2001: the darkest hour is before the dawn. Year in review IT¹s darkest hour sub: 2001: the darkest hour is before the dawn. by Dan Heilman
For eight months and 10 days, the year’s top tech story was a toss-up: The industry churned and struggled through so many ups and downs that we wondered how we’d ever winnow the list of top stories to a manageable figure. But then a dark Tuesday dawned, and everything changed. It’s now difficult to look back on any of the developments of 2001 without peering through a cloud marked 9/11. A startling number of significant developments and noteworthy trends emerged in 2K1, some of which were continued from last year, some of which emerged fresh. Still, it’s hard to avoid talking about those trends without starting with the story of the century.
The human consequences of that day have been well chronicled elsewhere, and we will not rehash them here. But the impact of the terrorist attacks in New York and Washington on the tech world were enlightening and wide-ranging. The first consequence might have been predicted: Sept. 11 was a watershed day for the Internet. Instantaneously, the Net became a combination water cooler, meeting hall, and lost-and-found outpost as the curious and the concerned used electronic resources to find out the latest on the disaster.
Later, ISPs opened their records to aid the FBI in its investigation of the attacks; the already-ailing PC market braced for a year-end plunge in sales even more dramatic than previously projected; and IT companies of every stripe slashed their budgets in anticipation of economic slowdowns.
Also, the tech world revealed itself to be a little more close-knit than many thought when it mourned the loss in the attack of some of the industry’s brightest lights. Akamai Technologies co-founder Daniel Lewin, MRV Communications CFO Edmund Glazer, and Netegrity CFO James Hayden were among those killed by hijackers.
Meanwhile, the potential long-term effects of the attacks quickly made themselves apparent. Official measures were undertaken that would ask citizens to give up electronic privacy in exchange for a greater measure of security. The Senate approved expanding the use of the FBI’s Carnivore e-mail surveillance system to include investigating acts of terrorism and computer crimes, and Congress reached a tentative compromise on an antiterrorism bill that, among other things, would allow for expanded surveillance of e-mail and other electronic communications.
Civil-liberties groups cried foul at much of the proposed legislation, citing the potential for the deterioration of online privacy. But as fall turned into winter, it seemed like a fear of terrorism would carry the day: Many polls indicated that most Internet users didn’t mind being spied on in the interest of public safety.
Watch your back
The terrorist attacks were only the culmination of a process in which high-tech surveillance is reaching the minds of more and more computer users. The practice of key escrow, putting encryption keys into the hands of an agreed-upon third party, were also debated. Meanwhile, encryption technology found itself under the microscope after speculation that terrorists had used the technology to help plan the Sept. 11 attacks. Aside from concerns from civil-liberties groups, any initiative against encryption will surely be fought by the already ailing e-commerce sector, which relies on the technology to keep its online transactions secure.
Microsoft v. DOJ, cont.
Is Microsoft fighting the good fight, doing everything it can to salvage its good name and remain atop the PC heap? Or is it using its virtually limitless resources to drag an unwinnable case out until doomsday? Both opinions got a good airing in 2001, and the year ended with a surprise settlement between the two adversaries.
The settlement pact imposes a broad range of restrictions on Microsoft’s business practices, which would be upheld by an independent, on-site, three-member panel of computer experts. Under terms of the agreement, Microsoft can’t enter into licensing agreements with PC manufacturers that restrict them from working with other software developers‹the so-called “exclusive dealing” for which Microsoft has become notorious. It also would require Microsoft to provide other software makers access to APIs in its Windows source code. The good news for Microsoft? The settlement doesn’t restrict what Microsoft incorporates into the Windows OS, the original bone of contention when the government initiated the case in 1997. At press time, the settlement had only been announced, and not ratified by many of the states still pursuing antitrust cases of their own. Microsoft still might have its work cut out for it as the new year dawns.
A match made in heaven?
When does two plus three equal one? When the second-biggest PC maker (Hewlett-Packard) merges with No. 3 (Compaq) in a $25 billion stock deal that has the potential to push the new conglomerate ahead of Dell in the PC market. Almost as soon as the deal was announced, analysts debated whether it would benefit consumers by stabilizing prices, or hurt them by making bedfellows out of two fierce competitors.
Employees of the merged company were made nervous by projections of 30,000 layoffs. Computer users, meanwhile, fretted about the overlap between the two companies’ products. Combined, HP and Compaq offer four server architectures, seven operating systems, four storage architectures. and multiple service businesses. No matter which of the duplicate services gets cut, someone will be left out in the cold.
While HP/Compaq grabbed most of the headlines, other mergers and consolidations made waves, too. AT&T Wireless scooped up the portion of Telecorp PCS that it didn’t already own; Novell merged with Cambridge Technology Partners; Autobytel.com bought Autoweb.com; Learn2.com Inc. and E-Stamp Corp. joined forces; an AT&T-Bell South merger is pending; Macromedia merged with Allaire; and several other lesser merger stories emerged throughout the year. Lost in the shuffle was the news that tech mergers were actually down in 2001.
Still, the message on mergers from within the industry was: Get used to it. In October, Gartner Inc. CEO and Chairman Michael Fleisher warned that, either through consolidation or bankruptcy, half of all the well-known IT vendors doing business today will vanish within three years.
For one brief moment a couple of years ago, the tech industry seemed like it might be impervious to the vagaries of the general economy. That moment seemed like ancient history in 2001 as Web sites closed up, tech companies slashed staff, and the bloom not only fell from the dot-com rose, but the stem withered as well. In fact, the name dot-com itself took on the stigma of failure, as several companies quietly dropped the “.com” from their names.
While tech followed the downward spiral of the economy, it led the way in slashing workers. Telecommunications and computer companies posted the largest number of job cuts in 2001, according to Chicago-based outplacement firm Challenger, Gray & Christmas Inc. For the first nine months of this year, telecommunications companies cut 225,231 positions, while computer companies posted 131,658 job cuts. (The total number of job cuts in major industries in that nine-month period was 1,371,688.)
Job cuts reached a record high of 248,332 in September, and of those, 200,807 were announced after the Sept. 11 terrorist attacks. Are we jaded enough to suggest that some companies saw 9/11 as the perfect excuse to hack away with impunity? Not us.
Sircam, Nimda, and Code Red got all the headlines, but the truly ominous news about viruses was between the lines. According to Information Security magazine’s annual Information Security Industry Survey, attacks on Web servers doubled in 2001 compared to 2000, and nearly 90 percent of companies surveyed have been infected with worms or viruses, despite having antivirus software installed.
That points to the twin bugaboos of all security efforts: budget constraints and plain old human laziness. Even when companies can afford to keep their security efforts current, employees too often don’t bother to learn how to use them. In other words, the best-laid plans are still subject to the foibles of human nature.
Turns out that the little file-swapping service that could actually couldn’t. After months of speculation about its possible future as a pay service, Napster ended the year on a respirator. Other swapping services scrambled to fill the void while Napster shuttled in and out of courtrooms. As the year ended, Napster was growing desperate, trying to find cases of collusion and antitrust in competing online-music services.
Who will fill the void? Probably nobody. The novelty of online music has faded as listeners await an improvement over MP3, and few seem willing to pay for downloads. Nonetheless, such services as Kazaa, Morpheus, BearShare, WinMix, Napigator, and Aimster are happy to slug it out for the hearts and wallets of the online-music diehards.
But even the most optimistic observers had to admit that 2000 will go down as a time of Camelot when the online-music craze is remembered. Your grandchildren will gasp when you tell them that once you could download all the music you ever wanted, for free.
OS wars, part 1
Microsoft planned a $1 billion marketing blitz for the Windows XP desktop operating system it launched in October, but projections made it seem unlikely that all the effort would sway corporate users. A Computerworld survey of 200 IT managers and decision-makers showed that 52.5 percent don’t intend to migrate to the new operating system.
It seems that not only do most managers have no use for the relatively power-hungry (minimum requirements: 233MHz processor and 64MB of RAM) OS’s new features and find it too expensive, but most are still in the throes of migrating to Windows 2000. At this writing, Microsoft was counting on word-of-mouth to create a groundswell of XP support among companies not obsessed with staying on the leading edge.
OS wars, part 2
It was touted as Apple’s most significant new OS since the giddy days of 1984. Only trouble was, most consumers didn’t see it that way. Almost from the moment Apple started shipping OS X in March, users wailed about bugs, lackluster plug-and-play capability, slowness in launching applications, and such missing features as DVD playback and recording. In September, Apple unveiled version 10.1 of the OS (including a $20 upgrade to the $129 OS), insisting that this was the true mainstream version of the operating system, and that the earlier version was only for guinea pigs‹um, early adopters. The true test of the new OS will come when the projected 1,500 software applications designed for it begin shipping.
If 2001 is any indicator, 2002 should have us all shaking our heads at year’s end of the year. But that prediction is taken up elsewhere in this issue of COMPUTERUSER. For now, those in the tech industry will probably watch the calendar turn over with the same response many of the rest of us have: a sigh of relief.