1. Apple is conquering the world
2. Google vs. Microsoft Live
3. DRM is losing ground
4. PC Makers need to improve experience
5. The Cloud is starting to take over

Last year was one of the most exciting years in tech I've ever seen. Not only did we see amazing new products come out such as some great new digital cameras from Canon and Nikon, but we also finally started seeing cell phones take usability more seriously, the launch of Windows Vista, cars starting to cater to techies in a big way and a lot more.

But were there any trends that we could see? If you'd asked me last year, I would have predicted that we'd be talking about Blu-Ray or HD-DVD as well as how next-generation consoles were taking over. But it turns out, last year saw some pretty unexpected trends begin to emerge.

Below are the 5 biggest trends we recognized last year as having far-reaching consequences.

Trend #1: Apple is conquering the world

A few years ago, Apple was a spent force. It took them until 2000 just to get a preemptively multitasking operating system on the market. Today, I could be convinced that Apple has a pretty decent shot of doing to Windows what Windows did to OS/2.  Apple has proven something that many companies have forgotten: execution matters. It's not who comes out with the most powerful gadget or even the most innovative product, it's who produces the product that does what it does the best. Pretty simple right? Apparently it's not since Apple is leaps and bounds above everyone else in understanding this concept.

Anyone who has used an iPhone can tell you that the iPhone isn't just a little bit better than other cell phones in terms of usability, it's massively better. The only thing that saved LG, Samsung and the rest last year was that the iPhone was exclusive to AT&T, was on the Edge Network, and didn't include GPS.  Imagine a scenario where the iPhone had 3G and GPS built in and was available from anyone and I think you would have been looking at total domination.

What's worse is that the cell phone makers still don't get it. The LG Voyager (which got a high rating at CNET surprisingly) is still awful compared to the iPhone in terms of usability.

Apple also released a new series of iPods.  The iPods weren't the first music players, but like the iPhone, they were so far superior to what else was out there that they took over. This year, I'd say that the iPod lead actually grew.  It makes one wonder just how clueless their competitors must be.  Spend some time with an iPod Touch and then wonder what the heck Microsoft was thinking with their latest Zune. 

Then you have the release of Leopard. It wasn't a perfectly smooth release but relative to Vista, it was a paradise. When people ask me whether they should get a Mac or a PC, it's getting a lot tougher to recommend the PC these days and I'm starting to wonder why I'm recommending a PC at this point.

At the rate things are going, one could imagine a world in which the Mac is the standard home computing platform, the iPhone is the standard mobile device for doing anything and everything one might realistically want to do, and AppleTV 2 (or whatever the next-gen one is) is how one deals with entertainment content in the home.

If you compete with Apple, you probably are afraid. But you're probably not afraid enough.

Trend #2: Google vs. Windows Live

The battle lines are drawn and right now only the geeks even care about these things. But as time goes on, these two services will start to matter to normal people too.

Here are the battle lines and philosophies:

Google is creating very rich and interesting web services that users can do everything from do spread sheets, blog, share images, etc.  It's all web based.

Windows Live is doing much the same thing except with more emphasis with desktop integration.

At this stage, I would say that Microsoft's philosophy is a bit better -- I don't want to use a website to do spread sheets. And Microsoft's organization is a bit better.  I find navigating the Google goodies to be more difficult.  Live is marginally better. Microsoft would be better off not copying off of Google so much.

But the battle for web-based user experience is something that's going to continue to grow, especially as the "cloud" takes over more (which we'll get to shortly).

vs.

And yet most people don't know this stuff exists. Which is probably a good thing as a lot of this stuff is not ready for prime time. 

Google still dominates in the search. Live Search still needs a lot of work. But the other tools in Live are pretty good. My biggest gripe is that they have their own distinct "look" to them that's kind of like Aero but...not Aero.  I'm sure the people who worked on Aero really appreciate having one of the teams go off in their own direction diluting the branding like that especially since it's only different for the sake of being different.

But there are some very interesting gems coming out of this battle.

For Windows Live they've got:

• Live Messenger is pretty good (though Yahoo's new client blows it away)
• Live Photo Gallery is an extremely nice and easy way to get your stuff onto the web (though they make it remarkably difficult to share these pictures).
• Live Writer is very awesome. Just wish it had more options in formatting.
• Live Search Maps is better in some ways than Google Earth.

On the other hand, Microsoft continues to not bother to make the most of the fact that 95% of the population has Windows on their desktop.  SkyDrive should install a drive in My Computer that works like a regular hard drive except puts its stuff onto sky drive. Maybe I just don't get Sky Drive but it's just not very useful right now.

Live Writer rocks!

For Google, you've got some really cool stuff too:

• Google Desktop Search is still the best in my opinion and Google search is still light years ahead of anyone else.
• Google Calendar is just awesome. Microsoft is starting to move forward on their own Live Calendar but it's just getting started. I'm really surprised Google hasn't created a Microsoft Project competitor. Imagine a Project.Google.com which integrated with Google Calendar to help groups coordinate better. I'm also surprised Microsoft hasn't done so either (Microsoft Project 2007 is still primitive).
• GMail absolutely blows away Hotmail.  I mean seriously, Hotmail doesn't have auto-fill on addresses.  Ironically, Live Mail looks better than Gmail now. And Gmail has incredibly spam filtering.
• Picasa is slightly better than Live Photo Gallery but it's hard to say since Live Photo Gallery's Windows app is nicer but with Picasa I can easily link to what I submit.

There's no doubt that both services are pretty good though. This is one area in which both competitors have sharp people on them.  I just can't quite understand Microsoft. I liked them better when they were bastards. The Microsoft that crushed OS/2 would have leverage the Windows platform a lot more. Live feels like it was written to appease Linux users or something.

Trend #3: DRM is losing ground

Admit it. You thought DRM was something you were going to just have to live with. I know I did.  I detest DRM beyond a minimal threshold (ironically, the DRM in iTunes doesn't bug me, it's largely transparent).  But this was the year where you could start to buy DRM-free music from both iTunes and Amazon.

I've written rants about DRM for years. The basic truth is that companies should be trying to prevent lost sales not end piracy. I don't like pirates. They're parasites. But some of the measures used to try to punish them are akin to using radical chemotherapy to get rid of tape worm. "Sure, you lost your hair and look like you're about to die, but we managed to cut down on the tape worms by 28%!"

DRM exists because non-technical executives think that putting draconian copy protection on their content will magically improve sales because it is complicated enough to keep them from pirating it.  The reality is, most people will buy something if they want it and its convenient.  If you make stealing even slightly more inconvenient than buying it, then you'll get the people who would have bought your products in the first place.  The pirates will still steal it but they weren't going to buy it in the first place.

This year it seems that increasing sales versus stopping all piracy finally began to click.  Most people are basically honest and if I download a song from iTunes or Amazon, I'm not going to deliberately share it with the world. Some will, but they would have done so anyway through other means.

Trend #4: PC Makers need to provide a better experience to compete

The Dells, HPs, Gateways, Toshibas and others of the world are probably (hopefully) looking at Apple and realizing that what happened with the iPhone in the cell phone market could very well begin to happen in the PC market.

Here's a question to ask yourself: If the iPhone had been available from every carrier, even with its limitations on 3G and GPS, what % of the market do you think it would have today?  Greater than say 5%?  If you said yes, that is the thing that PC makers need to be very concerned about because the PC experience right now is awful.

2007 was the year that the term "Craplets" started to become mainstream.  It was also the year Windows Vista was released which was supposed to improve the Windows experience.  And yet, Windows Vista shows that Microsoft still doesn't quite "get it".  Let me give you an example that tells the whole story: The Windows Sidebar, which is on by default, does not allow users to drag and drop short-cuts to it. You can only add "gadgets" of which there are no useful ones really out there.  When your default content includes a clock, you know that you're scraping for justification.

For the most part, Windows Vista does deliver a much better experience compared to XP. It was just released a bit too soon.

At the risk of saying "I told you so!" I wrote this article in August of 2006 "Microsoft: Push Vista Back!" in which I wrote:

What will happen if they ship Windows Vista if it comes out in 1Q2007? I predict it will be a disaster. Driver compatibility, rough edges in software working, weird and unpolished UI design, etc.  The acronymn UAC will come to haunt Microsoft and they will rue the day they didn't wait just a few more months to get driver compatibility together.

Microsoft isn't really the problem, it's the PC OEMs focus on bundling weird stuff that's poorly implemented.  PC makers do this because they generate money on what they preload.  But if they don't want to lose their lunch to Apple, they should make it a requirement that anything they include has to add value to the customer and improve the customer experience.  That means NO MORE SHAREWARE bundles or time out bundles or whatever.

PC makers also need to start looking to providing more-value add to their customers in terms of the experience. If Microsoft isn't able or willing to fill in some usability gap, then the PC maker should do so. 

Consider this: Remember the PCs that shipped with Windows XP in 2006? What were they like? Would you say they had a good experience?  Imagine if you were in charge, how would you have changed things? I bet a lot.  Of course, Apple is hoping the PC makers just continue to pre-load shareware and craplets and call it a day.

Trend #5: The Cloud is starting to take over

Most people still use their PCs as an independent machine that uses its Internet connection for web and email. But 2007 was the year that the cloud paradigm began to make its presence felt.

Basically the cloud is where our individual PC is no longer that important. Instead, our data and tool choices are important.  Google and Microsoft see this future pretty clearly which is why they're battling out. You could say they are battling it out for their share of the cloud.

But the trend is just starting. For the cloud to take over these 5 pieces have to be filled:

1. Your data will have to be accessible anywhere that has a network connection. This is why Microsoft, Google, Yahoo, and countless others are battling for.
2. Your private data (the data you don't feel comfortable putting on public servers) has to be seamlessly available to you anywhere too. Nobody has provided a solution to this yet. The big guys seem to think that most people will be willing to put their key files on computers they don't have direct access to which I don't think will happen any time soon.
3. Your computing environment needs to be supremely portable. This is what U3 is doing.  Your apps and tools are put on a USB drive, you plug it in and you can then do on any computer what you would normally do on your home computer without having to install anything to a remote computer.
4. Distributed computing needs to come into existence. That is, the more hardware you have rights on, the more your computing capability should scale. No one has bothered to do this for the masses yet. 
5. PC virtualization needs to become mainstream.  Virtual PC and VMWare are both getting startling close to nailing this.  One can imagine a future in which your USB key using U3 tech simply carries around your virtual PC with it.  We just need USB keys with say 16 gig capacities which should happen in the next year or two.

But with items #1 and #3 starting to mature, the power users are already starting to jump into the cloud.

So there you go. The 5 most significant technology trends we saw for last year.  What they will mean for 2008 remains to be seen. But if the past is any predictor, and it's not, 2008 will be a wild ride.