Change in any industry involves conflict. Evolution and revolution in tech this year took place not only in the marketplace but also in the courtroom, the factory, and on the Web. Here are the top news stories of 2012 as selected by the editors of the IDG News Service.
Microsoft finally shipped its new family of Windows operating systems in late October, and the stakes have never been higher for the company that has dominated the personal computing industry for three decades. The company’s continued position as a dominant force in computing rests on the success of Windows 8 for PCs, Windows RT for tablets, and Windows Phone 8. More mobile devices are being sold than traditional PCs, and Microsoft needs a win in tablets and phones. Windows 8 was designed for touch systems, and RT was created to run on devices built on ARM processors, which have a huge lead on Intel chips in mobile devices. To show off RT, Microsoft also made a risky plunge into the hyper-competitive mobile hardware business with its Surface tablet. While the early reception to the upgrade onslaught has been mixed, Microsoft is also readying Office desktop and server software for release in the third quarter of 2013. By this time next year, we’ll have a better read on the software giant’s place in the post-PC firmament.HP’s Autonomy charge: last straw for an industry giant?
In November Hewlett-Packard shocked investors by announcing an US$8.8 billion non-cash charge in its quarterly earnings, mainly as a result of what it called serious accounting improprieties that occurred at U.K. software company Autonomy before HP acquired the firm for more than $10 billion in 2011. HP essentially laid blame on Autonomy’s former management, and that company’s mercurial founder, Mike Lynch, was quick to hit back. The affair is the latest in a series of boardroom dramas and company missteps including a move to develop, then abandon, a family of smartphones and tablets, and, under the short-lived regime of former CEO Leo Apotheker, a plan to sell its PC business. After Meg Whitman took over as CEO, HP changed its mind and decided to keep the PC business. Whitman has stressed that the company generates a healthy cash flow. However, as Lenovo assumes the title of the world’s largest PC maker, industry watchers wonder whether it makes sense to break up HP into separate businesses.
Apple’s $1 billion patent victory over Samsung: patent wars rage on
A California District Court jury in late August handed a stunning $1 billion victory to Apple in its complex patent trial with Samsung over smartphones and tablets. The case involved a countersuit as well as numerous products and company subsidiaries, but the result was that the jury found products of the Korean company and two of its U.S. subsidiaries infringed Apple’s patents. Samsung is appealing and the companies are also fighting it out in other courts around the world. Such cases are likely to continue, since smartphones and tablets are the hottest-selling devices in tech and so much is at stake. Microsoft and Motorola — now a Google subsidiary — are also fighting their own battle over wireless and video coding patents.
Facebook’s IPO fumble
With approximately 1 billion users, Facebook had the wind in its sails when it set an IPO price of $38 per share. But the offering in mid-May stumbled out of the gate and by the end of the month shares were selling for $27, about the same price they’re going for today. The IPO hit a perfect storm, starting with Facebook’s decision to pick a half-dozen investment banks to see the offering through, which could have made individual bankers feel less accountable. They then increased the offering price to an astronomical value relative to earnings. A Morgan Stanley analyst reportedly cut his revenue forecast for Facebook days before the offering, possibly breaching the law by telling only top clients, which may have caused some investors to back off. Finally, Nasdaq system glitches on the IPO day delayed trade notices, wreaking confusion. Perhaps most seriously, closer scrutiny of the company’s finances exposed weaknesses in Facebook’s mobile revenue strategy that the company needs to overcome to earn long-term success.
The Foxconn riot: trouble at the i-mill
On a September Sunday, some 2,000 workers rioted at a Foxconn factory in the Chinese city of Taiyuan that assembled, among other products, Apple’s iPhone 5. Workers claimed that the riot was the result of an escalating brawl between assembly-line workers and guards. The fracas, which left 40 people hospitalized, became a symbol of unrest and poor conditions at the company, which also does work for Sony, Microsoft and Nintendo. There have been multiple suicides at Foxconn facilities. Apple itself had already come under fire after reports of hazardous conditions at suppliers, including Foxconn. Later, in a survey requested by Apple, the Fair Labor Association (FLA) said that though conditions were improving, Foxconn employees sometimes worked beyond 60 hours a week, were not always fairly compensated for overtime, and were subject to inconsistencies in healthy and safety procedures. Until factories get a clean bill of health, labor issues will continue to dog the big tech vendors.
Is Google evil after all? The E.U. throws down the antitrust gauntlet
Almost two years after complaints against Google were first filed, E.U. competition chief Joaquín Almunia in May announced that the European Commission had concluded that Google may be considered to have abused its market dominance. Google had been accused of using its search service to direct users to its own services and to reduce the visibility of competing websites and services. Though Almunia gave Google “a matter of weeks” to address the complaints, the case had not come to a conclusion by the beginning of December, indicating a willingness to settle. The case mirrors a similar inquiry in the U.S., where the Federal Trade Commission began investigating Google for antitrust violations in mid-2011. Though fresh reports surfaced in October that the FTC was moving ahead with a formal announcement, to date a lawsuit has not been filed.
Flame: malware for nation-states
In the waning days of May, security researchers revealed that they had discovered a highly complex, massive piece of malware that had been used for cyberespionage against targets in Iran and other countries in the Middle East and North Africa for at least two years. The espionage toolkit, dubbed Flame, shared a component with Stuxnet, the malware targeting industrial systems that had created problems for Iran’s nuclear centrifuges. In lines of code, Flame dwarfed Stuxnet, and researchers came to believe that both pieces of malware had been created by programmers coordinated by a nation-state or states, most likely the U.S. and Israel. The plot thickened in June when The New York Times broke a story that U.S. President Barack Obama had ordered the Stuxnet cyberattack to keep going, once the malware broke free on the Internet and was exposed, to do as much damage to the Iranian program as possible. The White House declined to comment, but there is little doubt that malware has come of age as a geopolitical weapon.
The Web rebellion: blackout protest snuffs SOPA and PIPA
The Jan. 18 Web “blackout” in protest against the Stop Online Piracy Act and the Protect IP Act, with some 10,000 sites participating, was a culmination of a popular movement that had been bubbling up against the bills for months. It was also the first online uprising that had a major, direct impact on the U.S. lawmaking process. Within days many lawmakers abandoned the bills. In the House of Representatives, Representative Lamar Smith, the lead SOPA sponsor and Texas Republican, killed the bill. A vote on PIPA was delayed, and Congressional support fizzled. The bills differed but both would have allowed the U.S. Department of Justice to seek court orders requiring U.S. online advertising networks and payment processors to stop doing business with foreign websites accused of infringing U.S. copyright. Supporters of the bills say lawmakers still need tools to stop international copyright piracy, so the fight will continue.
Oracle loses the Google API case, programmers breathe a sigh of relief
A district court judge in May ruled that the Java APIs (application programming interfaces) in Android are not eligible for protection under U.S. copyright law, handing Oracle a defeat in its lawsuit against Google. Oracle had acquired Java when it bought Sun Microsystems. The ruling means that programmers can create code that implements Java API functions as long as the code for the implementation is original. Programmers had voiced concern that a decision for Oracle would set a precedent that software APIs can be protected by copyright, making it much more difficult to create interoperable applications and fragmenting the market. Oracle is appealing the API ruling and meanwhile it suffered another big loss in court in August, when a California judge ordered that Oracle had to keep porting its software to Hewlett-Packard’s Itanium platform, setting the stage for a jury trial next year over whether Oracle breached a contract with HP, and what damages it may need to pay.
AMD announces ARM license: birth of a new server platform and threat to Intel
With its announcement at the end of October that it would license a 64-bit processor design from ARM and sell server chips based on the architecture in 2014, Advanced Micro Devices tried to accomplish several things. Ending its exclusive commitment to the x86 architecture, it hopes to revive its slumping fortunes in the server market and mount a new threat to its giant archrival, Intel. AMD will produce a new line of power-efficient, system-on-chip Opteron processors for massive Web workloads. AMD came on strong with its 2003 introduction, ahead of Intel, of the first 64-bit x86 processors, and is aiming for goalposts again. The announcement came two weeks after AMD said that third-fiscal-quarter revenue dropped 25 year over year to $1.27 billion, resulting in a loss of $157 million. The company badly needs a hit.
