Preview 1998: What to expect in IT next year

After hearing much about the sub-US$1,000 PC and thin clients this year, don't be surprised if you hear a lot more about the $800 or even the $500 PC next year. And if you don't know what xDSL (digital subscriber line) and DVD (digital versatile disk) stands for yet, sometime next year these will be familiar acronyms. In 1998 the IT industry will offer many incremental and major enhancements in virtually all product areas and industry sectors, made possible by advances in chip and data transmission technology. The overriding trends of getting on the Internet and offering cheaper, faster and more powerful products will continue next year. And so will the legal battles in IT industry -- most notably the antitrust cases against Microsoft in the US and Europe.

After hearing much about the sub-US$1,000 PC and thin clients this year, don't be surprised if you hear a lot more about the $800 or even the $500 PC next year. And if you don't know what xDSL (digital subscriber line) and DVD (digital versatile disk) stands for yet, sometime next year these will be familiar acronyms.

In 1998 the IT industry will offer many incremental and major enhancements in virtually all product areas and industry sectors, made possible by advances in chip and data transmission technology. The overriding trends of getting on the Internet and offering cheaper, faster and more powerful products will continue next year. And so will the legal battles in IT industry -- most notably the antitrust cases against Microsoft in the US and Europe.

Other events sure to make headlines next year include the following:

-- Asia, which continues to be plagued by currency and economic crisis, will replace Europe as the region that will keep a lot of CEOs awake at night, pondering how to prevent revenues from declining too far.

-- PC prices will continue to tumble, perhaps to as low as $500 by the end of the year, says James Staten, industry analyst at Dataquest. The price decline will be driven in part by manufacturers integrating more and more functions onto a single processor and reducing the need for separate sound cards, or graphics cards.

Staten also says that oversized handheld computers based on the Windows CE operating system, such as the 1.5-pound MobilePro 700 which NEC howed at the Comdex trade show in November, will compete with laptops. The devices are equipped with basic functionality like e-mail and word processing, and will retail for less than $1,000, Staten says.

-- 1998 will also see the emergence of "thin servers," which are being developed by the likes of Hewlett-Packard Co. and 3Com Dataquest's Staten says. Thin servers are slender, low-cost servers optimized to perform one or two workgroup functions, such as printing duties, file access and Web access.

-- Now that Intel has entered the network computer arena with its Pentium-based lean client architecture, 1998 may see some results from the much-discussed but slow to emerge thin client and network computer market.

-- In the semiconductor industry, the 3-D graphics market is likely to get shaken up in 1998, with Intel expected to release its 740 3-D graphics chip in the early part of the year. The 740's fast processing speed will cause a stir among vendors -- especially S3 Inc., which currently holds around 50% of the global market with a lower performance chip, says Peter Glaskowsky, senior analyst for 3-D and multimedia technology at Microprocessor Report in Sebastopol, California. The 740 is likely to accelerate the development of 3-D applications other than computer games, including business tools for graphical data analysis.

-- Much attention will also be focused on embedded DRAM (dynamic random-access memory), as more companies release processors that incorporate memory functions on the same silicon as the logic devices. Embedded DRAM enables chipsets to be built that are smaller and less power hungry, which lets manufacturers shrink even more devices like handheld computers and mobile telephones.

-- 1998 will also see the market for security products consolidate around a few major players while lesser companies fall by the wayside, says Jim Balderston, industry analyst at Zona Research. Security products like firewalls are becoming commoditised as the industry settles on a near-static design point, making it harder for small companies to distinguish their products, Balderston says.

A standard SET-like standard for electronic commerce will likely be decided in 1998, as transaction processing on the Internet continues to grow in popularity, Balderston says. "E-commerce just won't happen with 27 different protocols," he says.

-- As of Jan. 1, Europe's telecommunications market becomes a free-for-all, with consumers and businesses expecting prices to drop and services portfolios to increase. The European Union will also decide next year standards and regulations for the third generation of wireless telephone networks.

In late 1998, the Iridium satellite-based, digital communications system, designed to provide subscribers with worldwide voice, data, fax, and paging capability using hand-held phone and pagers, plans to begin commercial services.

Major telecommunications companies worldwide will look for partners, especially in Asia, as the fight for contracts to supply telecom services to multinational companies heats up.

-- By July the U.S. government will attempt to gain an international consensus on ways to keep Internet e-commerce tax- and tariff-free, based on its "Framework for a Global Electronic Marketplace" initiative.

-- Major pending acquisitions, most notably WorldCom Inc.'s purchase of MCI Communications are expected to close, while analysts expect the consolidation in the networking industry will continue in 1998.

-- In January interim Apple ComputerCEO Steve Jobs is supposed to announce the permanent CEO of the beleaguered company during his keynote speech at the opening of the annual Macworld show in San Francisco.

-- At the same time, the annual Consumer Electronics Show opens its doors in Las Vegas. In an indication of how computer-centric the show has become, Microsoft Chairman and CEO Bill Gates and Sun Microsystems' CEO Scott McNealy will deliver the keynote addresses at the show, which in part will be used by vendors to tout Internet enabled set-top-boxes.

-- Watch for Compaq Computer Corp. to acquire another company in 1998 in its effort to reach its stated goal of becoming a $50 billion (in sales) company by 2000. Digital Equipment Corp. (again) and Unisys Corp. are the latest rumored takeover targets.

-- Microsoft will bless PC users with upgrades to both Windows 95 and Windows NT, now slated for the second and third quarter 1998 respectively.

-- The focus of the DVD industry in 1998 will be an escalating competition over whose design will become the global standard for rewritable DVD storage. Though most of the major players have agreed on DVD-ROM as the winner in the read-only category, Sony Corp., with support from others, is mounting a 3G-byte challenger, called DVD+RW, to Toshiba Corp.'s DVD-RAM drive.

Though both factions expect to ship multi-gigabyte recordable systems in 1998, the real excitement over DVD -- if the words of Microsoft officials are to be trusted -- may come late in the year when Microsoft begins pushing DVD-based home systems that run Windows CE and enable users to play online games using televisions as monitors.

-- Enterprise Resource planning vendors SAP AG and Dutch competitor Baan Co. will deliver major upgrades to their applications, to be offered in modular form, allowing customers to upgrade systems in piecemeal fashion.

-- As the introduction phase for the euro -- Europe's common currency -- begins in 1999, the coming year will have to be the fix-it-or-suffer year for virtually any business, in or outside Europe.

-- European vendors led by France's Gemplus SA and Germany's Siemens AG will continue to enhance and market more intelligent smart cards for many diverse applications, ranging from paying for local transportation to conducting e-commerce transactions.

-- As the U.K.'s BBC, Australia's BSkyB and others will begin to offer digital television programming by mid-1998, the same firms will also allow subscribers to access the Internet via the same set-top boxes used to receive digital television signals. The same capabilities are being promised by U.S. cable TV operators.

(Joanne Taaffe and Jeanette Borzo in Paris, Kristi Essick in London and Rob Guth in Tokyo contributed to this report.)

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