NEW YORK (12/15/2003) - After a three-year roller-coaster ride, the IT industry settled down a bit in 2003. The year seemed to provide a respite from megamergers, monopoly-busting, history-making corporate scandals, and the exhilarating but scary boom-and-bust cycle. Not that anyone was operating on cruise control. IT managers faced continual assault from a variety of nasty worms, handled user demands for wireless access and figured out how to work 64-bit computing technology into their systems. IT issues spilled into the public domain as politicians around the world grappled with spam and the challenges created by offshore outsourcing. Home users saw an increasing number of consumer electronics products aimed at them from vendors who had once focused solely on the computer market.
Meanwhile, everyone still has an eye peeled for economic recovery. As the year wanes, there are signs of a pickup that might fuel IT spending, and as usual, the pundits have plenty of ideas about what that spending will entail.
Here are the top 10 IT stories of the year, not necessarily in order of importance:
SCO rocks the Linux boat
Just when things appeared to be going great for Linux the world over, a U.S.-made wrench in the works alarmed the open-source faithful. When the SCO Group Inc. filed a lawsuit in March, charging IBM Corp. with misappropriation of trade secrets, Linux users saw that the move involved more than a contract dispute. SCO asserts that IBM took proprietary Unix code and put it into the open-source community. This muddies the legal waters for open-source software users, some of whom believe that SCO's terms could restrict Linux users' ability to redistribute source code. Nevertheless, governments and local entrepreneurs around the world continue to develop new variations of Linux and promote open-source software as an alternative to Microsoft Corp.'s Windows. With such strong winds of change blowing, Linux's sails are not likely to be permanently deflated by the SCO suit, but the legal wrangling is sure to cause continued consternation in the open-source community.
Oracle, PeopleSoft, and JD Edwards star in merger drama of the year
Legal battles also added to the drama of PeopleSoft Inc.'s acquisition of rival ERP (enterprise resource planning) software maker J.D. Edwards & Co., and its subsequent fight to ward off a hostile US$5.1 billion takeover bid from Oracle Corp. With Oracle acting as spoiler of the J.D. Edwards deal, it got hit with several lawsuits by its takeover target. Adding spice to the affair was the war of words between Oracle's Larry Ellison, in the role of swashbuckling industry captain, and PeopleSoft's Greg Conway, who did his best to portray his rival as a pure opportunist. In any case the fracas is a milestone: The fragmented ERP market has been due for a shake-out, and the Oracle-PeopleSoft bout may end up being just one in a series of M&A events leading to a new chapter in the business applications story, in which there are far fewer characters.
Spam grows from annoyance to major political issue
As technology plays a bigger part in everyday life, it enters not only the legal realm but also, increasingly, the world of politics. This year, spam was one of the causes célèbres for politicians in both Europe and the U.S. In October, an "opt-in" directive came into effect for the 15 European Union (E.U.) member states. In the last few weeks of the year, the U.S. Congress followed suit by sending an "opt-out" antispam bill to President George W. Bush to sign. Squabbles over differences in approach gave way to agreement that unless some sort of antispam crackdown also occurs in Asia, purveyors of unsolicited e-mail will find a haven. Security experts agree: For now, just to be safe, users should not count on the law for protection, but use antispam filter software.
Offshore outsourcing: One worker's gain is another's loss
Stories about Western companies outsourcing work to India have been reported for years. But this year it became apparent that Romania, Bulgaria, Russia, China, Ghana, the Philippines, and literally dozens of other countries are also clamoring for, and getting, business from the leading industrialized Western countries. The value of IT services provided to U.S. businesses from offshore labor will double to US$16 billion next year and triple again to $46 billion by 2007, IDC now says. Forecasts such as this sparked fears that Western IT workers will face increasing competition, and prompted politicians and trade unions to raise the specter of protectionism. Legislators in several U.S. states voted for anti-outsourcing bills. Now, with outsourcers moving up the IT value chain from offering basic coding labor to higher-value product design, this issue is likely to cause friction for years to come.
Slammer, and other worms, continue to slam Net
The year had just gotten under way when Slammer hit the Internet, proving to be the fastest spreading worm to date and reminding Internet users globally that security is still a paramount, unresolved problem. The good news is that most organizations that were affected said prompt reaction and new security technology prevented more widespread disruption. The bad news is that security flaws in popular software will likely allow malicious hackers to continue to plague users. Slammer took advantage of a flaw in Microsoft SQL Server 2000, while Blaster, a worm surfacing in August, infected machines running Windows XP and Windows 2000. Experts estimate that there were about 80 more software flaws found in 2003 than in 2002. As long as such flaws exist, users will have to deal with corrupted hard drives and network slowdowns.
The Wi-Fi revolution comes to a coffee shop near you
While Wi-Fi hotspots had already started to spring up in public spots around the world last year, it wasn't until this year that you could pretty much count on finding a hotspot in multiple coffee shops throughout most of the globe's major cities. When you can access the Internet via Wi-Fi while sipping an espresso in cafes around the world, you know a consumer trend has arrived. Intel Corp.'s Centrino chip package, tailored for mobile computing applications, helped fuel interest in wireless computing. Meanwhile new specifications such as 8011.g, combined with new smart antenna technology, will work to boost Wi-Fi range and signal strength, and undoubtedly serve to further fuel the wireless revolution.
AMD pushes 64-bit computing into prime time
While not as mainstream as Wi-Fi, low-cost 64-bit computing took a step toward prime time in 2003. Advanced Micro Devices Inc., the perennial David to Intel's Goliath in the global processor arena, played a key role in lighting a fire under the market for 64-bit computing, launching in April the Opteron chip and in September the Athlon64 processor. Since the chips run both 32- and 64-bit applications, AMD hopes to be rewarded by helping customers hedge their investments in old technology and ease the transition to new applications. Though desktop users will still have to wait for many applications as well as a 64-bit version of Windows not expected until the second half of 2004, the stage is set for the average user to get the benefits of faster video encoding, better performance on complex applications like CAD, and a richer game environment.
PC vendors see the future, and it's the Consumer
When developed countries are saturated with PCs and developing countries don't have the economic muscle to energize a maturing market, what's a computer manufacturer to do? The answer appears to be: Take advantage of the average person's insatiable appetite for entertainment. Though the concept of convergence among consumer electronics, communications and computer technology took root about a decade ago, it's come to fruition this year as IT vendors plunge into the manufacture of televisions, music players and hand-held communications devices. Though Apple Computer Inc. offered the IPod music player in 2001, and Japanese companies have for years offered both PCs and consumer devices, this year marked a new epoch for traditional PC manufacturers. Mainstream PC makers like Dell Inc. offered LCD (liquid crystal display) televisions, Hewlett-Packard Co. announced digital cameras, and Gateway Inc. offered a range of consumer electronics devices, including Microsoft Corp.'s Xbox game console, and home theater systems.
The PC market shows signs of life
Though consumer electronics holds out promise for hardware manufacturers, their fate for the time being rests in their traditional market, and after lying moribund for a year or so, PC shipments by the end of 2003 were being forecast to grow more than 11 percent for the year. That rate would mark double-digit growth for the first time since 2000. Though signs of a pickup first emerged in Asia-Pacific and from the consumer side, it was an expected surge in business spending in the U.S. that helped push the forecasts up above 10 percent. Analysts are also starting to predict double-digit growth for 2004 as well. All this bodes well for the chip industry. By the end of the year various analysts were estimating global semiconductor revenue to grow 16 percent or 17 percent in 2003 and anywhere from 19 percent to 26 percent in 2004.
The tech story that wasn't, and the search for the Next Big Thing
By the end of the year, rosy predictions for hardware joined upbeat economic news, including the Dow Jones Industrial Average closing above 10,000 for the first time in 18 months, and moves by the Nasdaq stock exchange to bring more technology stocks into its Nasdaq 100, as the index rose by over 40 percent from 2002 levels. This gave a lift to the end of 2003, which in a sense was the year of the tech story that wasn't: Prognosticators' forecasts for an upturn in 2002 had been dashed, and this had a dampening effect on the usual hype surrounding new products. Now, industry watchers are starting to talk up technology that made news this year, but that might need a more robust buying climate to really take off. Look out for a resurgence in spending -- IDC forecasts overall IT spending to grow between 6 percent and 8 percent in 2004 -- and for trends including the increasing use of utility, or "on-demand" computing resources, and increasing corporate use of low-cost commodity computing systems that incorporate Intel chips and Linux.