for the entire year.

Wal-Mart will continue to desperately cut prices in order to drive store traffic, and will embark on a wide-scale redesign of its stores to better compete with Target(TGT Quote).

PCs

Microsoft will kill the first Zune media player by midyear, and I will write a column headlined "Goodbye to the Social," outlining Microsoft's obvious strategic errors in developing the device, specifically the decision to not design a new player from the ground up. However, Microsoft will have some modest success with a new media player designed 100% from the ground up, which will be out in time for the 2007 holiday shopping season.

Microsoft's Vista operating system won't drive big PC volume growth but will contribute to a strong uptick in demand for DRAM and graphics cards. One company likely to benefit is Qimonda(QI Quote).

Dell(DELL Quote) will continue to lose market share, and CEO Kevin Rollins will step aside by year-end, with Michael Dell once again taking the reins as CEO.

The Transformers movie, due out July 4, 2007, will be one of the top five grossing films of the year worldwide, resulting in a financial windfall for Hasbro(HAS Quote) as both kids and adults scoop up Transformers toys after watching the movie. Shortly after the release of Transformers, a new G.I. Joe film will be announced.

Offshore Outsourcing

This will remain a big growth market, with business process outsourcing (BPO) companies, to whom companies offload core company functions such as customer service and accounting, leading the way. Names to look at include TeleTech Holdings(TTEC Quote), Convergys(CVG Quote) and WNS Holdings(WNS Quote).

There will also be significant consolidation among offshore outsourcers as larger technology service companies seek to enter the space and as smaller BPO firms combine to increase geographic, customer and service line diversity.