The IT industry, perhaps more than any other, is reliant on new growth.
In the ferocious race to win the title “new”-and to hang on to that title the next day and the next-major and minor events jockey for position and perspective in our collective minds. Staring at any one of them might cause you to lose sight of the forest for the trees.
What follows are the groves of enterprise stories we’ve deemed most significant to the enterprise in 2008-with the economy casting a shadow that is sure to extend well into 2009.
1. Trickle-Down Pain
The most significant enterprise IT story in 2008 was not a technology story at all. What began two years ago as a correction in inflated real estate values in isolated parts of the country roared into IT departments nationwide this year, as an economy spiraling downward forced businesses to do more with less and/or craft slick solutions to difficult tasks.
The headlines recounting the nation’s descent into a recession (declared officially Dec. 1) rarely mentioned technology by name, but the effects have been felt hard in the industry. Tech stalwarts saw their market caps plummet (Google, for example, down more than 62 percent from its high of $228 billion) and share prices stumble (Sun Microsystems down 85 percent, to near $3).
And, as the year draws to a close, many companies have been forced to shed employees by the thousands. IT departments themselves have been shrunk, right at the time when they have been tasked with shutting down myriad accounts and consolidating divergent systems.
Budgets are frozen or shrinking, and IT is being asked to patch the old code, customize what’s already in place and keep the hardware going another year. As 2009 dawns, it’s clear that the economy will remain the primary concern of IT.
2. The Cloud Lands
“Cloud computing” is nothing new. You can find its roots in time-sharing, grid computing, on demand, SAAS (software as a service) and hosted services. But 2008 marked the cloud’s extension to mission-critical elements such as storage and security, and general enterprise acceptance.
Google and Microsoft grabbed headlines as they battled, successfully, for customers of their Google Apps and Microsoft Office Live productivity applications, respectively.
Amazon Web Services is generally considered the quintessential cloud offering. The company’s EC2 (Elastic Compute Cloud) for application development and S3 (Simple Storage Service) both serve up a Web interface and invite the customer to pay for what’s used via credit card.
In August, Amazon enhanced EC2 with EBS (Elastic Block Storage), which enables storage to persist after an EC2 instance is terminated. And Amazon augmented S3 with SimpleDB, Simple Queue Service, Flexible Payments Service and Mechanical Turk, a service now in beta that provides an on-demand work force.
Amazon is far from alone. Search engine giant Google offers Google App Engine, a cloud-based platform for application development. In the United Kingdom, hosting provider XCalibre Communications is serving up FlexiScale, which offers users a self-service virtual dedicated server on the Web.
IBM began its Blue Cloud initiative at a software park in Wuxi, China, 2 hours west of Shanghai. IBM provided technology, including System x and System p servers, on a secure VLAN (virtual LAN) for the center, which is run by the Chinese government and will serve as a cloud-computing resource for software companies operating in the park. Similar projects are under way in Beijing; Dublin, Ireland; and Johannesburg, South Africa.
Security vendors are selling malware in the cloud, and even EMC came out with Atmos, a combination of software and industry-standard x86 server hardware that can result in a multipetabyte, enterprise-level cloud storage infrastructure.
Microsoft’s Yahoo Bid, Mobile Is New PC, Chip Advances
3. Microsoft Bids for Yahoo
Sources have spoken of private acquisition talks between Microsoft and Yahoo as early as 2005, but the private conversation became very public Jan. 31, when Microsoft made an unsolicited offer to take over Yahoo for $44.6 billion. The saga made for a corporate spectacle involving boardrooms, share prices, investment circles, a proxy battle by billionaire investor Carl Icahn, an unexpected deal with Google, antitrust suits, the Department of Justice and, ultimately, the ouster of Yahoo founder and CEO Jerry Yang.
But, from the beginning, the battle was about Google and Internet search traffic. The deal would have given Microsoft the No. 2 position in search and enabled it to challenge Google on the Internet.
The bid for Yahoo has been characterized as Microsoft’s attempt to catch up to Google’s Web presence overnight. Indeed, as end users’ interaction with the PC moves from the desktop to the Web and even IT infrastructure moves to the cloud, Microsoft knows its lagging online presence will be a stumbling point-especially in the realm of search, fast becoming the central PC function for the majority of end users and the engine for so many other applications.
4. Mobile Is the New PC
Hardly a month went by in 2008 without a new phone to go gaga over. BlackBerry Bold and BlackBerry Storm, the G1 “Google phone,” the Nokia N97, and, of course, the iPhone 3G-each sleeker and more savvy than the last. However, the enterprise news wasn’t the form factors but the hot-rod engine running the phones-the operating system.
2008 marks the year the smartphone came of age, leaving behind the reputation of its youth as an e-mail machine. RIM’s BlackBerry remains the king of enterprise smartphones, and e-mail remains the king of enterprise smartphone applications. But the devices unveiled in 2008 are evidence that the smartphone is now a viable computing platform.
In addition, the rise of devices from Apple, Google and Nokia is evidence that users are ready to do more with their phones than read funny forwards.
The mobile device now stands to compete with the PC as the system of choice for many functions, with developers scrambling to build enterprise widgets and apps for the new platforms. With the emergence of the cloud as a computing infrastructure and the smartphone as a user platform, how long does the desktop have?
5. Chips Grow Older, Wiser, Faster, Cooler
No one buys a microprocessor; you buy what it does for the machine in which it runs. In 2008, processors got older and wiser, faster and cooler.
In keeping with its goal to deliver a new microarchitecture every two years, Intel delivered its Nehalem as promised at the Intel Developer Forum in August, with the first chips based on that architecture-the Intel Core i7 platform-rolled out in November. Nehalem makes several significant changes, but the one that will have the most impact is the integrated memory controller, which will eliminate the front-side bus and increase performance without increasing clock speed.
AMD kept pace, launching in November its 45-nanometer Opteron processor, “Shanghai,” which looks to erase the problems associated with the 65-nm version of the chip. Shanghai impressed users and OEMs worried about tight budgets, as it will be compatible with the current group of Opteron chips.
Wireless Broadband, The Virtualization Crowd
6. Wireless Broadband Gains Ground
Wireless broadband-the last mile separating users from the PC experience on mobile devices-took great leaps forward and grabbed a foothold on reality in 2008.
Early in the year, Verizon won the battle to use the 700MHz band of spectrum being abandoned by television broadcasters moving to HD signals. Verizon, the nation’s No. 2 carrier, captured prime swaths of spectrum for its next-generation wireless broadband service.
However, at Google’s urging and with some trickery in the auction process, the FCC will require Verizon to allow legal devices and services to connect to the network that will be built out of the spectrum.
But there was more to come from the spectrum and the FCC: Over the strenuous objections of broadcasters and wireless microphone makers, the FCC approved the unlicensed use of the interference buffer zone spectrum between television stations.
Google, Microsoft and others claim the FCC’s decision will open the airwaves for innovation as much as or more than the FCC decision to approve Wi-Fi. But the spectrum remains theoretical until it is built.
In the realm of reality, after years on the drawing board, WiMax technology made its U.S. commercial debut in Baltimore as Sprint Nextel rolled out the 4G, all-IP broadband network. The debut comes after Clearwire and Sprint Nextel agreed to merge their 4G wireless operations in hopes of building a nationwide WiMax network to compete with rivals AT&T and Verizon and their 3G networks based on LTE (Long Term Evolution).
Backing the WiMax play with $3.2 billion are Google, Intel, Time Warner Cable and Bright House Networks.
7. Virtually Crowded
The former one-man party that was x86 virtualization got crowded in 2008.
With its June release of Hyper-V, Microsoft presented x86 server virtualization leader VMware with what may prove its toughest challenge to date. That’s because while Hyper-V trails VMware’s ESX Server in core features, management options and guest operating system support, Microsoft’s new virtualization offering boasts a pair of significant-and familiar-advantages: Hyper-V is bundled with Windows Server 2008 and carries no additional charge.
At the very least, the entrance of Microsoft and Hyper-V into a market in which Xen-based offerings are already giving VMware a run for its money means that the days of VMware as the “no-brainer” option for server consolidation and similar virtualization-based tasks are over.
Virtualization itself is fast becoming a no-brainer for the management benefits it affords, but it isn’t the cost-cutting panacea vendors have led us to believe it to be. As adoption grows, so do challenges-including the cost of the high-end servers and memory required to support virtualization, as well as security and storage concerns.
Browser Wars, Gates Retires, $99 Terabyte
8. The New Browser Wars
The browser wars are back-and bigger than ever.
Web browser releases and innovation are coming as fast as they did in the day of Microsoft and Netscape’s epic struggle, in the 1990s. In 2008, Apple, Microsoft, Mozilla, Opera and a new browser warrior, Google, released new apps, innovating on Web features and, in general, pushing the browser market forward.
Google actually has two armies on the browser war field: Mozilla’s Firefox, which derives most (some estimates say more than 85 percent) of its support from Google, and Chrome, Google’s homegrown open-source browser that was released in beta in September.
As applications and infrastructure move to the cloud and begin to be delivered through the Web to a plethora of devices, control of the desktop operating system matters less and less. If the mobile device is the new PC, some consider the browser the new OS. And, despite Internet Explorer’s 72 percent market share, Microsoft can’t expect to have the same advantage in the browser arena that it has had on the desktop.
9. Bill Gates Retires
It was hardly a surprise, but Bill Gates’ retirement marked the end of the PC’s first 33 years and captured our attention for weeks.
Gates remains Microsoft’s chairman and largest shareholder, but June 27 was his last day as a full-time employee at the company. He now works full-time leading the world’s richest philanthropy, the Bill and Melinda Gates Foundation.
Gates’ departure comes as the technology industry’s center of gravity shifts from the desktop and PC-territory Microsoft thoroughly dominated for 20 years-to the Internet and various mobile devices, where Microsoft’s footing is less sure.
The task of making Microsoft a relevant brand in the age of the Internet and cloud computing is left to Gates’ successor, CEO Steve Ballmer-the man behind Microsoft’s failed bid to acquire Yahoo, a giant of Web traffic and the owner of enough dispersed infrastructure to give Microsoft an anchor in the cloud.
10. The $99 Terabyte
You can’t call it a commodity, but storage sure got cheap in 2008.
Sukhinder Singh Cassidy, Google’s vice president of Asia-Pacific and Latin America operations, speaking in November at a conference in Singapore, painted a provocative picture of the future: If the cost of storage continues to fall, by 2020, “all the world’s content will fit in the size of an iPod and in the palm of your hand. … And as early as 2015, all the world’s music will sit in the palm of your hand.”
Some external hard drives from Samsung, Iomega and others are pressing toward $99, and post-holiday sales might drop costs below that line. In addition, cloud storage offerings such as EMC MozyHome, Amazon S3 (Simple Storage Service), Carbonite and Box.net shot up in popularity in 2008, with most offering unlimited personal or business data storage for anywhere from $50 to $75 per year.
The real revolution in price, however, might be the SSD. Starting with the Lenovo ThinkPad x300 laptop, PC vendors have tried to incorporate more solid-state drive designs into their notebooks, allowing for thinner, lighter and sturdier PCs. Further, the drop in NAND flash prices behind the SSDs means a cheap PC with no moving parts could become a reality.