Top 10 tech stories of 2007

by Marc Ferranti

December 12, 2007 —

This year has been a time of realignment and redefinition, as Apple launched its second zeitgeist-defining product of the new century, Dell and Intel battled to regain their former dominance, the software sector consolidated, Google rallied industry heavyweights around a common mobile device platform, and major vendors scrambled to embrace social networking. So without further ado, here are the top 10 stories of the year:

Software consolidation: The big fish get bigger

While globalization has fueled IT mergers and acquisitions for several years,
consolidation in 2007 fundamentally reshaped the software industry. Facing saturated
markets and nimble, innovative rivals, SAP, IBM and Oracle have snapped up competitors
and partners in order to expand customer lists and acquire expertise and technology
in hot areas such as business intelligence and software as a service. Some of
the bigger deals this year included: SAP's US$6.8 billion acquisition of Business
Objects, IBM's $5 billion deal for Cognos, and Oracle's $3 billion buyout of
Hyperion. As usual, Oracle provided the most drama, with a $6.7 billion offer
for BEA, which was successfully rebuffed -- at least, for now. While innovative
entrepreneurs are bound to continue bringing startups to market, it's getting
harder for medium-size vendors to refuse deals with the giants.

Dell reinvents itself

For years, Dell remained the world's number-one vendor in the cutthroat PC
business by exercising unmatched control over logistics and sticking to its
direct-sales model. But by 2006 HP unseated Dell as global PC leader. Dell seemed
to lose its way as rivals adopted better supply-chain management techniques,
and inquiries into accounting practices forced the company to delay earnings
reports. In January, founder Michael Dell took back the CEO reins and the company
expanded offerings for the enterprise, increased services for medium-size businesses,
and departed from its traditional business model to start selling products in
stores. Dell also plans to expand in growth markets globally. Early results
are promising: Dell had record revenue growth for the third quarter, fueled
by an increase in worldwide notebook sales.

The iPhone: Apple redefines a market, again

Some companies reinvent themselves. Apple, under the guidance of the mercurial
Steve Jobs, reinvents markets. After redefining IT in the 1970s with the Apple
II and then pushing the envelope in personal computing with the Mac in the 1980s,
Apple stalled when its business model ended up giving the company a loyal --
but tiny -- user base. The company started to ride high in 2001 after launching
the iPod, and in 2006 breathed new life into the Mac by moving to Intel-architecture
chips. Before the iPhone, there were many multifunction phones. But amid a June
launch that had people lined up at stores from Tokyo to San Francisco, Apple
proved its design mojo still works. The iPhone combination of cool design, phone
functions, Internet connectivity and multimedia features has raised the bar
for any manufacturer of connected handheld devices. Apple's revenue and share
price have never looked better.

The Rise of the botnets: Software as a service ... for criminals

What do U.S. presidential candidate Ron Paul, the "Storm Worm," e-card
invitations, and the country of Estonia have in common? They've all been associated
with botnets -- groups of compromised computers, often numbering thousands or
tens of thousands, that are remotely controlled by criminals. The scammers use
the so-called "zombie machines" to pitch hot stocks or male-enhancement
products, or simply to do damage, as when Estonian government Web sites were
crippled in April. Botnets are now getting so sophisticated that they're being
offered as software as a service products to scammers. That's what happened
in November, when nearly 200 million spam messages supporting Paul for president
were sent without permission from the campaign.

OLPC and the era of cheap laptops

The grand -- some might say grandiose -- plan of former MIT Media Lab chief
Nick Negroponte to sell as many as 150 million $100 laptops by 2009, getting
them to poor children around the world, this year looked more like a pipe dream.
Production of the laptops, under the aegis of the One Laptop Per Child project,
was delayed, promised government deals fell through, and the price of the XO
"hundred-dollar laptops" turned out to be closer to $200. Current
plans call for production of only about 300,000 laptops this year. But Negroponte's
dream may not be permanently deferred, just co-opted by commercial vendors,
which simultaneously face a slowdown in growth in mature markets and increasing
pressure to cut prices and power consumption. For example, Intel has sold $200
Classmate laptops in Mexico, Brazil, Nigeria, Pakistan and Libya, and in November,
Everex announced it would sell Linux-based PCs with x86 processors for less
than $300.

Google's "Gphone" morphs into Android

Google's anticipated "Gphone" announcement in November was both less,
and more, than what had been long expected. For almost a year, rumors circulated
that the online search giant was going to offer an actual phone. Google and
its partners ended up unveiling not a device but a Linux-based open software
platform, called Android, upon which mobile phones can be built. The idea is
that a common platform will allow developers to build applications that can
run on devices from many manufacturers on many networks, reducing complexity
for both developers and consumers alike. Skeptics were quick to point out that
Android might instead add complexity, since developers will have to build applications
for it as well as existing platforms. Android-based phones, due out in mid-2008,
will face entrenched platforms such as Symbian and Windows Mobile.

Viacom vs. YouTube: User-generated content hits speed bump

When media giant Viacom sued Google in March for $1 billion, citing unauthorized
uploading of TV and movie clips to Google's YouTube site, it underscored a fundamental
problem for user-generated content on the Web: How do sites ensure that submissions
meet certain standards, or are in fact legal? The dilemma is a problem of scale:
Viacom charged that as of March, YouTube users uploaded nearly 160,000 video
clips for which it owned copyrights, and that these clips had been viewed more
than 1.5 billion times. One answer to the problem may be systems like Video
Identification, which Google unveiled in October. It matches user-uploaded clips
with a repository of legitimate videos, allowing the company to flag and remove,
if necessary, copyright-infringing material. With the cost of legal wrangling
and monitoring systems growing, it is clear that user-generated content is not
truly "free" after all.

Facebook controversy: Social networking hits prime time

Facebook's decision in October to sell a $240 million minority stake to Microsoft,
which had been battling Google for the prize, solidified social networking's
central place in technology. The stake values Facebook at $15 billion total,
even before it has truly figured out how to monetize its traffic. While social
networking has been a growing trend for years, Facebook offers interactive features
and a development platform that has Google, the social networking site MySpace
and others playing catch-up. But the problem of monetization has been compounded
by privacy issues. The ability of Facebook's Beacon ad system to track user
actions has whipped up a controversy that won't go away soon.

Barcelona: AMD's Waterloo?

AMD was hoping that the launch of its Barcelona quad-core chips would press
a perceived technology advantage it had built up against archrival Intel beginning
in 2003, the year the smaller company launched Opteron chips for 64-bit applications.
As Intel stumbled, AMD gained market share. But Intel cut prices and launched
new 64-bit and quad-core processors. The release of Barcelona, delayed until
September, may end up being a counterpunch that was too little, too late. Dragged
down by shrinking margins and costs from last year's acquisition of ATI, AMD
in October announced its fourth-straight quarter of losses and this month said
it has delayed volume shipments of Barcelona to fine-tune the chip.

Vista hoopla fizzles: Death of the big-bang upgrade?

Microsoft launched the consumer version of Vista in January after making it
available to businesses last November. Microsoft officials hyped it as the biggest
launch in the company's history and now say adoption is on a normal trajectory
for new operating systems. In November it said that 88 million copies have been
sold. But a range of market-analysis reports show that users, especially corporate
professionals, have concerns about stability and compatibility and hesitate
to upgrade. Though Bill Gates has said that big marketing events most likely
will always accompany major product releases, Vista may yet prove to be the
last of the old-school upgrades in a world where users, on their own timetable,
download incremental updates.

IDG News Service