Top Tech News of 2001

To say that 2001 was a turbulent year for the technology industry would be an understatement.

The promise of the Internet economy went down along with the promise of a new Internet society, as all but a few dot-coms fizzled. Technology managers battled incoming viruses on one front while fighting corporate budget-cutters on another. Meanwhile, corporate interests and governments stomped on information-sharing and privacy rights online. The ever-growing installed-PC base finally foundered on the shores of a weak economy worldwide. Even merger mania stalled this year, with the biggest deal of the year--Hewlett-Packard and Compaq--turning into a nasty boardroom brawl.

Here, in no particular order, are the stories that shaped our industry in 2001:

Viruses, Worms Run Amok

Whether it can be blamed on shoddy coding, negligent administrators, or stupid users, 2001 was the year of the worm. Nimda, Code Red, Badtrans, Anna Kournikova--the list goes on and on, alongside the list of millions of infected systems.

Most of the year's early worms were e-mail-based, exploiting settings in Microsoft's Outlook e-mail program that make it the preferred propagation method for virus writers everywhere. Later, though, worms turned to the Web, taking advantage of software security holes to break into Web servers and launch attacks. Once again, Microsoft software was center stage, with Nimda and Code Red attacking the company's IIS Web server.

As the year wound to a close, a future in which worms would spread through multiple methods, such as e-mail, the Web, and chat applications, was beginning to come into sharp focus, as virus researchers had warned. As predictions for such so-called "blended threats" came true in 2001, many were left wondering whether 2002 would see the advent of another prediction: worms that can update themselves automatically to avoid detection by antivirus software.

Year the Music Died

The Internet finally became safe for major corporations that control copyright works this year. The U.S. Digital Millennium Copyright Act was used, challenged, and bolstered in a number of cases that could have wide-ranging effects on free speech and the Internet.

The wildly popular Napster site went down and stayed down, along with a number of its file-trading relatives. The DMCA was upheld by courts in the DeCSS DVD cracking case in November. It was used in June to muzzle Princeton computer science professor Ed Felten, to prevent him from publishing his research about security flaws in the Secure Digital Music Initiative. And this U.S. law bared its teeth to a noncitizen who had traveled to America for a conference: 26-year-old Russian programmer Dmitry Sklyarov was threatened with up to 25 years in jail for writing a program that removes copy-protection features in Adobe eBooks, something the DMCA forbids but is legal in his homeland.

Dot-Bomb Fallout

When the Internet economy imploded in 2000, "real" technology companies--such as Cisco Systems and Intel--that had seemed stodgy during the dot-com craze looked like safe havens for investors. But the dot-bomb fallout also affected these technology stalwarts, which have suffered from the combination of a feeble stock market and a no-growth economy.

All those startups had voracious appetites for technology. Telecom equipment providers, for example, had their customer lists pruned as debt-laden local telephone carriers and Internet service providers went belly up, often before paying their bills. Big technology companies, names like Intel, Lucent Technologies, and Nokia, had also become big investors in Internet startups, setting up corporate venture funds to bring along small companies with complementary technology, or even just to make a profit. While these funds proved lucrative during the dot-com heyday, they quickly became corporate burdens when the stock market tanked. These vendors would be in better positions today if it weren't for the write-downs taken on dot-com investments.

ISPs Flame Out

ISPs and other competitors of the dominant telecommunication companies hitched their wagons to the same star as many online media companies and equipment providers, trying to profit from sales to dot-com companies.

When the dot-coms fell off the cliff at the end of 2000, they dragged many ISPs with them a few months later, starting with the high-profile crash and burn of NorthPoint. It went bankrupt and pulled the plug on thousands of customers' high-speed DSL Internet connections in March. The ISPs fell successively: PSINet went bankrupt in June (though the Baltimore Ravens still play in PSINet Stadium), and Rhythms NetConnections and Covad filed for bankruptcy in August. Excite@Home filed for Chapter 11 in September.

These upstarts laughed loudly while attacking staid old economy telecom competitors, but the last laugh was the quiet chuckle of just those telcos as they scooped up the broken pieces by either buying out or bailing out their bankrupt foes.