The Top 10 Tech Stories of 2006

Mergers, acquisitions, lawsuits, scandals, and battery recalls kept journalists busy in 2006.

Megadeals signaled realignment in the IT industry and foreshadowed the Internet’s multimedia future. A much-delayed Vista debuted amid speculation that it would be the last of the old-school, big-bang product launches. As software giants announced support for Linux, and manufacturers switched chip allegiances, the open-source and chip industries were thrown into turmoil. 2006 was a transition year, as IT giants positioned themselves for a new era of global competition in the post-PC era. Here, not necessarily in order of importance, are the IDG News Service’s top news stories of the year.

HP Spy Scandal: Board, and Broad, Implications

A board feud at Hewlett-Packard hit the newspapers in September, leading to the resignation of Chairman Patricia Dunn. The board spat erupted over an investigation to see which board members leaked information–including arguments about the ouster of former Chief Executive Officer Carly Fiorina–to the press. The company used “pretexting,” where investigators pretend to be the people being investigated in order to access private information.

Criminal charges were filed against Dunn, legal counsel Kevin Hunsaker, and outside investigators. Users are unfazed: Under Mark Hurd, CEO and newly appointed chairman, HP has overtaken Dell as the leading PC maker and IBM as the biggest IT company in revenue terms. However, the scandal has broad implications. Congress may make pretexting a federal crime. Oversight of corporate governance is a rallying cry.

Microsoft Cuts a Deal With Novell: Embrace and Devour?

Microsoft’s November deal with Linux distributor Novell created turmoil in the open-source world. Microsoft will offer sales and support for Novell’s Suse Linux, work on interoperability, and indemnify Suse users and developers from potential Microsoft lawsuits against copyright infringement.

Industry insiders say that Microsoft is driving wedges into the open-source community, protecting only some users from legal reprisals. The open-source world had already been rocked in October, when Oracle’s move to offer full support for Red Hat Linux had industry insiders worrying Red Hat’s business model would suffer. Ultimately though, the software giants’ embrace of Linux is a sign that no one can ignore open source. Microsoft CEO Steve Ballmer said the impetus for the agreement came from customers. Though that’s an old line, there’s no doubt that open source has truly come of age.

Alcatel-Lucent: M&A Mania Grows

The merger of Alcatel and Lucent Technologies, announced in April, formed a $24 billion networking giant and signaled trends in global mergers and acquisitions. The hookup was necessary to face down competition in growth areas of the mature enterprise market–such as Voice over IP–while Chinese manufacturers put pressure on the West on the low end.

2006 is expected to yield 3945 M&A deals, up from 3455 in 2005 and the highest number ever, according to investment firm Innovation Advisors. Globalization and changing demand are fueling M&A in networking, the Internet, the chip industry and enterprise software. 2006 examples include Advanced Micro Devices and ATI Technologies, Red Hat and JBoss, and EMC and RSA Security.

Google-YouTube: Convergence 2.0

Google’s ability to afford the $1.65 billion price tag for its acquisition of YouTube, announced in October, underscored its status as the Internet’s superstar revenue generator. The deal itself confirmed video’s importance in the evolution of Web 2.0: the mashing together of user-generated content and multimedia applications.

“Anybody who wasn’t interested in YouTube was either asleep or not being honest,” said Jonathan Miller, who was deposed as AOL chairman after the Google-YouTube deal.

Competitors scrambled. Lycos launched a movie-streaming service mixing elements of social networking and online video, while movie studios and TV networks rushed to put video online. Legal issues between Internet sites and content producers need to be worked out, but one thing is for sure: Convergence of video and the Net has hit prime time.

AOL Search Data Release Fans Privacy Debate

AOL’s July release of search log data on 658,000 subscribers, meant for research use, became a cause celebre in the privacy-rights debate. Coming amid reports of corporate data leaks and phishing scams, it was yet another reminder of the general insecurity of data. The AOL records contained sensitive information like Social Security numbers.

In September three people sued the company in what their lawyers claimed was the first such lawsuit seeking national class-action status. They asked the court to instruct AOL not to store users’ Web search records. But the request is not likely to be granted. Law enforcement officials want service providers to retain user logs to aid investigations, and new data retention rules may be proposed. The ability of technology to store an ever-increasing amount of data will ensure continuing debate. Jurisdictional issues also come into play as the U.S. and Europe clash over different privacy standards.

When Batteries Attack: The Great Battery Recall of 2006

It was the biggest recall in the history of IT and consumer electronics. Sparked by reports that lithium-ion batteries could short circuit and catch fire, Dell in August recalled more than 4 million laptop batteries. The move was soon followed by manufacturers around the world including Apple Computer, Fujitsu, Hitachi, Lenovo, and Toshiba. More than 8 million batteries were recalled, leading to yet another black eye in an annus horribilis for Sony, the manufacturer of the faulty cells. The recall, startup costs for the delayed PlayStation 3 game console, and poor PlayStation Portable sales pushed Sony’s operations into the red.

Mac on Intel: Chip Industry Realigns

Apple’s January launch of the first Mac PCs running on Intel chips was historic. For decades, Apple’s insistence on going its own way has been its strength, and also its weakness: the company has traded seamlessly designed products for market share … at least, until the iPod came along. But Intel chips have breathed new life into the Mac line. A 30 percent jump in fiscal fourth-quarter Mac sales helped the company generate $546 million in profit and blow away analyst expectations. The company’s profit margin is great: in their last reported quarters, Dell had more than 300 percent greater revenue than Apple, but only 24 percent greater profit.

Meanwhile, in a blow to Intel, Dell announced in May that it would for the first time use chips from Intel archival Advanced Micro Devices, in multiprocessor servers by the end of the year.

Patent Wars Singe BlackBerry

After the U.S. Supreme Court declined in January to hear Research In Motion’s appeal in its patent battle with NTP, industry watchers started sounding the death knell for RIM’s BlackBerry. A $612.5 million March agreement between the companies, however, ensures that RIM will never have to worry about NTP patent claims again.

The case is emblematic of the disruptions caused by patent disputes, which often lead to near-automatic injunctions that prevent companies from selling products that allegedly infringe on patents–even before final patent rulings have been made. Many industry insiders found wisdom in the U.S. Supreme Court’s May ruling that courts need to look at multiple factors instead of immediately awarding injunctions. The court sided with eBay in a patent infringement case brought by online auction company MercExchange. But patent wars continue: NTP sued Palm in November.

Vista Launches

After numerous delays, Microsoft in November launched Vista, along with Office 2007 and Exchange 2007.

Though Microsoft CEO Ballmer called it “the biggest launch in our company’s history,” it didn’t have that feel. Consumer versions of Vista and Office won’t be available until the New Year, thus missing the holiday buying season. The products are important: among many other things, the level of interoperability among them is greater than ever before. But the launch may go down in history for another reason: it could be the last of the traditional big products launches. With more people tapping into hosted applications, Google experimenting with Internet-based productivity applications, and users receiving a steady stream of product updates over the Web, big-bang launches may fade into the past.

Gates Steps Back … to Plunge Into Philanthropy

Bill Gates’ June announcement that he will step out of his daily role at Microsoft in July 2008 was a milestone that comes at a transition time. While he will remain chairman, Gates will focus on philanthropy.

Microsoft was rarely if ever a first mover, as for example Apple has been. But by combining technical acumen and business brilliance, Gates embodied the quintessentially American entrepreneurial knack of seizing a great idea and commercializing it beyond people’s wildest dreams. His deal to provide the operating system for the IBM PC in 1981 fueled the personal computing revolution. Over the next 25 years Gates led Microsoft to embrace the graphical interface and bring it to the masses, conquer the desktop market, and ultimately navigate the shoals of the Internet era. Microsoft faces further battles in the Internet age, against Google and other companies that will spring up. Meanwhile the Bill and Melinda Gates Foundation has assets of about $30 billion. The world watches to see if Gates can revitalize philanthropy, as he did computing.

Xbox 360’s HD DVD drive already functioning on PCs

In you haven’t had enough Xbox 360 (let alone Wii and PlayStation 3) news lately, we’ve got one more tidbit for you. While we knew the device would sport USB connectivity, the recently released (and unboxed) HD DVD add-on drive has reportedly already been hacked to function on plain ole PCs, no Xbox 360 necessary. Utilizing Toshiba drivers, users have apparently been able to not only view the file contents of their HD DVD flicks directly within a Windows XP environment, but have been able to play back the film on PCs well-spec’d enough to handle the load. By enabling the computer to read the UDF (Universal Disc File system) v2.5 — which is currently used by Toshiba’s first generation HD DVD drives — you can avoid throwing down the coin required for an Xbox 360 if you so choose. But as these roundabouts always go, we wouldn’t count on things working out so smoothly for too much longer, especially with HDCP always lurking and waiting to pounce.

WirelessHD Standard Coming in Spring 2007

New Special Interest Group Employs 60 GHz Technology for True Uncompressed High-Definition Video/Audio/Data Transmission
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SUNNYVALE, Calif.–(BUSINESS WIRE)– LG Electronics Inc., Matsushita Electric Industrial Co., Ltd. (Panasonic), NEC Corporation, SAMSUNG ELECTRONICS, CO., LTD, SiBEAM, Inc., Sony Corporation and Toshiba Corporation today announced that they are working as a special interest group called WirelessHD to develop a specification for a wireless high-definition digital interface (WirelessHD™ or WiHD™), that is intended to enable high-definition audio video (A/V) streaming and high-speed content transmission for consumer electronics (CE) devices. In addition to actively promoting the new format throughout the industry, WirelessHD will present the format available for adoption as soon as the specifications are completed, in Spring 2007.

The migration to high-definition content along with the proliferation of digital source devices has intensified consumers’ desire to simply and flexibly connect to highest quality, high-definition displays and consumer electronics systems. In-Stat notes that global sales of devices with a high-speed digital A/V interface is expected to grow from 60M units in 2006 to 495M units in 2009.

“Emerging as the first consumer electronics industry initiative for wireless uncompressed digital video transmission, WirelessHD will provide consumers wireless flexibility and ease of use while preserving the benefits traditionally associated with popular wired alternatives for point-to-point display, such as HDMI and DVI,” said Brian O’Rourke, a Senior Analyst with In-Stat/MDR. “The data rates (or bandwidth) that WirelessHD will support are truly impressive.”

WirelessHD, which intends to specify the unlicensed, globally available 60 GHz frequency band, will enable wireless uncompressed high-definition, high-quality video and data transmission and is first targeted to be built into HDTV’s as well as a wide range of audio video (A/V) devices, both fixed location and portable.

“The availability of high-definition wireless connections stands to eliminate the morass of cables, switches and other complexities traditionally needed to support the wide variety of devices consumers have and will continue to buy, such as HDTVs, HD disc players, digital video cameras and game consoles. With high-definition wireless links, media streaming and transmission from any source to any display or recorder is dramatically simplified by removing the need for a hard-wired connection. WirelessHD will provide a high-speed wireless digital interface that will enable customers to simply connect, play, transmit and port their HD content in a secure manner,” stated John Marshall, Chairman of WirelessHD.

The participants’ commencement of WirelessHD relates to acknowledgement that industry support is critical. In addition, commencement of WirelessHD relates to the recent availability of several new technologies that make it possible to achieve the multi-gigabit data rates required for uncompressed video streaming. Such breakthroughs enable low cost, better image quality, and higher performance wireless A/V systems. The key characteristics and focal technologies include:

  • High interoperability supported by major CE device manufacturers
  • Uncompressed HD video, audio and data transmission, scaleable to future high-definition A/V formats
  • High-speed wireless, multi-gigabit technology in the unlicensed 60 GHz band
  • Smart antenna technology to overcome line-of-sight constraints of 60 GHz
  • Secure communications
  • Device control for simple operation of consumer electronics products
  • Error protection, framing and timing control techniques for a quality consumer experience

“After its launch, WirelessHD has great potential to be adopted rapidly in the consumer electronics segment. WirelessHD should first appear in adapter products, followed by digital televisions and projectors, DVD players, and set-top boxes. Other potential markets include game consoles and portable devices,” said O’Rourke of In-Stat/MDR.

The convergence of these industry leaders with a common application focus, accompanied by the latest advances in wireless technology and available spectrum, represents a unique opportunity for the industry that stands to change the way consumers access and manage high-definition digital content today and tomorrow. In the development of this industry initiative, WirelessHD looks to build momentum at this time by issuing a call for additional interest. Interested companies can visit www.WirelessHD.org or email info@wirelesshd.org.

About WirelessHD

Formed in 2006, LG Electronics Inc., Matsushita Electric Industrial Co., Ltd (Panasonic), NEC Corporation, SAMSUNG ELECTRONICS CO., LTD, SiBEAM, Sony Corporation and Toshiba Corporation, have joined together to create the next generation wireless interface specification for HD media streaming and transmission. WirelessHD will facilitate technical advancement by creating a specification focused on fixed and portable devices. WirelessHD is the first consumer electronics and technology industry-supported, high definition digital wireless interface for simplified media streaming and HD content portability. For more information on WirelessHD, please visit www.wirelesshd.org.

Are you getting all the HDTV resolution you paid for?

Not necessarily, given the results of Home Theater Mag’s recent tests of 61 HDTVs. Using test patterns from a Silicon Optix HQV HD DVD, they tested deinterlacing, 3:2 detection and for the 1080p sets, bandwidth. Unfortunately, just over 54% of the HDTVs failed the deinterlacing test, 80% failed the 3:2 test, but the 1080p sets passed the bandwidth test, despite all but one (Pioneer Elite PRO-FHD1) losing some detail. If a HDTV doesn’t pass these tests, then you’re losing at least some visual information from a 1080i signal. Some televisions throw away half the horizontal lines, which results in a fail on the deinterlacing test, or don’t perform inverse telecine on moving images appropriately, failing the 3:2 test. Of course, contrast ratio, refresh rate and black levels still contribute to overall picture quality, but you should take a look at their results to make sure you’re getting every pixel you expected from your new HDTV.

[Thanks, Ryan]