Putting myself on the line with 2006 predictions

I'm wiping the champagne off my crystal ball and risking whatever reputation I have as an insightful technology columnist with six predictions for 2006.

These hunches all relate to Silicon Valley, and I've imposed one rule on myself: The predictions must be specific enough so that we can look back in a year to see if I was right or wrong.

Prediction One: Google's stock goes down, Hewlett-Packard's stock goes up.

Google repeatedly has humiliated Wall Street bears since its initial public stock offering at $85 in August 2004. The bears said the Mountain View company would never pass $100 a share, which it did on the first day of trading; or $200, as it did in January 2005; or $300, as it did in June; or $400, as it did in November.

But nothing goes up forever. The stock will finish 2006 somewhere below its 2005 closing price of $414.86.

Meanwhile, investors have been so disenchanted after several years of dismal HP performance that the company is undervalued. Even after gaining 48 percent this year from its low of $19.34 in January, HP will finish this year above its 2005 closing price of $28.63.

Prediction Two: Substantial job growth in Silicon Valley for the first time this century. It is still the global headquarters of technology, and there are encouraging signs of growth among established companies and startups. Profits and venture-capital investment are both moving up and new technology ideas are flowering.

Prediction Three: Broadband monthly rates drop under $20 with no strings attached.

If there is really a "broadband gap" affecting the United States, with other countries having more ubiquitous high-speed Internet service, it's because of price more than anything.

But real competition is finally emerging, with cable and phone companies suddenly eager to sign up more customers before the arrival of new broadband technologies such as wireless.

Prediction Four: Global economic competition and innovation become election issues; Democrats retake the House of Representatives.

"The World Is Flat" by New York Times columnist Thomas Friedman got the nation focused last year on issues already familiar to Silicon Valley, such as the rise of India and China, along with the need for more education and innovation in the U.S.

The Democrats in Congress are gearing up to make competitiveness and innovation into major issues for the November 2006 midterm elections.

Republicans won't be able to completely shift the blame elsewhere for the nation's lack of investment in education and technology, giving the Democrats enough of an edge to gain at least 15 seats in the House and thereby retake control.

Prediction Five: Apple Computer allows flexible song pricing on iTunes but doesn't open up iTunes or the iPod to competition.

Emperor Steve Jobs, the Colossus of Cupertino, has decreed that all songs will sell for 99 cents on Apple's hugely popular iTunes Music Store.

This is causing restless muttering among the dukes and barons of the music industry.

To keep peace in his kingdom, Jobs will allow flexible song pricing during 2006.

Prediction Six: The first big merger between a Silicon Valley company and a New York-Hollywood media giant.

The future of mass entertainment is digital and online. The future of consumer technology is delivering digital entertainment. It only makes sense that the valley snuggles up with the New York-Hollywood media establishment.

Maybe Viacom, owner of CBS and Paramount, will buy Yahoo!. Or HP will acquire Dreamworks Animation. Or Cisco will buy Disney. Or Rupert Murdoch will grab Electronic Arts. Whatever happens, you heard it here first.

Mike Langberg is a columnist at the San Jose Mercury News.