The year of living dangerously

It's hard to find the bright side to a year that analyst firm IDC recently called "the worst year" for the IT industry.

Some vendors simply tried to weather the storm -- moving cautiously, taking few if any risks and focusing entirely on their core products. Others cut huge hunks out of their expenses (including their payroll) and hoped for better times soon. Still others appeared to follow the old adage that the best defense is a strong offense, and in that latter category, few have been as interesting to watch as IBM Corp. and Dell Computer Corp.

First IBM: it started and finished 2002 in a sprint. On the software side, Big Blue unveiled WebSphere 5, its flagship middleware product that now ships with a substantial nod to what IBM believes will be the next e-commerce -- Web services. It also announced Version 8 of its DB2 database software.

Meanwhile, the Lotus division shipped its next version of Notes/Domino, although skittishness among users about the lack of a clear product roadmap and concerns over the role of Java and DB2 integration must have given Armonk officials pause for thought.

Also of note was IBM's corporate activity throughout 2002 -- last year it ventured into territory HP once feared to tread, and bought the consulting arm of PricewaterhouseCoopers for US$3.5 billion, thus adding 30,000 employees to its Global Services division. And last month, it plunked down US$2.1 billion for development tools specialist Rational Software, which IBM says will eventually form the "fifth pillar" development arm of IBM's software division.

And that's just the big-ticket stuff. Over the past 12 months IBM issued a Linux-only mainframe; oversaw the transition of CEOs from Lou Gerstner to Sam Palmisano; signed a US$4B services pact with American Express; launched new Regatta Unix servers; upgraded its Tivoli security suite; released a new Power PC networking chip; inked a deal with Palm to help PDA users access IBM business applications; announced new blade servers; and upgraded its AIX Unix platform.

It wasn't all good news. IBM axed 15,600 jobs last year, mostly in its services and manufacturing arms. And IBM continues to face tough competition in virtually all areas of its business, from application servers (BEA) to databases (Oracle) to servers (Dell, HP and Sun). It also has to spend 2003 proving that it can integrate two very large additions to the company.

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