This was a year most of us would just as soon forget. Recession stifled innovation and terror traumatized a nation....
Computer makers spent the year revising forecasts downward and laying off more than 100,000 workers. Talk of the future was overshadowed by worry about the present.
Nevertheless, onward! Each year I take an educated guess at what I think will happen in the 12 months to come. My forecasts from last year actually weren't too far off the mark. There were a couple of bull's eyes (Microsoft wins in court, consumers fail to embrace wireless data services), some mistakes in timing only (Fiorina resigns, fee-based music services flourish) and one real stinker (dot-com renaissance). So newly emboldened, I'll go out on a limb once again with Ten Predictions for 2002.
1. A "U"-shaped recovery
That's U as in a long, slow scrape along the bottom followed by a rough climb up a steep hill. The analysts are calling for the recession to end in the first quarter, but the same analysts also told us things would turn up in the second quarter of this year. Every time the market gets a reason to cheer these days (consumer confidence is up), it simultaneously gets a potent dose of bad news (unemployment jumps). There's no indication things will turn around soon. The good news: the tech sector tends to lead a recovery. The bad news: the tech sector is in a mighty deep hole right now.
2. Fiorina resigns
I predicted this last year but all I got wrong was the timing. The HP-Compaq merger is dead, dead, dead and Carly, who has staked her reputation on the deal, will take the severance and run. Customers of both companies better hope this happens soon because the internal chaos has got to be killing them. These companies didn't exactly move quickly to begin with.
3. The EMC takeover
An IBM acquisition of EMC makes too much sense not to happen. The deal would give IBM half the high-end storage market and take out its top competitor. IBM would also give its big blue eyeteeth to have EMC's sales force. So what's stopping it? Lou Gerstner is a lame duck. Assuming EMC's stock price stays weak, Sam Palmisano's first big move as IBM CEO will be to bid for its storage nemesis.
4. Cyberterror spectacular
Driven temporarily underground by international retaliation, terrorists regroup and focus anew on computer networks. The target is financial and transportation systems. Casualties are small, but the scope of the attack shocks the world into a new awareness of how vulnerable their computers really are. We've been lucky to this point, but we can't escape the ugliness of cyberterrorism forever.
5. Cisco bids for Nortel
This deal makes sense. On the strength of a strong recovery in its share price, Cisco goes after a top rival whose strength in the carrier market it has long coveted. Nortel, which is flat on its back, is relieved to have a chance for a graceful exit. But the big question -- whether antitrust regulators will approve the deal -- delays closure into 2003.
6. PC doldrums persist
PCs are about as differentiated as washing machines these days and come in fewer colors. Intel continues to promote multimedia as a reason to upgrade, but users are still puzzled why they need a 1.4GHz machine to play MP3 files when their two-year old desktop works just fine. The PC industry gets a modest boost from a natural upgrade cycle following the disastrous 2001, but sales bump along at single-digit growth levels as the PC identity crisis deepens.
7. Notes slip-sliding away
Now that Lotus has been fully assimilated into the IBM Borg, will Big Blue wring all innovation out of the company? RNext, the coming new version of Notes/Domino, probably won't be out till 2003, marking three years between releases. Meanwhile, Microsoft is positioning Exchange as a compelling application of Active Directory while chipping away at Exchange's deficiencies. WebSphere is the apple of IBM's e-business eye, which leaves Notes looking like an orphan. Anyone want to buy a fancy e-mail client?
8. .NET .NOT .NOW
With .NET, Microsoft has a well-developed strategy for delivering a software platform for Internet-based computing. Unfortunately, it requires an hour and 28 PowerPoint slides to explain. The vision and product lineup that make up .NET are impressive, but it will take years for the market to really digest them and put them to work. Hey, if .NET was such a great opportunity, why is Microsoft putting all its marketing money into a Windows upgrade and a game machine? These guys aren't stupid.
9. Technology winners
The 802.11G wireless standard, Web Services, Infiniband, Linux, the Handspring Treo, Microsoft's Xbox, biometric security, Linux on mainframes, Windows XP, the Apple iPOD (Windows version), voice over IP, iSCSI, anything providing data redundancy, cable modems.
10. Technology losers
Internet Information Server, HP 3000, Wireless Application Protocol, IT recruiters, voice recognition, wireless LAN security, pure-play Web businesses, DSL.
Dig Deeper on SAP trends, strategy and ERP market share