Google Über Allies

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.