In 2007, just as the wireless industry was starting to think of itself as a maturing industry and looking to consolidate, the disruptive force of technology—and bold business strategy—upended assumptions and sent major corporations racing to catch up with smaller, newer, nimbler rivals.

New companies rose to become investors' darlings, while at least one "old" one—Google—managed to defy gravity by remaining a favorite even as its share price soared out of view.

Apple rolled out the iPhone to accolades—and saw its share price rocket to $200—but many potential customers complained about the company's exclusive deal with AT&T, which has prevented widespread adoption of the device.

A 16-year-old New Jersey teen became an overnight global celebrity after he "unlocked" his iPhone in his basement as a summer project. He said he did it "for fun."

Google had another banner year, signing new deals that drove its share price above $700. Search advertising revenue continues to be strong, but the pace of growth has slowed.

The company's biggest news came elsewhere: the start of open-source initiatives in the wireless and social-networking markets.

The company's Android mobile-operating system has already forced Verizon Wireless and AT&T to pay lip service to open-source wireless advocates.

Meanwhile, its Open Social initiative was seen as an effort to "out-open" Facebook, the hottest social network in the country.

Mark Zuckerberg's social-networking site exploded in popularity in 2007, raising $300 million in venture capital, including a $240 million infusion from Microsoft in exchange for a 1.6 percent stake. That transaction implies that Facebook, which is hoping to earn $30 million this year, is worth a total of $15 billion.

But Facebook's euphoria over that development was dashed in stunning fashion when the company was forced to wipe egg from its face over the disastrous launch of the company's "social advertising" system, called Beacon, which critics viewed as a privacy nightmare. Zuckerberg apologized, but the incident raises questions about his ability to lead Facebook.

What does 2008 hold in store? Rumors are already circulating about new products and potential partnerships. But in an industry still growing and changing rapidly, some surprises are also lurking ahead....

Google Über Allies

Google will win the "C block" in January's F.C.C. 700Mhz wireless spectrum auction, positioning the "Mountain View money-machine" as a formidable player in the mobile communications market.

Developers will create third-party, open source applications for Google's mobile-operating-system protocol, which it is calling Android.

Assuming these steps occur, look for Google to buy a handset company and roll out Google-branded phones. HTC is a good candidate: If Google bought the company, it could deprive Microsoft of a key partner for Windows Mobile OS.

Google's search advertising business will continue to rake in money, but revenue growth will continue to slow. If Google's share price approaches $1,000 (it was recently about $676, having gone public in 2004 at $85), look for the company to begin offering earnings guidance to increasingly nervous investors.

A Sliced Apple

Apple will release a new, super-thin, 13-inch MacBook Pro—equipped with flash memory—at the MacWorld conference in San Francisco on January 14.  

While Apple will remain locked in a relationship with AT&T, iPhone innovation will move forward. New 3G iPhones will be presented by fall.

Steve Jobs will evade any repercussions from the stock options backdating scandal, and continue to be one of the most respected C.E.O.s in the world.

Dance of the Elephants

Microsoft will either buy Yahoo, or strike a pricey strategic partnership with the lackluster former tech stalwart.

Jerry Yang's post-Terry Semel "100-day plan" did little to boost the company's share price, which will begin 2008 exactly where it began 2007.

Now that it's clear that Google will continue to outperform Yahoo in search ad revenue, earnings, and growth for now, Yahoo has little choice but to seek a strategic alternative.

It does have some valuable assets, such as Yahoo Movies, Travel, and Real Estate, so in a worst-case scenario, the company can start selling properties.

Sun Sets on Palm?

Jon Rubinstein, the former Apple executive installed to save Palm, has his hands full. Palm, the former high-flying smartphone maker, is in dire straits. In 2008, the company faces three outcomes, none of them inspiring: bankruptcy, sale, or mere survival.

Palm's flagship Treo smartphone is not in the same league as new Blackberry models like the 8830, or with the iPhone.

While Palm's share price will appear cheap to investors—the stock fell by about half in 2007—many will wait to see some tangible progress on new products before putting money into the company.

Palm's new Centro smartphone has been generating some positive buzz, but the company will need more than one success to right its sinking ship.

Facing the Music

If Facebook wants to go public, Mark Zuckerberg will be replaced as C.E.O. and given a largely ceremonial title, along the lines of "Chief Social Grapher."

After the Beacon "social advertising" disaster, many are convinced that Zuckerberg lacks the experience to run a $1 billion company, let alone a $15 billion company. While Zuckerberg apologized for the Beacon fiasco—more for the company's handling of the incident than the underlying privacy issue—it's just not evident that he is capable of leading the company to the payout he seeks.

Although Facebook's origins at Harvard are contested, Zuckerberg clearly had the vision and drive to build the company into the hottest social network on the Web. But if he wants his company to successfully go public—potentially earning him billions—he'd better bring in an experienced technology executive to run the business, much like Google's Sergey Brin and Larry Page did by tapping former Sun veteran Eric Schmidt.

Google, it appears, turned out just fine by pursuing this strategy. Facebook's No. 1 priority in 2008 should be to increase its user base—which will swell with older users—and prevent an upstart from usurping its status as the hottest social network, much as it did to MySpace.