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What made the news in 1996:
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Microsoft targets the Internet
Microsoft Corp. realized that the only way to turn its ocean liner
around in response to the sea of change under way in the industry was to
reorganize the company, setting up a new Internet-focused business unit
in February. Since then, the company has released a slew of products,
and bought its way into the electronic commerce market with the
acquisition, in June, of eShop.
Once again, Microsoft finds itself standing alone while the rest of the industry tries to coalesce around a standard: It was noticeably absent from the new "100% Pure Java" initiative, which aims to ensure that the Web-oriented development and operating environment remains multiplatform. Meanwhile, industry watchers have declared the battle of the browsers to be a non-issue, but that's unlikely to stop Microsoft and Netscape executives from turning every speaking opportunity into a string of pot-shots aimed at the other -- now, both companies are wrangling over the more-lucrative intranet server market.
Java rules
The most influential technology of the year was arguably Sun
Microsystems Inc.'s Java software. In May, it won the endorsement of a
range of leading vendors including IBM, Apple Computer Inc., Novell
Inc., Hewlett-Packard Co. -- and even Microsoft -- which were among
nine companies announcing at Internet World that they would license the
Java Virtual Machine and embed it in their operating systems. Since
then, any Web software worth its salt has been Java-enabled -- this is
the hot checklist item of the year.
Hardware vendors seek to cash in with 'Net devices
Hardware vendors figured there must be a way to make some money from
the Internet explosion. Oracle Corp., which might like to see the world
shift from a PC model dominated by Microsoft back to a terminal-server
model where its big centralized software can reign, put out its Network
Computer specification in May. It found support from Sun, IBM, Apple,
and Netscape.
Microsoft and Intel fought back in October with the NetPC specification and the Windows CE operating system, and managed to sign on quite a few mass-market hardware players by Comdex in November. Meanwhile, TV makers hoped that most people will prefer to do their Web-surfing from the comfort of their couch, using a remote control similar to the one that they are now using for channel surfing -- but the new Web TVs may not be the Christmas blockbuster some expect.
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Online services draw censorship all around the world
As the Internet and online services make it easier for all kinds of
information to circulate, they have also made it easier for peddlers of
illegal material to escape interception by authorities. Governments in
many countries found themselves facing the challenge of trying to
control child pornography and other obscene or illegal material.
In the U.S., the hastily drafted Communications Decency Act was too vaguely worded to pass muster with a federal court that struck it down; the U.S. Justice Department has appealed that ruling to the Supreme Court. In the U.K., police put together a list of Internet newsgroups featuring material deemed illegal and asked Internet service providers to block access to those groups. Despite action taken by many European ISPs to block the most offensive newsgroups, an investigation by IDG editors in Norway found that Digital Equipment Corp.'s AltaVista search engine was a boon for European pedophiles who, despite the blocks, were able to access their favorite child porn sites through Digital's system.
How the Internet will be policed remains a controversial topic -- many countries are just beginning to assemble some legal framework to handle it. Whether ISPs will be responsible -- in France, two ISP company directors were arrested for content accessible through their service -- or whether someone else will be deemed the gatekeeper has yet to be decided.
Hot Internet IPOs cool off
July 1995 saw the red-hot initial public offering from Netscape, but just
one year later, the Internet IPO fever had broken. Investors have cooled
considerably towards start-ups with lots of flash but no cash and no plans
to generate actual profits anytime soon -- and hipper-than-thou Wired
Ventures Ltd. has had to withdraw its IPO not once, but twice.
If you build e-commerce, will buyers come?
Like the sellers of shovels and soap who were the real beneficiaries of
the 1840s California gold rush, e-commerce technology companies struck
some gold selling systems to those who would like to make money from
sales over the Internet. From IBM's Commercepoint family to the U.K.'s
UUNet Pipex's DialStore Web storefront in a box, the Internet became a
money-maker, at least for those selling to the sellers. And at least
some users were ready to plunk down dough on the Internet, to the tune
of spending $478 million online this year, according to Jupiter
Communications Inc.
E-commerce payment standards came closer to formation in October, when the Joint Electronic Payments Initiative (JEPI) finalized its industry-backed standard for processing payments over the Internet.
Apple tries to fight its way back
Apple brought in a new CEO, Gilbert Amelio, to replace Michael Spindler
in February, and Amelio has spent the year touting big changes at
Apple. He hired IBM veteran Ellen Hancock as chief technology officer,
and she indicated recently that the fun's over in Apple's research and
development labs, where only viable money-making projects will be given
the green light. Apple surprised analysts in October by posting a
profit, though analysts cautioned that increases in sales or market
share, the true measure of long-term success, remain unstable.
In December, Apple even added another big name to its roster: Apple co-founder Steven Jobs. Apple plunked down some $400 million to acquire Jobs and his Next Software. Apple, which shelved its advanced operating system, codenamed Copeland, is now betting that the Next operating system will be Apple's next step toward profitability. Meanwhile, companies that have built their businesses on Apple's success, such as Macromedia, Global Village, and Mac clone-makers, had a tough year.
Telecoms look to liberalization, globalization
British Telecommunications PLC and MCI Communications Corp. of the
U.S. made a bid to merge into a $42 billion beast named Concert.
Regulators have yet to bless the union, but the European Commission did
give the nod to a threesome, permitting France Telecom, Deutsche
Telekom, and Sprint Corp. to offer international telecom services to
business clients through their Global One joint effort.
What all these alliances aim to do, energized by liberalization of markets around the world, is to poke their fingers into many new pies. In the U.S., long-distance carriers made plans to enter local markets and vice versa, fueled by the Telecommunications Act of 1996, which blew away long-standing restrictions on who could serve whom.
Asian PC vendors make move on U.S. market
Japanese vendors stepped up their foray into the U.S.; Sony launched its
own branded products stateside, while Toshiba sought to replicate its
success in notebooks on the desktop. Hitachi Ltd., Fujitsu Ltd., and NEC
also set their sights on the U.S. market, as did Taiwan's Acer Group and
South Korea's Samsung Electronics Co. Ltd.
DRAM prices drop
This year brought good news for computer users who can never have enough
system memory, and bad news for chip manufacturers who saw their
profits plunge. Prices for 4-megabit DRAMs tumbled to $3 on the spot
market in June, while 16-megabit DRAMs hit a new low of $7.50 in
September. By the end of the year, memory manufacturers were rethinking
expansion plans, and holding off on most new capacity except for lines
that can produce higher density, 64-megabit DRAMs.
The decline of European manufacturers
European manufacturers were hit hard this year. As slowing growth
through the first half pushed down prices and squeezed margins,
industry insiders asked whether large, indigenous European PC makers
would survive. In the third quarter, a string of bad news sent shivers
through the European PC manufacturing industry. The bad news included
German retailer Escom AG going into bankruptcy and Olivetti SpA
Chairman Carlo de Benedetti resigning amid charges of accounting
fraud.
During the year, much of Groupe Bull passed into the hands of Asian companies, ICL passed off its high-volume PC unit to its parent, Fujitsu, and now Olivetti is looking for a buyer for its ailing PC company. As the dust clears at the end of the year, only Siemens Nixdorf Informationssysteme is left standing as an independent European-based PC maker of international ranking -- and even SNI's market is grounded in one country, its native Germany.
Looking ahead
Internet fever shows no signs of abating, and is likely to dominate
vendor business strategies next year. As the number of consumers going
online continues to skyrocket, almost every IT product announcement
incorporates some Internet element. As many as 100 million people will
go online next year, according to a study from the Gartner Group market
research company. As newly liberated telecom companies, PC makers, and
consumer electronics companies all seek to cash in on the rush to go
online, the Internet is likely to spur some interesting partnerships
and hybrid products -- all aimed at the wired consumer. Convergence, a
buzzword being batted around for a few years, signifying the merging of
broadcast, computer, and consumer electronics industries, is likely to
be taken for granted.
--Elizabeth Heichler and Rebecca Sykes, IDG News Service, Boston Bureau
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