Computers Today, July 1-15, 1999, Master File; World View; pg 1

Free PCs, superfast processors, E-business and global satellite phones-along with technology gloss, the roller coaster year witnessed a lot of boardroom drama and courtroom shuffle.

Shrinking PC prices, faster chips, the rapid spread of the Internet and E-commerce: could any infotech analyst have asked for more in the roller-coaster year that 1998-99 was? It took companies like Intel, America Online and Dell to new highs, and brought others like Informix, Netscape and Iridium to the ground. Even the ERP giants SAP and BaaN found that the party was over. Nor could the Redmond giant Microsoft and its presiding deity breathe easy in a climate of trials and courtroom acrimony.

The chip major Intel faced the same music with its intellectual property dispute with the US Federal Trade Commission (FTC). However, it avoided a Microsoft-like antitrust suit and a mud-smearing media campaign by reaching an agreement with the Government before its trial began.

While Europe remained stagnant because of the Euro issue, the Asian crisis kept most companies excluding those in India and Taiwan on tenterhooks. Owing to currency fluctuations and depressed demand, leading Japanese electronic and PC companies announced lower earnings. The biggest dud of the year was Iridium's sky-high project to link up the earth with 66 low-orbit satellites. 'Geography is History', the company declared at the time of launching its services. By the end of the year, the company had learnt that geography is probably bad economics.

In the emerging New Economy, the Net became the omnipresent religion which lured in many followers this year. Compaq, Dell Computer, IBM, and many other leading PC manufacturers revamped their marketing strategies to become Net-centric. E-commerce was a big sell for almost all organisations. According to Louis Gerstner, IBM's CEO, the company gets about $20 billion-a quarter of its revenues-through its "electronic business". Intel's monthly Net sales hit the magic figure of $1 billion. What makes this real hard-knocking news is the fact that in January 1998, Intel had no online sales! Dell opened an online superstore offering peripherals and software. Reportedly, sales are crossing $10 million per day globally and $2 million a day in Europe-about 25 percent of the company's overall business.

That was not the only dramatic change the PC industry underwent this year. The Net quake and the ongoing Asian economic crisis forced many companies to look beyond PC making and reshuffle their boardroom deck. The $16 billion mega-deal between IBM and Dell was a strong indicator. Under the deal, Dell will buy IBM equipment including storage and networking, and in return benefit from Big Blue's high capacity disk drives, flat panel displays and custom chips. The deal also includes cross-licensing of patents.

Exploring Netscape

The browser market exploded like a supernova. Microsoft's Internet Explorer 5 was launched with a big bang. Without the cluttered looks of IE4 and powered with IntelliSense, the new upgrade browser includes many rich features such as radio toolbar, Go button, sophisticated search and history functions. Netscape Communications also released Version 4.6 of the communication browser. The new version includes integration with RealNetwork's G2 multimedia player, enhanced encryption and bug fixes, among other features.

According to a Zona Research study, Microsoft's Internet Explorer is the preferred browser in the corporate sector. Of the 308 companies that participated in the study, 59 percent rated IE as the browser of their choice, while the rest 41 percent voted for Netscape's Navigator. These findings are in sharp contrast with Zona's previous study in which IE trailed behind Netscape's browser by 20 percent.

Resignation, split-up, mergers, acquisitions and innovative initiatives-the cup of boardroom drama and excitement overflowed.

Keeping in line with its restructuring plans, the Redmond giant split up in four key groups: consumer, enterprise, applications and software development. Hewlett-Packard also went in for a big shake-up to give itself a dose of revitalisation. HP announced that it would spin off its testing and measurement division, and offer new E-services. The company rolled out a new line of compact Vectra and Brio PCs targeted at business buyers. In addition, HP Labs, like its parent company, also split into two separate firms.

Another company that was under media attention was Compaq Computer. The world's largest PC maker reshuffled its deck twice in its reorganisation attempts. In a sudden and surprising move that sent quivers industrywide, Compaq's CEO Eckhard Peiffer and chief financial officer Earl Manson resigned in April. Later, the company made a slew of announcements that included crowning Michael D. Capellas as the acting CEO. Global major BaaN also appointed a new CEO. While Mary Coleman would head the company, the outgoing chief Tom Tinsley would pursue new business opportunities outside BaaN.

Take a look at the major multi-million dollar deals of the year: while Intel bought Dialogic, a computer telephony integration firm, in a $780 million deal, Cisco Systems snapped up GeoTel Communication, a distributed call centre company, for $2 billion in stock. Enterprise software vendor Computer Associates bought software and consulting firm Platinum Technology International Inc. for about $3.5 billion. Likewise, Novell Inc. acquired Netoria, a maker of software for computer network administrators. Lucent Technologies merged with Ascend Communications in a $20 billion deal. Vodafone acquired AirTouch and AtHome acquired Excite.

In 1965, Intel's co-founder Gordon Moore predicted that the density of transistors in an integrated circuit would double every year. Dubbed as Moore's Law, his axiom, was later changed to reflect 18 months' progress. It has held true till three decades. Moore's law of falling chip prices and rising performance quotients ran on warp speed this year. Toshiba, along with IBM and Siemens, announced the world's smallest DRAM (dynamic random access memory) chip. Using 0.175 micron technology, the firms achieved a chip-size reduction of 40 percent.

Advanced Micro Devices Inc.'s K6-2 chip started a price war at the lower end. And traditional rival Intel's Celeron ended it. After months of savage cuts and historic price lows, AMD found itself fighting for breath: it had a tough time meeting the increasing demand for K6-2. Celeron made good of that opening to move in and carve its niche.

Under the new price regime, only two AMD processors sell for more than $100 in volume while only one Celeron, the 400 MHz version, sells for above the $100 mark. In the higher end, Intel turned the heat by introducing a 550-MHz chip. The chip giant also cut prices of Pentium II and III processors, setting a wave of PC price cuts in motion. AMD matched the price drops with cuts of its own. Leading PC manufacturers including HP, Compaq, Dell and IBM are all supporting the 550 MHz version of the Pentium III, with many cutting prices on older systems. More price cuts are likely to follow with the release of Intel's "Coppermine" Pentium and AMD's K7 chips.

Virus on the Prowl

This was the year of red alert! Organisations worldwide scrambled to cope with fast-circulating viruses that affected terabytes of data and shut down many systems. It all started with Melissa-a Word macro virus that infects computers running Microsoft's Office 97 and Office 2000. Once installed, Melissa alters Windows' security settings, sneaks inside your address book in Outlook and sends a copy of itself to the first 50 E-mail addresses. This menacing virus spread around the globe within 16 hours and downed systems in more than 300 Fortune 500 companies. Next came Win-CIH-the much-dreaded virus timed to strike on the 13th anniversary of the Chernobyl nuclear disaster. Designed to reside inside a computer and infect a wide range of documents that trigger the virus when opened, it caused widespread damage and hit the Asian region with a vengeance. It is the sole computer virus capable of inflicting structural damage to computers. Hardly had the companies taken a sigh of relief, that the Worm.ExploreZip attacked and forced them to shut down their E-mail systems. Containing a very malicious payload, this worm uses Microsoft Outlook or Microsoft Exchange's MAPI to single itself out by replying to the messages received. It attaches a file called "ZIPPED_FILES.EXE" that infects the recipient's computer with the Worm.ExploreZip-an .EXE file in disguise of a ZIP file. From Boeing, General Electric to Intel and Microsoft, virtually all major corporate networks were affected.

What is in it for the consumer? More power for less money. The above $2,000 system has virtually disappeared from the market while machines costing between $600 and $999 occupy around 30 percent of retail sales, according to figures released by US-based ZD Infobeads.

Post Script: there was something for the wireless industry too. Qualcomm unveiled the industry's first third generation (3G) wireless chipset. Designed for CDMA (code division multiple access) cellular handsets, the chipset can cope with data rates of up to 153 kilobits per second (Kbps)-slightly higher than the 144 Kbps speeds agreed by the International Telecommunications Union (ITU) for the first wave of 3G networks. Be sure to witness a price and power war in this chip segment. That's probably still a year away.

The flavour of the year was Apple's new iMac line. This comprised not just the candy PCs (with a 233 MHz processor, 6 GB hard disk drive, 24x CD-ROM Drive, and 56K modem) in lip-smacking colours, but also the PowerMac G3 hunks with raw power appeal. The body is the same: translucent teal (like the original iMac) made from the same plastic used for bulletproof vests.

Apple lovers, for the first time, could cosy up to the high-end systems thanks to prices comparable to PCs. iMac's brawny looks and comfortable pricing helped pushing Apple's share to 10 percent of the PC market. According to the firm, more than 800,000 pieces have been sold since August-about one every 15 seconds. The company's figures show that 32 percent of people buying an iMac have never had a computer before, while 13 percent are converts from the PC world.

Almost lost in the splash of new and colourful iMacs was the launch of a new server operating system from Apple. Mac OS X Server is Apple's first step towards offering an advanced operating system with sophisticated networking capabilities long sought by customers in the education, publishing and application development markets. Next attraction on line: new Apple notebooks.

Mac OS X Server is the renamed Rhapsody, which was to use software technology acquired from NeXT to enable software to run on Mac and Windows platforms. The release of OS X Server marks the beginning of Apple's two-tiered OS strategy where there is a "Pro" and "Consumer" version of the OS, much like Microsoft's Windows NT and Windows serve different markets. Mac OS X-a separate product from Mac OS X Server-will be based on the technology in OS X Server, but it will be better able to run current Mac programs.