Wednesday, December 31, 2008

Biggest Tech Stories Of The Year

Steve JobsAndy Greenberg, Forbes.com

Turbulent as the last 12 months have felt, 2008 may go on record as the year when the most important events in technology news were those that didn't happen.

Despite all the media's coaxing, Microsoft and Yahoo! failed to consummate their star-crossed love affair. Google came away empty-handed from its bid to buy up swathes of radio frequency in the FCC's spectrum auction. And even if he won't appear at 2009's Macworld, Steve Jobs did not die--a fact that may bewilder loyal readers of Bloomberg or CNN.com.

No, 2008 wasn't a year for dramatic twists or industry-shaking news bombs in the world of technology. Thanks in part to a growing recession and the financial crisis that quickly rippled through the tech economy, 2008 was a year in which incumbents stayed on top, disruptors crept in, ever so slowly, and the industry's laggards held on for dear life.

In fact, the biggest success story of the year was really a sequel to a 2007 coup d'etat: the iPhone 3G. When Apple's smarter smartphone officially launched in June with a smaller price tag and a game-changing application platform, Apple stopped flirting with the handset market and started owning it. The iPhone, originally an expensive wonder toy for elite technophiles, became--by some counts--the most widely-used cellphone model in the world.

Google also had some wireless successes. Though the search giant may not have won the wireless spectrum auction that began in February, it achieved its real goal: lobbying the FCC to open up its 700-megahertz frequency, a win that could allow users to access any wireless application on any network. And that vision became clearer with the launch of the G1, the first phone to use Google's Android operating system, and perhaps the only one capable of rivaling the iPhone's buzzing cloud of media hype.

Meanwhile, what was occupying fellow tech giants Microsoft and Yahoo!? A strange, many-months-long mating dance that ended in mutual frustration and extremely bored reporters. While the two companies played games largely based on pride and miscommunication, Google's share of Internet searches climbed above 70%, according to Web-tracking firm Hit wise, dwarfing its two major competitors. Microsoft's buggy Vista operating system became a running joke, with no relief from marketing stunts like "Mojave," a bizarre blindfolded taste test, or Jerry Seinfeld's mystifying ad campaign. Yahoo!, for its part, found no solution to its lagging second-place search ad platform, least of all getting in bed with its biggest competitor in a deal no one believed would be approved by anti-trust gatekeepers.

In the gaming world, too, big moves stalled. Electronic Arts' dramatic bid for Take-Two Interactive fizzled after the release of "Grand Theft Auto IV," Ear's main target in the deal. Spore, the most anticipated piece of software in years, disappointed gamers with its crippling digital rights management and disappointing game play. The only record it broke was the number of times it was illegally downloaded. Overall, the biggest winner of the year was the endlessly popular WI, a console that launched in 2006.

To be sure, big tech stories didn't disappear in 2008. But even more than in years past, innovation bubbled up from below, disrupting the market in ways only just beginning to become clear. Notebooks--those cheap, simple PCs aimed at pulling their applications from Internet--solidified as a new and dangerously appealing alternative to high-performance machines.

Smart phones started to look less like expensive handsets and more like cheap computers. Twitter emerged as the new digerati communication medium. And while the Blu-ray high-definition format won its long battle against HD-DVD, the real winner in the future of video was far more stealthy: streaming sources like Hulu.com and Netflix, with popularity that's only beginning to percolate.

Some of the year's tech trends produced real victims: Web advertising, ADD for instance, continued to unnerve the journalistic world like a toddler with a machine gun. Venerated newspapers swooned as advertising went from their pages to their Web sites before vanishing into the digital ether. Book sellers, too, saw sales plummet. Oprah gave a rousing endorsement for Amazon's e-book reader, the Kindle, which debuted in 2007, but those sales are still far from helping publishers make up the losses from their print divisions.

But most of 2008's failures were far slower. Deteriorating dot-com boomers like Nortel and Sun Microsystems eroded further in the weakening economy, and managed to lose enormous value without inspiring an acquisition. Since the beginning of the year, Sun's stock price has dropped by three-fourths, Nortel's by more than 98%. Motorola, the sick man of the cellphone market, has watched 75% of its value slip away, too.
In fact, the most heartening tech news of the year may not have been in business, but in politics, where a Twittering, Facebook-friendly, YouTube'd candidate trumped his e-mail-illiterate foe. Barack Obama isn't just focused on using tech to get elected. He also promises to use tools ranging from universal broadband to green tech in shaping the future of the country. And that shift in the government's attitude toward technology could mean 2009 will be a year when tech headlines are not just big--they may also be good news.

The Year Ahead 2009

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