Much of 2002’s biggest tech news had a familiar ring.
Was there something about the year in news that felt, well, a little stale? A touch anticlimactic? After all, when it comes to big stories, how do you top the collapse of the tech market, let alone 9/11? Even the poignant one-year anniversary of 9/11 (or as The Onion solemnly observed, the poignant one-week anniversary of the one-year anniversary of 9/11) felt more like a fuzzy-tongued Bloody Mary than a fresh cocktail.
And many of the top tech stories had a similar filmy feel of familiarity. Most of 2002’s top stories were continuations (or encores) of tales begun in 2001. Few earth-shattering new technologies or controversies stole the headlines, giving the tech news pages some welcome stability. Instead, the big stories from the past couple of years ground forward, indicating that the debris from the tech explosion might be finally falling to earth. Is that good or bad? Does it mean continued stability or the calm before the storm? Stay tuned.
Come out with your hands up
Did Oracle CEO Larry Ellison dump his company stock in anticipation of an earnings warning that only he and a handful of insiders knew about? Did WorldCom controller David Myers mask billions of dollars in company expenses at the behest of his bosses? Those stories and more, on the 2002 episode of “As the Tech World Turns.” The technology sector, while not earning Enron-size headlines, certainly had its own episodes of alleged corporate sleaziness to deal with. Oracle’s woes had several of its biggest clients running for cover (and for other vendors). But as Undersecretary of Commerce for Technology Phil Bond told C|Net in July, “The tech sector has been depressed–flat on its back–and it’s most in need of investor confidence.” The implicit message being, shape up or watch your stock prices, and those of your colleagues, fall through the floor. Can executives look past their own greed for the sake of the industry they serve? We’ll believe it when we see it.
Pick up the phone
Speaking of WorldCom, that company’s well-documented troubles had a ripple effect in the telecom world. The scandal led to fears among consumers that service quality would deteriorate, and many pre-emptively jumped to other providers on the presumption that WorldCom was done for. The dwindling confidence created by the scandal, along with the tech recession in general, also led to red ink for equipment providers like Lucent and Nortel. In the meantime, heretofore smalltime telecom providers like Intel were licking their chops, waiting for the market to open up. The shame about the shake-out is that WorldCom seemed to have some interesting productive things in the works: The company’s plans to beef up such growth areas as VPNs and voice-over-IP services will have to wait. For the future, look for the main areas of development emphasis to be chips for wireless networking, optical networking, network processing equipment, and chipmaking processes that can tie all the technology together.
Get a job
The bleeding has slowed if not stopped, at least in the tech job market. The latest report from AeA (formerly the American Electronics Association) showed 700 tech jobs lost in June, a mere bruise after the 24,000-plus-per-month average rate of job cuts that had prevailed since the start of 2001. But a growing number of companies are reporting increased orders, and unemployment in Silicon Valley was 7.6 percent in August–still an outrageous figure compared to the December 2000 glory days of 1.3, but an improvement. And experts are saying that even though tech start-ups are down to a trickle, now is the time to come forward with a great idea that won’t get lost in the shuffle–you just need to be a little more creative about getting capital, using your own money, or finding angel investors among friends and relatives. Does that mean the worst is over, or does it signify a brief rally preceding more gloom? Stay tuned, and in the meantime, keep polishing that résumé, or refining that world-changing brainstorm.
Napster’s pending sale to Bertelsmann was blocked by a federal judge, leading to the closing of the file-sharing pioneer and many similar services. Meanwhile, the major record labels forged ahead with plans for pay-download services; by fall, Pressplay and MusicNet were both either at or near licensing agreements with the five primary music conglomerates. That development drew a resounding yawn from consumers who, spoiled rotten by Napster and its brethren, couldn’t see the wisdom in paying $1.99 for a dodgy-quality, unburnable MP3 of a track that was available in higher quality, for free, on any number of renegade peer-to-peer servers. Look for film studios to join the file-trading battle in 2003, as increased storage capacities and adoption of broadband make trading movies as simple as trading songs was a few years ago.
OS Wars, part I
Windows XP, Microsoft’s new operating system stumbled out of the gate, as most adoptions came from new PC purchases, not upgrades of existing OSes. Fewer than 300,000 shrink-wrapped copies fell from store shelves in the OS’s first week on sale. Consumers loved XP’s ability to run games and other power-hungry applications, but tended to give 2000 Professional and other previous OSes the nod for stability. But the ever-adaptable software giant used a shift in strategy to beef up XP’s adoption rate. Later in the year, Microsoft rolled out its business-targeted Professional edition of XP, and it powered a first-year total of 67 million copies of XP sold and an astounding $2.73 billion operating profit in the company’s first fiscal quarter.
OS Wars, part II
Getting a push from its biggest-ever TV advertising campaign–and by the way, who else wants to dump a bucket of cold water on Janie Porche, the girl who “saved Christmas”?–Apple sold more than 100,000 copies of version 10.2 (aka Jaguar) of its OS X operating system, by far the fastest seller of any Apple OS. Apple managed the admirable feat of wooing PC users with such Windowsesque features as iChat and Inkwell, all the while keeping the loyalty of notoriously possessive Mac lovers. Even though Jaguar was priced along the lines of a new OS (not just an upgrade), many hard-line OS 9 people made the switch–partly because Jaguar revived features of previous Mac OSes that were missing from earlier iterations of OS X.
OS Wars, part III
Is Linux ready for the big time? Because the big time might be ready for Linux. Increased adoption across all sectors has business owners and consumers confident that service and support for Linux-run products will now start matching the quality of the products themselves. A big step toward that milestone was taken in 2002 as Amazon.com, Verizon, and E*Trade all declared their allegiance to Linux–to the tune of $10 million in savings, in Amazon’s case. Sun also joined the parade by employing Linux servers and putting the Linux OS to work in its consumer-level PCs. It also helped that the Linux Standards Base was formed, all but guaranteeing that it won’t splinter the way UNIX did. Only 9 percent of enterprise businesses use Linux at this point, according to a recent Forrester survey, but almost all observers say that number will rise significantly in 2003.
New jobs might be scarce, but among the ones that are being created, many are in security. That’s partly thanks to post-9/11 anxiety, and partly due to an increase in general demand for such efforts as firewalls and network monitoring. IDC predicts that security spending is on track to grow twice as fast as overall IT spending and to reach $150 billion worldwide by 2006. Much of that money is going to be spent on real, live humans, which means now is the time to get in line for the security-certification gravy train. A recent survey by IT research firm Foote Partners showed that overall base salaries for security-related jobs increased by almost 3 percent more than salaries in other IT jobs during the survey period. Looking for where the action will be in 2003? For starters, try corporate security, Web security management, data-warehouse security management, and senior-systems administration.
The game is on the line
Video games are the second most popular form of home entertainment today, behind only television. The industry is projected to generate $20 billion annually worldwide by 2005. And to think some parents still call gaming a waste of time. Figures like that have Microsoft, which arrived somewhat late to the gaming party, ready to put $2 billion into the development of its proprietary online service, XLive. But other gaming giants aren’t sold on online gaming. Nintendo is focusing its efforts on making its existing gaming platforms able to talk to each other. But Nintendo’s the exception. Other, more generic developments that should lead to those lofty online-gaming goals include compatibility across platforms, gaming on portable devices, the continually enhanced realism of graphics and sound, the use of gaming technology in the education market, the integration of applications such as e-mail into games, and the migration of game developers to and from TV and movies.
Plenty of storage space
100MB Zip drives gather dust in junk drawers while 128MB ThumbDrives are a staple of key rings everywhere. Hard drives in video recorders are sending VHS tapes to the scrap heap of history. That should be a solid indicator that data storage has come a long way in a short time, and 2002 was a big year for places to put big files. The future looks bright in the storage arena, too: “Blade” servers, which cut storage space in half, are emerging strongly. And just this fall, iSCSI technology–a storage standard that takes connections between hard drives and computers into the Internet, thus letting multiple computers tap into a pool of storage systems–came into wide use. At the consumer level, those heretofore-$3-a-pop CD-Rs became practically disposable as storage media became bigger, better, and cheaper.
A word from our sponsor
The ongoing fight against unsolicited marketing via e-mail–and the fight for the right of marketers to send it out–continued in 2002. An IDC report released in September predicted that the worldwide volume of e-mail will increase from its current rate of 31 billion messages per year to 60 billion by 2006. That means more spam, and lots of it. According to antispam service provider Brightmail’s interception figures, more than a third of all e-mail sent is spam. But while legislators try to push through antispam bills and fed-up consumers turn to the courts for satisfaction, the real battle over spam is going on in the technology trenches. Corporations are employing blacklists and rules-based filters, while consumers are increasingly turning to such products as SpamKiller, SpamAssassin, MailWasher, and SpamNet to keep the garbage out of their mail servers. Yet, those advances cut both ways, and spammers are beefing up their methods as their victims increase their resistance. Until a legislative solution is found, the real winners will be the developers, whose technologies have the potential to help both sides.