Top Tech News of 2001

Hot Topics Still Simmer in New Year

A number of the major stories of 2001 will continue to make headlines in the months to come.

HP Struggles to Tie Knot

Carleton Fiorina came to Hewlett-Packard with a plan for sweeping changes at the stately granddaddy of tech firms. She went public on September 4 with her boldest gamble: a $25 billion bid to buy struggling Compaq and create a technology colossus able to hold its own against mighty IBM.

But the news didn't take--investors dumped shares and quickly slashed billions from the deal's valuation, while analysts warned of the massive risks associated with complex tech mergers. Then the heirs to HP's founding fathers went public with their opposition to the merger, setting the stage for one of the largest corporate proxy fights in history.

HP and Compaq head into the new year with their rivals circling overhead like vultures, ready to pick off confused customers as Fiorina and Compaq's Michael Capellas fight to overcome industry doubts and internal dissent at their companies. If the merger is completed, it will be the biggest high-tech union to date. If it falls through, the deal's architects may be among its casualties. Beset by commoditization and consolidation in its consumer business, Compaq faces a bleak future as an independent firm, while Fiorina's reign as head of HP would likely come to an operatic end.

Post-9/11 Security

In one horrifying morning, hijackers rocked the rarefied sense of security in the United States by crashing planes that leveled the World Trade Center towers in lower Manhattan and destroyed a good part of the U.S. military's home, the Pentagon.

When financial markets lurched back to life, biometrics were the hot stocks as security took center stage. Iris and fingerprint scanning, and voice and facial recognition technologies, got a lift as airport security in the United States was scrutinized and found sorely lacking. Calls for more and better screening continue, as airport terminal closings and evacuations rise due to security breaches. New laws passed in the name of security are meant to curb terrorist activity by making it easier for authorities to snoop.

A backlash from terrorist attacks on the United States and new technologies for identifying users on the Internet made for a double-whammy encroachment on the online civil liberties of Internet users everywhere. The U.S. Congress voted to give the federal government unprecedented powers to snoop on digital communication.

The Internet spying system known as DCS1000, or "Carnivore," began chomping away at the meat of Internet privacy. Internet service providers handed the government access to data sent over their pipes. And in December, the FBI confirmed the government is working on another Internet spying technology, code-named "Magic Lantern," to be used to eavesdrop on suspected criminals.

While the new technology means better tools for tracking down bad guys who misuse the Internet, advocates say it also means the end of privacy on the Web. Next thing you know, the government will make up with Microsoft and start handing out Passport accounts as national ID cards--identify yourself and read your Hotmail with a single log-in.

Tech Growth Stalls

In the world of technology market research, where every line points upward as it travels from left to right and markets always seem to grow, 2001 delivered a reality check. For the first time in history, PC sales measured by IDC and Dataquest declined in Europe and the United States.

In September, IDC projected worldwide shipments for the PC, the little engine that today drives so much of the globe's IT market, would fall 1.6 percent, compared with last year's growth of 15.7 percent. The U.S. consumer market led the downturn, projected to tumble 25 percent from its 2000 level. Is it just the economy? Or is the global market resisting Bill Gates' vision of a PC in every home and on every desk?

MacOS X Finally Bows

For Mac users the world over, the wait for a mature, robust operating system finally came to an end this year when Apple released the Unix-based Mac OS X in March.

The new OS is based on BSD, a Unix variant that would have sent Mac users screaming years ago. However, with a spiffy, animated user interface laid over the top of BSD, Mac fans embraced the OS happily. Mac OS X was the culmination of Steve Jobs' 1997 return to the company he cofounded in the late 1970s, as the technology that helped build Mac OS X was acquired when Apple bought Jobs' company NeXT in 1997.

After nearly ten years of delays and almost as many code names--Mac followers no doubt cringe at the mention of Pink, Copland, and Rhapsody--Apple finally has an operating system to build on for its future.

Microsoft on Trial

A year ago, Microsoft was under the threat of a breakup ordered by Judge Thomas Penfield Jackson after he found the software giant guilty of breaking U.S. antitrust law. Now, Microsoft critics say that it looks like the company may get just a slap on the wrist.

A proposed settlement in the ongoing antitrust action reached between Microsoft, the U.S. Department of Justice, and nine U.S. states calls for restrictions on Microsoft's behavior, but still lets it add essentially whatever it wants to its products--a clear victory for Microsoft. Microsoft feels so vindicated, despite unresolved private lawsuits and a pending European case, that when the nine suing states not participating in the settlement called for harsher remedies, it protested by calling the plan "punitive." Maybe someone needs to remind Microsoft lawyers that the company was found guilty.

Longtime industry observers recall the 1994 consent decree settlement--also criticized for being a slap on the wrist--between the DOJ and Microsoft, in the wake of antitrust inquiries that began in 1991. After much legal maneuvering, that settlement was upheld in 1995. But one year later, after accusations that Microsoft was violating the consent decree, the DOJ launched yet another antitrust inquiry, which broadened into the case that is still making headlines. While the software industry moves at fiber-optic speed, some things never change.