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If 2001 was a year of cataclysmic change and 2002 was a year of prolonged recovery, recessionary and otherwise, then in 2003 we seemed to get back to business. In fact, in business terms, it was a very good year. It was a year in which we spent more time looking forward than back, for a change. IT spending was up, and startups began stirring again. Online businesses led the way, yet with none of the hysteria that marked the late 90s. It all points to an even better 2004—if only we can do something about all that spam. Here are eWEEKs most intriguing stories of 2003 and beyond:
Open Source Finally Grows Up
For years, Linux and open source have been viewed by many in corporate America as youthful and intriguing but not nearly mature enough for the enterprise. Well, they do grow up fast, dont they? In fact, in 2003 alone, Linux seemed to skip its teen years and head straight into adulthood, complete with a bad marriage, a messy divorce and an IRS audit. (And its still not clear wholl get custody of the kids.)
As part of its rapid maturation, Linux started earning its keep this year. In addition to becoming a bigger part of the enterprise, Linux for the first time started to take business away from Microsoft Corp. In May, the city of Munich, Germany, announced plans to migrate its 14,000 Windows computers to Linux. In October, the United Kingdom announced nine Linux pilot projects across central government departments. Microsoft, which used to scoff at the possibility of losing business to Linux, reacted by slashing prices, such as cutting its popular SQL Server 2000 Developer Edition by $450, to $49. With the 2.6 Linux kernel on the way by the end of 2003, look for more enterprise wins for Linux.
But these milestones pale next to the uproar caused by The SCO Group, the erstwhile Unix vendor that turned copyright litigation into a profitable business model in 2003. The onslaught started March 6 when SCO filed a $1 billion lawsuit against IBM for “efforts to improperly destroy the economic value of Unix.” IBM countersued in August, claiming SCO violated the GPL—the GNU General Public License. SCO then turned on corporations and individual users of Linux with threats of licensing fees. Linux creator Linus Torvalds had this to say about SCOs actions to eWEEKs Peter Galli in August: “They are smoking crack.”
Undeterred by the criticism, SCO, which has spent much of the past few weeks fighting off denial-of-service attacks on its Web site, took aim at the GPL itself in an open letter in early December. If SCO succeeds in dismantling the GPL, the lifeblood of the open-source movement, all bets are off on the future of open source. This battle will rage on in 2004.
Next page: Merger Mania—Its Back
Merger Mania
—Its Back”>
Merger Mania—Its Back
You have to hand it to Larry Ellison. Just when things seemed to be getting a little complacent, the Oracle Corp. CEO decided to make a $5.1 billion hostile takeover of competitor PeopleSoft Inc. on June 2, just days after PeopleSoft itself acquired J.D. Edwards & Co. for $1.7 billion.
As the offer sent shock waves through the industry, PeopleSoft and its CEO, Craig Conway, held firm. PeopleSoft closed on its JDE deal in late July, while Oracle upped its offer to $7.3 billion and extended the tender to Dec. 31.
But the Oracle-PeopleSoft nonmerger did little to slow a busy year of mergers and acquisitions. Two of the busiest companies spending the cash in 2003 were EMC Corp. and Novell Inc.
EMC bought backup software vendor Legato Systems Inc. on July 8 and continued its software drive in October by acquiring content management vendor Documentum Inc. for $1.7 billion. Just last week, EMC completed its buying spree with VMware Inc. for $650 million.
Novell, meanwhile, refashioned itself into a Linux company, buying Boston-based developer Ximian Inc. Aug. 11 and desktop maker SuSE Linux AG in November.
In March, networking giant Cisco Systems Inc. bought Linksys Inc., marking Ciscos first foray into consumer and home networking. In June, Palm Inc. (now PalmOne Inc.) acquired Handspring Inc. In July, Business Objects S.A. acquired Crystal Decisions Inc., while in October, Hyperion Solutions Corp. completed its acquisition of Brio Software Inc., also announced in July.
Next page: Microsoft Everywhere
Microsoft Everywhere
Microsoft Everywhere
For the first time in memory, Microsoft made more news on the software front than in the courtroom. With many of its legal problems being settled, Bill Gates & Co. executed on several fronts, launching Windows Server 2003 in April, Office 2003 and Exchange 2003 in October, and giving users a peek at the future with its “Longhorn” and “Indigo” technologies in November.
In December, Microsoft pulled the plug on some old standbys, namely Windows 98, as part of the Java legal settlement with Sun Microsystems Inc.
Nevertheless, security problems continued to dog the company—and millions of Windows users—in 2003. Ironically, those now-retired Windows 98, 98 SE and 95 products were immune from one of the worst worms to hit this year—the Blaster worm that ripped through the Internet in August. Another worm, Slammer, hit SQL Server database sites in late January and knocked out much of the Internet—and Microsofts MSN—for two days.
If Microsoft made any progress on security this year, it was in improving management of its security update system. Early in 2004, service packs for Windows Server 2003 and Windows XP will help shore up leaks in those products.
Next page: It Must Be the Chips
It Must Be the
Chips”>
It Must Be the Chips
Intel Corp. reinvigorated its processor business in March with the Centrino technology: a chip, chip set and wireless component for laptops.
But the real story of the year was the rebirth of Advanced Micro Devices Inc., which rolled out a 64-bit Opteron in April and persuaded IBM and Sun to jump on the bandwagon.
The move was the latest in what was quickly becoming a processor horse race. AMD released its Opteron chip, for servers and workstations, and its Athlon 64, for desktops and notebooks. Intel released the Itanium 2 6M “Madison,” the latest in the companys Itanium processor line. Intel also unfolded an aggressive road map that calls for new Itanium processors next year—the Itanium 2 9M—and the year after—”Montecito.” With all that new processor muscle, application vendors can start developing 64-bit programs in earnest.
Next page: Tech: Back in Black
Tech
: Back in Black”>
Tech: Back in Black
As it was in 1999, it was hard not to make money in technology in 2003. The industry hasnt climbed all the way back, but all financial markets rose steadily over the year, ending at or near yearly highs.
In marked contrast to the late 90s, sustainable business models won out. Some of the more successful tech businesses this year were the dot-coms. Amazon.com Inc., which turned its first-ever quarterly profit and may be profitable for the year, saw its stock rise from the single digits in late 2002 to more than $60 per share in 2003. Likewise, Yahoo Inc. went from $33 a share to more than $61. eBay Inc. peaked at more than $115 per share and then split its stock.
Meanwhile, the first full year of Carly Fiorinas new and even bigger Hewlett-Packard Co. could be considered a success, as the company turned an operating profit of $1.1 billion in the fourth quarter.
Next page: What Price Outsourcing?
What Price Outsourcing
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What Price Outsourcing?
As eWEEK reported in June, General Motors Corp. is in the vanguard of a “third wave” of outsourcing, which seeks to break the huge single-provider contracts of yesteryear into smaller, more manageable—and profitable—chunks. As a result, GM is spending $1 billion less on IT than it did in 1996, said GM CIO Ralph Szygenda.
However, for many IT workers in 2003, the outsourcing wave hit home. Once one of the keys to cost cutting and growth, outsourcing—particularly offshore outsourcing—became a lightning rod itself this year, with thousands of jobs heading overseas and millions more expected to go over the next decade. Some states even considered a ban on the outsourcing of government contracts to offshore providers.
Dataquest Inc. reported in January that while only about 5 percent of 917 U.S.-based companies surveyed are using offshore resources for IT projects, offshore outsourcing will grow at a double-digit rate next year, well above the growth rate for U.S.-based IT services overall.
Spam You Very Much
Spam You Very Much
Spam-filled in-boxes caught the attention of everyone, including lawmakers and Internet access providers.
Rivals Microsoft, America Online Inc. and Yahoo issued a rare joint announcement in April pledging to join forces in the fight against spam. They promised anti-spam technology and advocated better, more responsible customer communications.
Spam reaches 60 to 80 percent of all corporate e-mail accounts, according to some estimates, but the CAN-SPAM (Controlling the Assault of Non-Solicited Pornography and Marketing Act of 2003) bill passed by Congress and signed by President Bush late in the year wont go nearly far enough, experts said.
Cyber
-Setbacks”>
Cyber-Setbacks
After much fanfare, one of the quietest news events of the year occurred Feb. 14, when the Department of Homeland Security released its long-awaited National Strategy to Secure Cyberspace. Since then, the department and its strategy have taken much abuse.
First, cyber-security czar Richard Clarke retired in March. Clarke was replaced by former Microsoft executive Howard Schmidt, who abruptly left his post in May to go to work for eBay as a security officer. Amit Yoran, formerly vice president for managed security services at Symantec Corp., replaced Schmidt.
Late this year, the department was stung once again, after becoming one of several federal agencies to receive a failing grade on information security from the House Committee on Government Reforms Subcommittee on Technology, Information Policy, Intergovernmental Relations and the Census. The grade was for the departments own network, not for the critical infrastructure segments it defends. Still, more than two years after the terrorist attacks of Sept. 11, the future of guarding the nations critical cyber-infrastructure remains very much a work in progress.
Sun Sets, Rises
Sun Sets, Rises
No major technology company struggled more than Sun did this year—revenue fell for the 10th consecutive quarter—but it wasnt for lack of trying to push forward.
The company executed aggressive strategies on the developer front, with eWEEK Senior Writer Darryl K. Taft reporting in April about a move to simplify development with Java 2 Platform, Standard Edition, code-named Tiger. In September, Sun outlined a bold restructuring of its software operations under Executive Vice President Jonathan Schwartz and an inexpensive Java stack for desktop and enterprise systems. In December, the company landed a big deal to sell Java systems in China. Sun is also working on a deal to sell Java-based computers through the Wal-Mart Stores Inc. chain.
And Another Thing
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And Another Thing…
Ethernet turned 30 years old in 2003, while computer pioneer Adam Osborne and relational database guru Edgar Codd died.
New technologies started dominating in 2003. Mainframes are still big, but virtual servers are going to take off.
RFID (radio-frequency identification) tags will be even bigger next year.
Oracle released its 10g database as grid computing trials popped up all over, but the future is still cloudy as customers grapple with its applications.
Camera phones were the hottest-selling technology item, but as eWEEK Senior Editor Carmen Nobel reported in November, sometimes high tech is too high tech.
Many privacy-conscious companies took to banning the devices from their premises.
Sarbanes-Oxley compliance has started slowly, but companies will get on the bandwagon in 2004.
IBM, with its Rational acquisition, is focused on model-based development, and Microsoft will be following suit, eWEEKs Taft reported in August.
Google me: When your company name becomes a verb, you know youve made it. The biggest search engine on the planet had a banner 2003. If companies werent trying to copy, license or buy the service (including Microsoft), they were complaining about the sites ranking system or suing Google for its use of keywords. But the biggest is yet to come. The Mountain View, Calif., company will singlehandedly try to end the tech startup drought in 2004 with an initial public offering that will rival those of Netscape Communications Corp. and Amazon.com in the mid-1990s. According to experts, the success of the offering will be a barometer of the health of the technology industry.
Finally, online music services bloomed in 2003, led by Apple Computer Inc.s iTunes, with 25 million songs sold since its September launch. Suddenly, its become cool not to steal music.
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