Hindsight is a wonderful thing. It ought to have been obvious, I suppose, that Google would buy YouTube and that something would emerge from the shadows to torpedo Sony's PS3. (The killer device was the Nintendo Wii, a fiendishly clever gizmo which is my gadget of the year.)

The opening salvoes in the DVD format wars were also predictable - and indeed looked awfully like a rerun of the VHS-Betamax conflict.Sony released Blu-ray and Toshiba et al unveiled HD DVD. Both systems offer terrific picture quality and massive storage capacity but are - naturally - incompatible. So consumers very sensibly sat on their hands and are likely to continue in that posture for some time. And the ironic thing is - as Bill Gates observed - that this will be the last format war, ever. Next time, movies will be beamed over the net rather than burned on to plastic.

This year was also the one in which old-media companies came out of denial about what they had hitherto regarded as an oxymoron, 'user-generated content' - text, audio, imagery and video created and published by mere amateurs. (Think of blogging, Flickr and YouTube.) Having awoken from their slumbers, the Time-Warners of the world reasoned thus: how can we exploit this garbage? After all, there's a serious financial opportunity here.

If you're an old-media outfit, creating 'content' is an expensive business: you have to hire producers, directors, studios, actors, writers and a host of other low-life types, pay them good money up front and wait until they produce the goods. Only then can you start to make money from it. But the explosion of user-generated content suggests that there are millions of schmucks out there who are willing to do all this for free! So the question for the old-media world was: 'how do we cash in on this racket?'

Predictably, Rupert Murdoch got there first with his purchase of MySpace in 2005. In 2006 his dozier counterparts salivated impotently as blogging, podcasting, image-hosting, video-publishing and social networking (MySpace, Bebo, Facebook) boomed. The most pathetic symbol of this impotence was Time magazine's 'Person of the Year' feature. 'You - Yes, You - Are TIME's Person of the Year', was the burbling headline on a cringe-making feature, and it went downhill from there.

The web, it explained, was a revolutionary tool. 'And we are so ready for it. We're ready to balance our diet of predigested news with raw feeds from Baghdad and Boston and Beijing. You can learn more about how Americans live just by looking at the backgrounds of YouTube videos - those rumpled bedrooms and toy-strewn basement rec rooms - than you could from 1,000 hours of network television. 'And we didn't just watch, we also worked. Like crazy. We made Facebook profiles and Second Life avatars and reviewed books at Amazon and recorded podcasts. We blogged about our candidates losing and wrote songs about getting dumped. We camcordered bombing runs and built open-source software.'

Pass the sick-bag, Alice. And note the use of the term 'we'.

The best prediction for 2007 is 'more of the above'. Plus the continued decline of Microsoft and the inexorable rise of Google. Next month Microsoft launches the consumer version of Vista - the latest, and possibly the last, version of Windows. (Corporate customers have had it since November.) Stand by for a lot of wailing, therefore, as consumers discover that they will need to buy new hardware to run it - and for the screams of pain from the poor saps who attempt to upgrade their existing kit.

The trauma of producing Vista has shaken Microsoft to the core, and revealed the extent to which it has become a middle-aged company which is poorly adapted for a net-centric world. Its dominance of the PC has become a wasting asset, because the PC is no longer the cornerstone of our information ecology. The network has become the computer, and it is Google, not Microsoft, that dominates there.

The extent of that dominance will become more apparent in 2007. It's underestimated by the usual market-research statistics, which put Google's market-share in the upper forties. But I've seen figures based on estimating the proportion of 'referrals' - inbound links from search engines - that big e-commerce sites receive, and these suggest that Google's real market share is already around 70 per cent.

The other big trend in 2007 will be 'virtualisation' - software which enables a single computer to run many different operating systems simultaneously. This makes sense for all kinds of reasons, but the most important is that the current generation of 'server farms' which power Google, Amazon, eBay, and so on are financially and environmentally unsustainable. Enormous sheds filled with thousands of servers consume too much power, and the only solution is to reduce the number of physical machines. Virtualisation makes that possible, which is why it's an irresistible technology.

And guess what? The Vista Eula (End User Licence Agreement) contains a clause which prohibits running the commonest versions of Vista under virtualisation software. Wonder if Gates ever heard of Canute?