December 15, 2005, 7:37 PM — Midway through the decade, new pricing and business models championed by relative upstarts such as Google Inc. and Salesforce.com Inc. are forcing established players to reinvent themselves. Meanwhile, old-line companies that have failed to meet the challenges of the new millennium are cleaning house, sometimes starting with the chief executive. Here, not necessarily in order of importance, are the IDG News Service's pick of the top stories of the year, significant in themselves but often indicating larger IT trends.
Oracle buys Siebel: M&A market stays hot
It's official: The high-end, enterprise business applications market is now a two-horse race between Oracle Corp. and SAP AG. After Oracle closed its bitterly contested US$10.3 billion acquisition of PeopleSoft in January, it turned its sights on Siebel Systems Inc., announcing in September that it would scoop up the embattled CRM (customer resource management) maker for $5.85 billion. Like PeopleSoft, Siebel had been on the vanguard of corporate uptake of ERP (enterprise resource planning) and CRM, but suffered as rivals entered the market. The Oracle acquisitions were part of a trend as mergers and acquisitions stayed hot throughout the year in other areas of IT and communications. Witness the SBC Communications Inc. purchase of AT&T Corp.; the Cisco Systems Inc. acquisition of set-top box maker Scientific-Atlanta Inc.; and eBay Inc.'s move to buy Internet phone service provider Skype Technologies SA. The continued, relatively low cost of borrowing money has helped fuel M&A in industry sectors that are maturing, as well as hotly contested new areas such as Internet communications.
The bet that failed: HP fires Fiorina
The Hewlett-Packard Co. (HP) board's ousting of Chief Executive Officer (CEO) Carly Fiorina in February was a stunning acknowledgment that the company's approach over the last few years, marked by the Compaq merger, did not work. Fiorina pushed through the acquisition of Compaq over objections to sinking money into a low-margin business like PCs. Fiorina's bet was that HP could boost its flagging sales of higher-margin servers and services by selling complete packages of hardware to business customers. But three years after the Compaq purchase, HP's financials are still faltering. Fiorina's replacement, the low-key former NCR Corp. President and CEO Mark Hurd, has not overhauled HP yet, but has cut 15,000 jobs.
Sony dumps Idei, elevates Stringer
In a defining moment for the company, Sony Corp. in March dumped Nobuyuki Idei and named Howard Stringer as chairman and group CEO. The appointment will mark the first time that a foreigner has taken the helm at Sony, which last year saw 70 percent of its sales come from outside of Japan. The move is an acknowledgment that the company has bungled the transition from analog to digital devices. In an age where most companies rely on the same components to build products, Sony has had a tough time justifying to consumers the price premium that its products typically carry. Stringer, who was chairman and CEO of Sony Corp. of America, is expected to bring a new agility to the electronics giant.
Google, supernova
Google Inc., whose IPO (initial public offering) was a big story in 2004, made history this year when its share price in June ascended to the point where the company became the most highly valued media company in the world, beating Time Warner Inc. In the months that followed the company's valuation turned incandescent as its secondary offering of common stock netted more than $4 billion, and its share price rose past the $400 mark, more than $350 more than rivals such as Yahoo Inc. and Microsoft Corp. The share price premium is a reward for having the most popular search technology on the market and figuring out how to monetize that through ads. The company made some missteps, including security flaws in new services and a lack of preparation for demand that temporarily shut down new services. But as rivals bolster online services, the main question is whether Google will succeed in other forms of online advertising or in different businesses, such as enterprise search, where it is a relatively new player.
Web 2.0: Software as a service is real
