To say that 2001 was a turbulent year for the IT industry would be
an understatement. IT managers battled incoming viruses on one
front while fighting corporate budget-cutters on another.
The promise of the Internet economy went down along with the
promise of a new Internet society, as all but a few dotcoms fizzled
out while corporate interests and governments stomped on
information-sharing and privacy rights online. The ever-growing PC
installed base finally foundered on the shores of a weak economy
worldwide.
Even merger mania stalled this year, with the biggest deal of the
year - Hewlett-Packard and Compaq - turning into a nasty boardroom
brawl. Here, in no particular order, are the stories that shaped
our industry in 2001:
Viruses and worms run amok
Whether it can be blamed on
shoddy coding, negligent administrators or stupid users, 2001 was
the year of the worm. Nimda, Code Red, Badtrans, Anna Kournikova,
the list goes on and on, right alongside the list of millions of
infected systems.
Most of the year's early worms were e-mail-based, exploiting
settings in Microsoft Outlook that make it the preferred
propagation method for virus writers everywhere. Later, though,
worms turned to the Web, taking advantage of software security
holes to break into Web servers and launch attacks. Once again,
Microsoft was centre stage, with Nimda and Code Red attacking the
company's IIS Web server.
As the year wound to a close, a future in which worms would spread
through multiple methods, such as e-mail, the Web and chat
applications was beginning to come into sharp focus, as virus
researchers had said it would. If predictions for such so-called
"blended threats" came true in 2001, many were left wondering
whether 2002 would see the advent another prediction: Worms that
can update themselves automatically to avoid detection by
anti-virus software.
The year the music died
The Internet finally became
safe for major corporations that control copyright works this year,
as the US Digital Millennium Copyright Act (DMCA) was used,
challenged and bolstered in a number of cases that could have
long-ranging effects on free speech and the Internet. The popular
Napster site went down and stayed down, as well, along with a
number of its file-trading relatives.
Courts in the DeCSS DVD cracking case upheld the DMCA in November.
It was used in June to prevent Princeton computer science professor
Ed Felten from publishing his research about security flaws in the
Secure Digital Music Initiative. And this US law bared its teeth to
a non-citizen visiting America for a conference: 26-year-old
Russian programmer Dmitry Sklyarov was threatened with up to 25
years in jail for writing a program that removes copy-protection
features in Adobe eBooks, something the DMCA forbids but is legal
in his homeland.
Dot bomb fallout
When the Internet economy imploded in
2000, the "real" technology companies - such as Cisco and Intel -
that had seemed stodgy during the dotcom craze looked like safe
havens for investors. But the fallout also touched these technology
stalwarts, which have suffered from the combination of a feeble
stock market and a no-growth economy.
All those start-ups had voracious appetites for technology. Telecom
equipment providers, for example, had their customer lists pruned
as debt-laden competitive local exchange carriers and Internet
service providers (ISPs) went belly up, often before paying their
bills.
Big IT companies, names like Intel, Lucent Technologies and Nokia,
had also become big investors in Internet startups, setting up
corporate venture funds to bring along small companies with
complementary technology, or even just to make a profit. While
these funds proved lucrative during the dotcom heyday, they quickly
became corporate burdens when the stock market tanked. These
vendors would be in better cash positions today if it wasn't for
the write-downs taken on dotcom investments.
ISP businesses flame out
By profiting from sales to
dotcom companies, ISPs and other competitors to the dominant
telecommunication companies' wagons were hitched to the same star
as many online media companies and equipment providers. When the
dotcoms fell off the cliff at the end of 2000, they dragged ISPs
with them a few months later, starting with the high-profile crash
and burn of NorthPoint Communications Group. NorthPoint went
bankrupt and took down the high-speed digital subscriber line (DSL)
Internet connection of thousands of customers with them in March.
Successively, the ISPs fell - PSINet went bankrupt in June (though
Baltimore's Ravens still play in PSINet Stadium), and Rhythms
NetConnections and Covad Communications filed for bankruptcy in
August. Excite@Home filed for Chapter 11 status in September. These
upstarts laughed loudly while attacking staid old-economy telecom
competitors, but the last laugh was the quiet chuckle of just those
telcos as they scooped up the broken pieces by either buying out or
bailing out their bankrupt foes.
HP/Compaq problem merger
Carly Fiorina came to
Hewlett-Packard with a plan for sweeping changes at the stately old
granddaddy of tech firms. She went public on 4 September with her
boldest gamble: A $25bn (£17) bid to buy struggling Compaq and
create an IT colossus able to hold its own against mighty IBM.
But the news didn't take - investors dumped shares and quickly
slashed billions from the deal's valuation, while analysts warned
of the massive risks associated with complex tech mergers. Then the
heirs to HP's founding fathers went public with their opposition to
the merger, setting the stage for one of the largest corporate
proxy fights in history. HP and Compaq head into the new year with
their rivals circling overhead like vultures, ready to pick off
confused customers as Fiorina and Compaq's Michael Capellas fight
to overcome industry doubts and internal dissent at their
companies.
If the merger is completed, it will be the biggest high-tech union
to date. If it falls through, the deal's architects may be among
its casualties. Beset by commoditisation and consolidation in its
consumer business, Compaq faces a bleak future as an independent
firm, while Fiorina's reign as head of HP would likely come to an
operatic end.
Security after 11 September
In one horrifying morning,
hijackers rocked the rarefied sense of security in the US by
crashing planes that levelled the World Trade Centre towers in
lower Manhattan and destroyed a good part of the US military's
home, the Pentagon. When financial markets lurched back to life,
biometrics was the hot stock as security took centre stage.
Iris and fingerprint scanning and voice and facial recognition
technologies got a lift as airport security in the US was
scrutinised and found sorely lacking. Calls for more and better
screening continue, as airport terminal closings and evacuations
rise due to security breaches. New laws passed in the name of
security are meant to curb terrorist activity by making it easier
for authorities to snoop.
Privacy rights weaken
A backlash from terrorist attacks
on the US and new technologies for identifying users on the
Internet made for a double-whammy encroachment on the cyber-civil
liberties of Internet users everywhere. The US Congress voted to
give the federal government unprecedented powers to snoop on
digital communication.
The Internet spying system known as DCS1000, or "Carnivore", began
chomping away at the meat of Internet privacy. Internet service
providers handed the Government access to data sent over their
pipes. And in December, the FBI confirmed that the government is
working on another Internet spying technology, code-named "Magic
Lantern", to be used to eavesdrop on suspected criminals. While the
new technology means better tools for tracking down bad guys who
misuse the Internet, advocates say it also means the end of privacy
on the Web.
Next thing you know, the government will make up with Microsoft and
start handing out Passport accounts as national ID cards - identify
yourself and read your Hotmail with a single login.
IT growth stalls
On the planet of the IT market
research firms, a world where every line points upward as it
travels from left to right and markets always seem to grow, 2001
delivered a reality check. For the first time in history, PC sales
measured by IDC and Dataquest declined in Europe and the US.
In September, IDC projected worldwide shipments for the PC, the
little engine that today drives so much of the globe's IT market,
to fall 1.6%, compared to last year's growth of 15.7%. The US
consumer market led the downturn and was projected to tumble 25%
from its 2000 level. Is it just the economy? Or is the global
market resisting Bill Gates' vision of a PC in every home and on
every desk?
MacOS X finally bows
For Mac users the world over, the
wait for a mature, robust operating system finally came to an end
this year when Apple released the Unix-based Mac OS X in March. The
new OS was based on BSD, a Unix variant that would have sent Mac
users screaming years ago.
However, with a smart, animated user interface laid over the top of
BSD, Mac fans embraced the OS. Mac OS X was the culmination of
Steve Jobs' 1997 return to the company he co-founded in the late
1970s, as the technology that helped build Mac OS X was acquired
when Apple bought Jobs' company NeXT in 1997.
After nearly 10 years of delays and almost as many codenames - Mac
followers no doubt cringe at the mention of Pink, Copland and
Rhapsody - Apple finally has an operating system to build on for
its future.
Microsoft on trial
A year ago, Microsoft was under the
threat of a break-up, ordered by Judge Thomas Penfield Jackson
after he found the software giant guilty of breaking US antitrust
law.
Now, Microsoft critics say that it looks like the company may get
just a slap on the wrist. A proposed settlement reached between
Microsoft, the US Department of Justice and nine US states calls
for restrictions on Microsoft's behaviour, but still lets it add
essentially whatever it wants to its products - a clear victory for
Microsoft.
Microsoft feels so vindicated, despite private lawsuits and a
European case that have not been resolved, that when the nine suing
states not participating in the settlement called for harsher
remedies, it protested by calling the plan "punitive". Maybe
someone needs to remind Microsoft lawyers that the company was
found guilty.
Long-time industry observers recall the 1994 consent decree
settlement - also criticised for being a slap on the wrist -
between the DoJ and Microsoft, in the wake of antitrust inquiries
that began in 1991. After much legal manoeuvring, that settlement
was upheld in 1995. But one year later, after accusations that
Microsoft was violating the consent decree, the DOJ launched yet
another antitrust inquiry, which broadened into the case that is
still making headlines. While the software industry moves at
fibre-optic speed, some things never change.