What defined the tech nation in 2002? Years from now, we may look back at the 12 months that have just passed as a time of transition. Unlike the irrational exuberance and dreams of convergence that drove market behaviour in prior years, people asked critical questions in 2002 and answers were demanded.
Perhaps it was the lingering emotions of Sept. 11 that made the industry more sober and judgmental of its drunken past. Accounting fraud was targeted, corporate cheats were denounced, and companies spent considerable energy trying to regain the trust of shareholders and consumers.
There was little humour in this year of introspection. The entire industry retrenched. Tech and telecom companies returned to core operations and abandoned projects or businesses that didn't contribute to "profitable growth." Global ambitions were tempered. Risk was avoided. Captive consumer dollars were squeezed a bit more, and experimentation was kept to a minimum. Companies decided the best strategy was to do more with what they already had.
Of course, there were exceptions to the rule, but generally speaking, the technology industry grew up by growing down a bit. Out are the rose-coloured glasses and tinted windows of the late 1990s. We're heading toward a WYSIWYG world — what you see is what you get.
Below is a summary of technology-related events and issues, in no particular order, that I believe defined this past year. But let me start by pointing out something that didn't happen in 2002: We didn't have a crippling cyberattack (knock on wood).
A year ago, I called 2001 the year of the Internet worm. We saw Code Red, Anna Kournikova, Nimda and a slew of other computer bugs wreak havoc on our PCs and corporate networks, and hackers remained quite active.
"It has been a quiet year," said security expert Bruce Schneier. "There will be another big thing. There always is. But you're right, we haven't seen the big thing for 2002."
Schneier, I should point out, made this comment in the fall, but it still holds today. That said, don't hold your breath going into 2003. International Data Corp., the Framingham, Mass.-based technology research firm, predicts that the impending U.S. war with Iraq and the ongoing war on terrorism will "galvanize" hackers and result in a major act of cyberterrorism that will hurt the economy.
Hmmm ... with that dark forecast now planted in our minds (sorry about that), let's focus on what did happen in 2002.
Wireless consumers saw mobile phones that take digital pictures, play MP3 files and download Java games. They also saw Blackberry e-mail pagers and Palm-based products such as the Treo add voice capabilities. Mobile text messaging had a breakout year, thanks to an agreement among Canada's four wireless carriers to allow cross-carrier messaging. Provinces debated whether talking on cellphones while driving should be against the law, and Newfoundland actually did something about it last week. Ontarians will have to wait and see what the Eves government decides to do.
In general, the Canadian wireless industry drove growth in the telecommunications sector, with a strong emphasis on wireless data services and cost control. Instead of the focus on expensive and super-fast 3G wireless networks, carriers trimmed back expectations and decided that new 2.5G networks — IX and GPRS — would do just fine.
Unfortunately, data speeds on these networks are good but not great. This drew attention to new Wi-Fi wireless local area networks, based on the 802.1b standard, as a quick and dirty way of linking mobility with broadband. The challenge now is to make it more secure from hackers and figure out how to charges prices for public "hotspot" services that consumers will accept.
Some wireless players struggled, particularly south of the border and in Europe. In Canada, Montreal-based Microcell Telecommunications Inc. spent the year watching its stock nosedive and looking for ways of restructuring an unmanageable debt load. In the coming year, we will find out if the provider of the Fido service figures out a magic solution, otherwise, the Canadian industry may be left with three players — Rogers Wireless, Bell Mobility and Telus Mobility.
The most notable deal of the year, even though it stretches back to 2001, was clearly the $20 billion (U.S.) marriage between Hewlett-Packard Co. and Compaq Computer Corp., which was marked by a long and drawn-out battle with dissident shareholders. The dramatic standoff between Walter Hewlett (57-year-old son of HP co-founder William Hewlett) and HP chief executive Carly Fiorina could have been a made-for-TV movie.
It had mudslinging. It had the suspense of a shareholder vote that, like the last U.S. presidential election, was too close to call. And the stakes were high, with Fiorina's job clearly on the line and the future of both companies on the ropes as skeptical analysts and competitors looked on.
In the end, the mega-merger was approved. In eliminating redundant staff and product lines, HP chopped about 18,000 heads. So far, cost savings have been the only benefit of the merger, and it remains to be seen whether "the new" HP has what it takes in the long-term battle against Dell Computer and IBM. It didn't help that growth in the PC market shrank again for the second year in a row.
Technology patent fights seemed to increase in 2002, with companies such as America Online, Amazon.com, eBay, Adobe, British Telecommunications, and Waterloo-based Research In Motion among the big hitters attempting to lock down, enforce or get around patents.
Also on the rise was spam — not to be confused with the popular meat-like substance. Junk e-mail made headlines again and again over the year. People are simply sick of all the porn invitations, make-money schemes and product pitches flooding their in-boxes. So bad is spam that the Direct Marketers Association in the United States, followed soon after by the Canadian Marketing Association, called on their respective national governments to pass legislation to control the flow of junk e-mail.
Nothing happened, of course. No national anti-spam law exists federally in either country, though about half of U.S. states have introduced legislation of their own. For now, consumers and businesses must fight spam with technology. While junk e-mail filtering software isn't perfect, an entire market has spawned to meet demand.