The Year Ahead: Vista, Linux And M&As, Oh My!

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After a relatively strong second half of 2005, the outlook for the new year is mixed: CIO confidence is modestly declining, demand for IT is expected to fluctuate, yet strong, long-term growth, with no visible prospects for any measurable downturn, is part of the forecast.

"We are seeing a cautious outlook," says Andrew Bartels, a senior research analyst at Forrester, which, along with the Information Technology Association of America (ITAA), made those prognostications in its first quarterly U.S. Tech Sector Index, released this month.

The cautious outlook is the result of uncertain economic factors that could affect business in the coming years, including overall gross domestic product, the housing market and energy prices, Bartels says.

Into 2008, however, the index promises to show strong growth--upward of 9 percent--resulting from next-generation computing, says ITAA president Harris Miller.

"Longer term, we see a new period of innovation," he says. "I think it's fair to say that tech is back, but it's older, wiser and more important to the U.S. economy."

Now that we have the macro forecast, here's how things are expected to look across different segments of the IT industry:

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