3 Hot Technology Trends to Watch in 2012

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If you think 2011 was a wild year for technology, just wait until you see what 2012 has in store for you.

Thankfully, you know that the best way to beat the market is to stay a step ahead of it. Figuring out the major investment themes and where the profitable opportunities are before most of your fellow investors will help you lock into more attractive starting lines.

Let's go over three tech trends that will undoubtedly grow in relevance in the year ahead.

1. Tablets Will Evolve Into Portable Computers

Until just a few months ago, buying a tablet usually meant buying an Apple (AAPL) iPad. Despite the roll out of some really nifty Android, webOS, and BlackBerry tablets, consumers flocked to the offerings of the tech world's tastemaker, scooping up the $500 iPad and eventually iPad 2. According to sales tracker Gartner, all but 1.2 million tablets sold in this country through the first 10 months of 2011 were iPads.

Things changed in a hurry this holiday season. Amazon.com (AMZN) is already on the record as selling "millions" of its $199 Kindle Fire entry-level tablets, and it's making "millions" more.

A late entry this holiday season -- Asus' Transformer Prime -- is turning heads for its ability to dock into a full-featured keyboard that almost turns it into a full-fledged laptop.

In short, Apple can no longer rest on its laurels. Instead of the simply evolutionary upgrades that we saw between the iPad and iPad 2, Apple will either have to crank out a bar-raising iPad 3 in a few months or come through with price cuts. (See "How Low Can the Price of an iPad Go.")

Either way, 2012 will be a year that won't be dominated by a single tablet maker. Innovation and functionality will transform a device that may have been a novelty for early adopters into a truly indispensable appliance. Now that many schools are moving from textbooks to e-books on tablets, the third year will be the charm for this still-nascent form of gadgetry.

2. After a Decade-long Lull, Microsoft Will Bounce Back

Poor Mr. Softy. The world's largest software company can't seem to catch a break. It's still a force with its Windows operating system, but PC and laptop sales growth has stalled. Microsoft Office remains the productivity software of choice, but freeloaders are finding perfectly capable free alternatives to Word word-processing and Excel spreadsheets on the cloud. Bing is popular, but Microsoft (MSFT) continues to lose money in its online operations. The Xbox 360 has emerged as this country's gaming console of choice, but it comes at a time when the whole gaming industry is in a three-year funk.

Is it any wonder that shares of Microsoft have come to define the lost decade, given its lack of material movement over the past 10 years?

Sponsored Links

Well, Microsoft has a big checkbook and it's not afraid to use it. Microsoft's meaty deals with Yahoo! (YHOO) to power the portal's searches and Nokia (NOK) to have the handset maker champion its mobile operating system haven't come cheap. Microsoft will supposedly pay billions in each of the two arrangements.

Microsoft may be overpaying, but it's buying its way into relevance. Yahoo!'s presence has helped boost the visibility of Bing, turning it into the country's distant silver medalist in search. The deal with the Finnish handset maker -- the world's largest player -- will be even bigger, helping Microsoft gain ground on Apple and Android before that becomes merely a two-horse race for smartphone supremacy.

Windows 8, rolling out in 2012, will also be Microsoft's first tablet-friendly operating system, giving the company its best shot at regaining ground in the "smart enough" computing trend that has been eating into its flagship business since last year.

3. In-Car Streaming Will Heat Up

Until recently, audio entertainment in cars was limited to terrestrial radio, premium satellite radio through Sirius XM (SIRI), or whatever you happened to have lying around in the form of CDs or -- in older cars -- cassette tapes.

Some cars began adding input jacks for iPods, but now automakers are really making it easier for drivers to integrate the music and streaming apps on their smartphones through Bluetooth connectivity and in-dashboard touchscreens.

Some of the newer Toyota (TM) and Ford (F) models have seamless access to Pandora (P), Clear Channel's iHeartRadio, and countless free and premium streaming alternatives for anyone with a smartphone. As more new models hit the open road, expect this trend to benefit the recently profitable Pandora and any other nimble players to cash in on audio streaming.

The tech trends are coming, so you may as well get in front of them.

Longtime Motley Fool contributor Rick Munarriz does not own shares in any stocks in this article, except for Ford. The Motley Fool owns shares of Ford Motor, Microsoft, Apple, Amazon.com, and Yahoo!. Motley Fool newsletter services have recommended buying shares of Amazon.com, Apple, Ford Motor, Microsoft, and Yahoo!, as well as creating bull call spread positions in Microsoft and Apple, and a synthetic long position in Ford Motor.

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