News review
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A review of events in December 2002.
The Windows-Linux war rumbled on, with no clear winner in sight. Challenging conventional wisdom, IDC, the market research company, found in a survey that there were 'hidden' staff costs related to open source technology that made running Windows up to 22% cheaper. Another IT researcher, the Meta Group, argued that the growing popularity of open source would force Microsoft to port its major applications to Linux from 'late-2004'. Microsoft laughed off those claims. An insight into the software giant's true feelings was offered by its former COO, Rick Belluzzo, who said he left the company to join storage specialist Quantum earlier in 2002 partly to escape "screaming rows" about the threat posed by Linux.
Veritas, the US storage management software company, signalled a significant shift in strategy by acquiring companies from neighbouring sectors. It paid $537 million for Precise Software, whose technology monitors and analyses web servers, application servers, databases and storage infrastructure, and $62 million for Jareva Technologies, an automated server-provisioning specialist. The deals suggested Veritas wants to create a systems management software empire to rival that of Computer Associates.
Cost-cutting by some of the world's biggest banks fuelled unprecedented activity in the IT outsourcing sector. Electronic Data Systems (EDS), under pressure after a profit warning in September that triggered an accounting probe, won a timely 10-year, $4.5 billion deal with Bank of America. But that mammoth deal was quickly overshadowed by two big IBM wins: a 10-year, €2.5 billion contract with Deutsche Bank and a seven-year deal with JP Morgan Chase worth some $5 billion. IBM's expertise in utility computing was seen as instrumental in its success.
Oracle unveiled eBusiness Suite Special Edition, a new cut-down, lower-cost version of its applications package targeted at the European mid-market.
The Pentagon called for wireless local area networks to be restricted, fearing they might interfere with military radar systems. But few experts gave the military's lobbying effort much chance of success, recalling Nato's failed bid to hold on to frequencies that were earmarked for third-generation wireless networks.
Those inclined to think there is less work for people in the post-bubble IT industry can discount lawyers at Microsoft. Sun Microsystems convinced a federal court that the software giant gained an unfair advantage by shipping its Windows desktop operating system with an outdated version of Sun's Java programming environment. Microsoft must now include the latest version of Java, thereby possibly threatening its nascent .Net strategy. An appeal is planned.
Days later, Sendo, a UK mobile phone maker whose minority shareholders include Microsoft, filed a suit in a US federal court accusing its former friend of stealing its technology and customers. Microsoft denied the claims. Meanwhile, the US state of Massachusetts said it was not prepared to accept a recent anti-trust settlement between Microsoft and the federal government and would be pushing for harsher penalties itself. Other states balked at rejoining the battle for fear of spiralling legal fees. All this came at an awkward time for Microsoft, as it conducted make-or-break negotiations with European Union anti-trust regulators.
IBM bought tools vendor Rational Software for $2.1 billion. The rationale: IBM wants to provide integrated software development across every segment of computing, from mobile phones to mainframes. Rumours that suggested Microsoft was mounting a counter-bid appeared to be unfounded.
IT services company Computer Sciences Corporation (CSC) bought military computer services specialist DynCorp for $950 million, leaving it better placed to win lucrative e-government and US national security contracts.
Network management software vendor MetaSolv put ailing rival Orchestream out of its misery, agreeing to acquire the UK company for £7.9 million. A victim of the telecoms crash, Orchestream was valued at £360 million when it floated on London's stock market in 2000.
Hewlett-Packard said it would release the next version of its highly-regarded Alpha microprocessor in January. But enterprises were not expected to rush out and buy systems based on the 64-bit chip: HP will 'retire' the former Digital Equipment product family in mid-2004.
Colt Telecom, one of Europe's biggest suppliers of telecoms and web-hosting services to the enterprise market, fought off an audacious High Court bid by US hedge fund Highberry Group to have it declared insolvent.
Sir Christopher Gent, the wheeler-dealer CEO of Vodafone, the world's biggest wireless network operator, said he would step down in July 2003 to be replaced by Arun Sarin, the ex-CEO of Airtouch International and a member of Cisco's board.
Sun Microsystems gained a symbolic victory in its long-odds bid to break the stranglehold of rival Microsoft in the office productivity software market. Sony, the Japanese electronics giant, became the first major computer vendor to dump Microsoft Office in favour of Sun's StarOffice suite of desktop applications. With the announcement, Sun claimed that StarOffice provides "about 90%" of the functionality of Microsoft Office: given that most people only use about 20% of Office's functions, that may not be as weak a marketing pitch as it sounds.
