Technology Companies: Year 2000 and Beyond

The Year 2000 belonged to the lawyers and to the stock

market. The first fought it out in the courts over trail breaking cases, like

the Microsoft antitrust case and the Napster copyright infringement case, which

may redefine the way IT business is done, while the latter took technology

companies on a roller coaster ride, taking them first up and then dropping them

mercilessly at an even faster pace.

The dotcoms, which for some strange reason are considered to

be part of and even better than the IT fraternity, started the year on a high

note, but by now, when the year is drawing to a close, many of them have already

folded up, with most others waging a desperate battle for survival. The dotcom

philosophy of seemingly unending investments without any immediate plans for

profits was touted as the mantra of a new economy for some time, before the

market gave way to the need to be profitable. The first of the big names, and

perhaps the most famous case to go belly up, was Boo.com, a Web-based up-market

fashion retailer. When the story became known, it came to light that Boo had

spent millions of dollars in advertising and other business expenses with hardly

any sales to show.

The path that the dotcoms took, of depending on venture

funding and not internal accruals for every business expense, including working

capital, is what ultimately led to the tight situation that the entire sector is

in. With no cash flows of their own, they were dependant on round after round of

venture funding for their very existence. Initially, venture capitalists were

too willing to pump in the money without bothering too much about the

sustainability of the business. But after a few Web businesses went belly up,

they began asking questions, and to cut a long story short, funding dried up.

Simultaneously, the stock market also went on a downswing, possibly for the same

reasons, and the squeeze for those who depended on the value of their stock and

nothing else became really hard. Nobody is yet questioning the utility of the

Web as a way to reach customers. But there are serious questions being raised on

the very survival of a Web-only business.

So,

in all this frenzy who made money? Two types of businesses made money during the

height of the dotcom frenzy. And one of these two was a business that the Web

was expected to kill off–print media, including newspapers and magazines. The

dotcoms had to resort to large doses of print advertising to drive up their

valuations with the venture capitalists. The second were those who provided

services to the dotcoms–those who developed the Websites, or provided the

software and hardware for them. Even the stock market did, to some extent,

reflect this reality.

Another group of companies that had a rough time this year

were the Linux companies. Last year, many companies providing products and

services around Linux had gone to the stock markets and raised money. This year

saw their stock prices tumbling down, as most couldn’t produce a positive

bottom line. About the only exception was Red Hat, which was able to produce a

better financial performance than both.

In the following section, we’ll look at some of the

familiar international names and see what the year ahead could have in store for

them. This is not an exhaustive list, but just a top-of-the-mind selection.

Microsoft

The high points for Microsoft this year were the ruling in

the antitrust case, the launch of the Pocket PC platform and the launch of their

new .Net strategy. While the first one, at least in the initial round went

against the company, it has been able to get significant success with the second

one. On the .Net front, it’s still early days and one needs to wait and see

what evolves.

In the coming year, we expect to hear more on the .Net front,

with the company realigning almost all their products around the .Net

initiative. The fact that quite a lot of advertising money is being spent on

this front will ensure that we get to hear enough about what’s happening and

more.

The X-box–Microsoft’s gaming console–the device with

which the company hopes to take on the likes of Sony and Sega is due for launch.

Gaming is a market that they have been eyeing seriously for some time now,

having launched a range of software titles and peripheral devices. So we can

expect a lot of noise on that front from Microsoft next year, if the X-box

arrives on schedule.

The long promised new version of Windows for the desktop,

based on NT (now 2000) code base is also due and could bring more robustness to

the desktop. On the other side, Paul Allen, cofounder along with Bill Gates is

due to step down from the board of the company next year. Allen had not had an

operational role in the company for a long time now. So, the impact of his

stepping down from the board is likely to be minimal.

Nokia

While cellphone usage grew by leaps and bounds this year, it

has not been a kind year for cellphone manufacturers. Most of them struggled to

stay in the black. Nokia was one notable exception, consolidating its position

in a crowded market.

New models came with monotonous regularity, and the focus

with recent ones was on building more functionality, particularly PDA-like

functionality, into cellphones.

The next year should see 3G-based devices from all cellphone

manufacturers, and going by current trends, it’s only natural to expect Nokia

to have a significant say in how things evolve.

Sun

The last big revolution from Sun was Java. Recently, they

bought over Star division, the company that makes StarOffice, the free

alternative to Microsoft Word. Simultaneously, they also announced plans to have

a portal called StarPortal, an ASP service around the productivity suite. But

nothing has been heard of the effort since.

In short, the company and the world is waiting for the next

big revolution from its stables since Java.

Samsung

Samsung has proved to be a really nimble player in the

market, not only in embracing newer technology areas, but also in carving out

significant marketshare. Samsung is today known more for its products that its

technology.

The coming years should see Samsung transform from being just

a product leader to becoming technology leader. One particularly hot area seems

to be in mobile communication devices. Their recent deal with Microsoft for

developing such technology is a good pointer in this direction.

Apple

Apple had ridden to a new high on the success of the iMac.

This year, however, Apple was not able to repeat the success of the iMac with

the G4 Cube. Dual-processor Macs made their debut, but they have to wait for OS

X to be able to use the second processor! After a long wait, we finally had the

beta release of OS X (read as OS ten), but it’s yet not clear whether the

final release will have the same impact and fan following as some of the more

popular products from Apple.

IBM

IBM is one of the few IT companies to have a finger in almost

every pie. Major initiatives for IBM this year were on the marketing rather than

on the technology front. These include a major Linux push and a repositioning,

or rather a renaming, of their complete server range.

Corel

Corel was originally known for its graphics software. Then it

bought over Perfect Office, and a slew of other products, but could not achieve

much with them. Then it started off a division to produce hardware for Linux,

and even developed their own distribution. Then they gave up plans for both, and

after much turmoil have signed up an agreement with Microsoft to develop

software around their .Net initiative. One interesting sidelight of this is the

option for Corel to develop the .Net stuff for Linux. Whether it will actually

happen, the coming year will tell us.

SCO

Technically, the company called SCO doesn’t exist anymore.

It has renamed itself as Tarantella after selling off its operating systems and

services divisions to Caldera, the Linux major. Tarantella is the name of the

thin-client software that SCO had developed. Just before the sale of the

operating systems they had announced major plans for Linux, and had even

developed the Linux Kernel Personality, a software that allowed UnixWare, their

Unix operating system to run applications meant for Linux, without having to

recompile them.

Krishna Kumar