If 2001 was a year of cataclysm and change, 2002 was about looking for—and in some cases finding—closure on events that dominated the previous year. IT and government officials refined their view of networking and computing infrastructures through the filter of potential terrorism; Microsoft Corp. and Hewlett-Packard Co. shed some of the uncertainty that weighed them down the previous year; and, with many enterprises still working off the IT spending binge of the past, consolidation continued unabated, and investments in IT remained slow.
Here are the stories that shaped IT in 2002:
1) The visible hand
Still reeling from the Sept. 11, 2001, terrorist attacks, IT and government policy-makers in 2002 forged ahead on two fronts to fortify the nations networks and data centers.
As eWeek began reporting in August, the Presidents Critical Infrastructure Protection Board, headed by Richard Clarke, released in September a draft Strategy to Secure Cyber Space. Industry applauded the voluntary nature of the recommendations, but many others, fearing costly new regulations, raised concerns about the balance between security and economic realities.
IT organizations objected to proposals calling for new standards bodies, federal assessment of service providers and a public/private fund to address the Internets needs. The PCIPB is expected to release its final version of the strategy early in 2003.
Meanwhile, legislation creating the Department of Homeland Security was signed into law by President Bush Nov. 25. Security experts praised the prospects for bringing all data regarding cyber-security under a single organization.
Whether these measures will strengthen the nations IT infrastructure is still in doubt. One year after Sept. 11, eWEEK found many IT departments decentralizing their organizations and moving data centers out of city locations such as Manhattan. Meanwhile, IT security upgrades at many of the nations potential terrorist targets remain works in progress.
2) Beating the rap
Microsoft had another full docket in 2002. Lawyers for the Redmond, Wash., software maker fought a retrial of the antitrust remedies with nine dissenting states and the District of Columbia and, in November, claimed a victory when U.S. District Judge Colleen Kollar-Kotelly issued a ruling that affirmed much of a federal settlement signed earlier in 2002. Kollar-Kotelly rejected most of the tougher penalties proposed by the nine states, which fought that settlement. By the end of the year, only two states—Massachusetts and West Virginia—continued to pursue the case.
Microsoft also renewed its tug of war over Java with Sun Microsystems Inc., which in March filed a private antitrust suit against Microsoft, claiming the company used its monopoly power to hinder Java. It was the second Java-related suit filed by Sun. The first was settled in January 2001 over Microsofts distribution of Java-compatible products. As the year closed, U.S. District Judge J. Frederick Motz, showing some sympathy for Java, was considering whether Microsoft should ship Java with Windows.
Meanwhile, outside the legal arena, Microsoft CEO Steve Ballmer and company dodged shells lobbed by enterprise customers, particularly small and medium-size businesses, that felt cheated by new licensing plans instituted in July that required heavy upfront payments by some customers. As eWEEK reported in November, Microsoft was by then considering new ways to add value to the new Software Assurance licensing program.
3) HP, Fiorina: On their own
In a vote that had all the makings of a Florida recount, HP and Carly Fiorina sweated out the shareholder ballot approving the acquisition of Compaq Computer Corp. in March. In April, Fiorina took the stand and fought back an HP dissident director, Walter Hewlett, in a lawsuit that charged HP, of Palo Alto, Calif., with coercing shareholders. In May, Fiorina, as CEO and chairman, celebrated the new HP.
Fiorina retained former Compaq CEO Michael Capellas as president. But by November, Capellas was being tapped by WorldCom Inc. to lead it out of bankruptcy, and, suddenly, HP and Fiorina were truly on their own.
By years end, the new HP was showing signs of life, delivering on Web services, exceeding expectations in fourth-quarter earnings and closing a billion-dollar outsourcing deal with NEC Corp.
4) Hot-spot warming trend
Wireless LAN technology entered 2002 in an alphabet soup war that threatened to push WLANs into a state of confusion even before the technology had a chance to prove itself. But by years end, 802.11b products were reaching commodity status, thanks to rising user demand.
802.11b, also known as Wi-Fi, has proved popular enough that support for the rival wireless transport protocol, Bluetooth, is dwindling. Security, though, remains the biggest problem with Wi-Fi, and it wont be solved until follow-on specifications such as 802.11i are adopted. As a result of 802.11bs popularity, the first public wireless network access points—or “hot spots”—emerged. HP, Toshiba America Information Systems Inc., Nokia Corp. and IBM Global Services each were developing WLAN-related products or services. In addition, T-Mobile USA Inc. helped Starbucks Corp. roll out public hot spots in 2,000 stores.
: 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.