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By Scot Petersen  |  Posted 2002-12-23 Print this article Print

: Top Tech Stories of 2002"> 5) IBM: Changing of the guard

Sam Palmisano succeeded Lou Gerstner as CEO of IBM in March and began laying off employees in May. The Armonk, N.Y., company reported in a government filing in August that 15,000 employees would be targeted to compensate for slowing sales.

Amid the cost cutting, Palmisano in October announced a $10 billion investment the company is making in what it calls On Demand computing, promising an IT infrastructure that is more responsive, variable, focused and resilient.

IBM also acquired the worldwide consulting unit of PricewaterhouseCoopers to bolster IBM Global Services, IBMs biggest unit. In addition, the company moved to add heavyweight development toolmaker Rational Software Corp., bidding $2.1 billion for the company in December. That would make the deal IBMs largest software purchase since Lotus Development Corp. in 1995.

6) Linux: Growing pains

Enterprise interest in Linux is growing. But as Linux vendors found themselves increasingly facing off with Microsoft in the enterprise space, some began to realize they couldnt compete on their own. In June, four such Linux players—Conectiva S.A., The SCO Group (which changed its name earlier in the year from Caldera International Inc.), SuSE Linux AG and Turbolinux Inc.—formed UnitedLinux to collaborate on a new kernel. Their initial release launched in November. Meanwhile, Linus Torvalds put the final touches on the next Linux kernel, Version 2.6, due early in 2003.

UnitedLinux, Red Hat Inc. and Sun CEO Scott McNealy made noise over the summer about attacking Microsoft, once again, on the desktop. But so far, theyve failed to put a dent in Windows dominance. Sun, for its part, sparred with customers that wanted to run its Solaris on Intel Corp.-based servers. In January, Sun deferred all work on Solaris 9 for Intel but by August had relented. Still, users were not happy with Suns less-than-enthusiastic attitude about the project.

7) Security: Holding pattern

Security hardware and software are more advanced than ever, yet they still have a hard time keeping up with viruses and worms—and their creators.

The most pervasive, disruptive worm in 2002 was Klez, which used random subject lines and could appear to be from anyone, even if that person didnt have the virus.

Throughout the year, debate simmered over vendor liability for insecure software. Microsoft tried to assure the masses that it cares about security—issuing Bill Gates Trustworthy Computing manifesto in January and taking part in the multivendor Palladium project to build security into enterprise platforms.

Despite Microsofts poor record on security, the company received a boost in December when an Aberdeen Group Inc. report debunked the notion that open-source software is more secure because it has more developer eyes on it.

8) Budget crunches ...

The IT spending downturn continued in 2002. Meta Group Inc., of Stamford, Conn., reported that in 2002, spending would drop by around 12 percent compared with 2001 spending. And the company said IT spending could fall 15 percent more in 2003.

Companies are spending less and spending differently. Half the companies polled by Meta spent more on developing Web applications than they did in 2001. On the other hand, 45 percent spent less to develop computer applications that are not tied to the Internet. As they cut spending, many organizations also cut IT staff. In a Meta survey, 47.6 percent of companies said they had reduced IT staff, most by 10 to 15 percent.

9) ... and crashes

The downturn in IT spending has had its effect on service providers, which have had to ramp up their offerings around infrastructure consolidation and other services that could demonstrate clear return on investment. The big enterprise systems management players—Computer Associates International Inc., IBMs Tivoli division, HP and BMC Software Inc.—didnt fare well, but smaller, nimbler and less expensive vendors did. Some—namely, System Management Arts Inc. and IT Masters Inc.—grew at a nice clip this year, despite the downturn.

Big outsourcing providers, meanwhile, suffered as customers deferred potential deals. Procter & Gamble Co., for example, decided not to outsource its business process group. The touch-and-go decision saw Electronic Data Systems Corp. emerge as the leading candidate to win the deal before P&G pulled the plug on the project. The financial woes of giants such as WorldCom and UAL Corp.s United Airlines also contributed to EDS slip.

10) Storage bytes

In 2002, storage management software came of age, with dozens of startups plus hardware vendors such as EMC Corp. and Hitachi Ltd. all gunning for Veritas Software Corp. In a tough year, EMC CEO Joe Tucci responded with a reorganization and spin-out of the companys storage management software unit as Diligent Technologies Corp. in November. Veritas itself saw an exodus of several executives, including its chief technology officer. Meanwhile, Network Appliance Inc. entered storage area networking and in the third quarter beat EMC in network-attached storage market share, according to International Data Corp., in Framingham, Mass. Enterprise users craving storage interoperability saw the birth of the Common Information Model, but whether it will succeed before EMC and Veritas rebound is undetermined.


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