The global business of technology took some sharp turns in 2005. We saw public companies going private, a preference among entrepreneurs and investors for buyouts over IPOs, the growing influence of the iPod, and the gravity-defying rise of Google’s stock price as the search company turned from underdog to overlord.

It was also a banner year for mergers and acquisitions, with Skype being snapped up at a value of $4 billion by eBay. And of course, China and India continued to cast larger shadows.

These shifts and twists are what trend-spotters feed on. And they set the stage for predicting what’s next and why it matters.

Our editorial staff did not turn to tea leaves, Tarot cards, or horoscopes, as tempting as they might have been. Instead, we gathered empirical evidence and anecdotal insights from venture capitalists, investors, analysts, and the people who put technology to work.

As usual, we were wary of the tendencies of some sources to spin and shape the picture in ways that could benefit them most. For the second year in a row, we got a more objective perspective by working closely with ChangeWave Research to gain expert insight from its alliance of several thousand tech-savvy survey participants.

We listened closely to the keen observations of industry giants like Vinton Cerf, who helped pioneer the Internet. When asked about the global push toward broadband, Mr. Cerf points out that mobile phones could spawn an entire new wave of Internet applications. “We may see a quite varied evolution of services in the Internet environment as we go from region to region and country to country,” he says.

Mr. Cerf is cautious about the long-term implications of shifting interests in digital media. “The combination of media, both video and audio, and the ability for greater interaction also comes with more risk,” he says. “It is powerful to make things happen—but also very dangerous.”

The Tough Decisions

In choosing our trends, we delved into our seven industry sectors, which include biotechnology, IT, alternative energy, and nanotechnology. As with any list we compile, we had to make tough decisions and leave several smart ideas on the cutting room floor. But the big trends endured, like the full-speed rush of the computing industry toward the adoption of inexpensive flash memory.

Along those same lines, we observed that the world of digital music is no longer running from the law. Peer-to-peer networks, once pursued in court by the music industry, sought legitimacy—and dusted off old names like Napster and iMesh as pay-to-play sites. And big media, too, finally showed signs of accepting and grasping the new business models. A telling example was Disney’s deal to let video iPod users download episodes of ABC shows.

ABC

One obvious trend in 2005 was the heightened concern with energy issues triggered by the rising cost of oil. The push to embrace clean and alternative energy technologies will surely shape the business and technology landscape in 2006. Mark Rostick, director of strategic investments at IntelCapital Partners, says that big problems facing technology companies like heat and battery limits will start to be solved with better power-saving devices and innovative battery technologies.

Partners, says that big problems facing technology companies like heat and battery limits will start to be solved with better power-saving devices and innovative battery technologies.

And there were those ugly, unresolved security issues that await attention and resources. One, for example, is the increased interdependency between electric power and communication—as demonstrated by Hurricane Katrina. The rise of IP networks and Internet phones means that when the lights go out, so may your telephone. “There should be a lot of joint development work going on between industry, government, and the private sector to set up first responders,” says Jody Westby, president and CEO of Global Cyber Risk Group, a security consultancy based in Washington, D.C. Katrina also highlighted another issue that became one our trends: the growing logjam in logistics as the amount of products pushed along our crowded rivers, highways, rail networks, and air routes continues to climb without adequate automation of the handling and routing.

Of course, our list would not be complete without trends that march to a different drummer—such as science’s effort to take over the kitchen with recipes engineered at the molecular level to more effectively tickle your taste buds.

One consequence of trend-spotting is that once we’ve selected the 10 trends, it’s open season on us. We are subject to potshots from the brightest skeptics, cranks, and curmudgeons who make this industry what it is. We don’t mind at all. In fact, the comments and criticisms help us hone our list for the next time. In all likelihood, the changes ahead in 2006 will take shape fast and live up to the words of Albert Einstein, who once said, “I never think of the future—it comes soon enough.”