By Chris Gonsalves  |  Posted 2005-12-19 Print this article Print

Hanging up on Ma Bell

Federal regulators this year approved the acquisition of the nations two largest long-distance companies—AT&T Corp. and MCI Inc.—by the two largest local exchange carriers—SBC Communications Inc. and Verizon Communications Inc.—opening the floodgates for consolidation in telecommunications.

To protect SMB (small and midsize business) customers, the U.S. Department of Justice required that SBC and Verizon divest lines to several hundred buildings in 19 cities where they otherwise would not face competition following the mergers.

The Federal Communications Commission required that the merged companies provide stand-alone DSL service, retain the rates they charge businesses for high-capacity communications and continue to provide peering with other ISPs for specified time periods. However, two FCC commissioners, Jonathan Adelstein and Michael Copps, cautioned that the conditions may not go far enough to prevent rising prices and diminishing choices. Following its acquisition of AT&T, SBC changed its name to AT&T Inc.

Patriotic acting

Facing the expiration at years end of more than a dozen police powers enacted in the USA Patriot Act, Congress began debating an extension of the law early in the year but found itself at a standoff as the sessions adjournment approached. In the fall, the Senate passed a bill to protect civil rights while extending certain surveillance powers, but the House of Representatives passed a measure without such protections.

To read more about the Patriot Act II, click here. With urging from the White House, lawmakers participating in a conference to reconcile the two bills eliminated the protections. However, a bipartisan group of senators vowed to block passage of the bill if the protections were not included.

More at the core

Both IBM and Sun Microsystems Inc. have had dual-core processing in their respective Power and UltraSPARC chips for several years, but in 2005, Advanced Micro Devices Inc. and Intel Corp. introduced the feature in their x86 server and PC chips.

The moves brought the technology—which offers two processing cores on a single piece of silicon—to a new customer base and kicked off the rush to multicore processors. It also was the latest example of AMD beating its larger rival to the technological punch. Just as with 64-bit computing in the x86 world, AMD was several months ahead of Intel in introducing dual-core processors and has seen its share of the server market climb as a result.

Both companies enter 2006 promising to quickly add other features, such as virtualization, to their processors and to introduce four-core capabilities in 2007. Theyll have a way to go to beat Sun, though, which, in November, unveiled its new UltraSPARC T1 processor—formerly code-named Niagara—which offers up to eight cores on a single chip.

Grand-plan Cisco

In the networking arena, Cisco Systems Inc. dominated the news with continued expansion. The company this year launched what could be its boldest bet yet with its AON (Application-Oriented Networking) initiative. AON represents Ciscos first bid to perform preprocessing on applications traffic in the network fabric. The technology is designed to read application-to-application messages and allows users to apply policy rules to the traffic.

Google beats Microsoft for a 5 percent stake in AOLs business. Click here to read more. Cisco also bookended the year with significant acquisitions. In January, Cisco announced the $450 million acquisition of Wi-Fi switching startup Airespace Inc., whose centrally managed wireless LAN products flew in the face of Ciscos traditional distributed WLAN strategy.

It became clear quickly that Airespace would be a force within Ciscos wireless division. In March, Bill Rossi, vice president and general manager of Ciscos Wireless Networking Business Unit, took a leave of absence—and never returned. By years end, the unit was led by former Airespace CEO Brett Galloway. On the product side, Cisco introduced software that let its access points work with Airespace switches. The company also entered the mesh-networking space using technology gained in the Airespace acquisition.

Late last month, Cisco leapt into home video equipment, acquiring cable set-top box maker Scientific-Atlanta Inc. for $6.9 billion.

Theyre feeling lucky

Last year at this time, the buzz was about Google Inc.s public stock offering. Despite persistent predictions that the search company would stumble, 2005 proved to be another heady period for Google. The stock finished last year at $170 per share, and it looks like it will exit this year at more than $400 per share.

Throughout the year, Google has rapidly expanded its efforts to woo the enterprise with the launch of a new partner program for enterprise integrators and ISVs, a partnership with IBM on enterprise search tools, and a slew of price reductions on its search and Web analytics tools aimed for businesses.

Under increasing pressure to counter Googles moves in Web services, Microsoft Corp. finished the year by trotting out extensions to its Windows and Office products that will be delivered over the Internet. The so-called Windows Live and Office Live services wont replace the traditional software but rather are MSN services rebranded to allow users to connect from anywhere.

Microsoft also made a splash in 2005 by restructuring into three new business units and tasking IT industry luminary and Lotus Notes creator Ray Ozzie with heading the companys software-as-a-services strategy, a world in which Microsoft is playing catch-up with the likes of IBM, Oracle and Inc.


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