Secret wiretaps. Security breaches in high places. Criminal indictments, federal probes, a go-to-jail card for
a computer boomer. Over in Microsoftland, Novell enters the lion's den, Vista comes into view and somebody with a loud voice keeps insisting that Redmond, Wash., is on the front lines of Web 2.0. In the meantime, media moguls make googly eyes at the kid who made a market -- oh, what a market! -- in online videos.
No one would call 2006 a dull year for the technology business. But what, exactly, does it say about corporate culture when some of the same companies that were 2006's biggest losers are also its biggest winners? Maybe it's the 24-hour news cycle. Or maybe it's just that capitalism in a land of laws is a strange business.
Consider Hewlett-Packard Co., the poster giant for naughty and nicely profitable this year.
HP elbowed out Dell Inc. as the No. 1 global supplier of personal computers and posted record profits at roughly the same time the California attorney general charged Chairwoman Patricia Dunn (make that ex-chair) and other company brass with illegally spying on board members and journalists. The shenanigans made pretexting, the act of getting someone else's personal data under false pretenses, part of the business lexicon. HP settled the California lawsuit earlier this month for chicken feed -- $14.5 million. Federal investigations are continuing.
The last laugh
Meanwhile, Wall Street seems to really, really like Carly Fiorina successor Mark Hurd. In the midst of scandal, Hurd has presided over a 40% jump in stock price during the past 12 months and given a masterful performance of Scrooge, Wall Street's favorite role, promising in this holiday season to eliminate even more jobs -- oops, waste.
Dell Inc., another candidate for both the winner and loser category, kept busy this year making (exploding) lemons into lemonade. In August, Dell announced the largest recall of batteries in history, after acknowledging that the Sony ion-lithium batteries in its laptops could catch fire -- and actually won brownie points for doing the right thing.
The Texas computer maker's winner status, to be sure, is more about faring better than its partner in recall -- Sony Corp. -- than unalloyed success. Sony saw profits plummet this year and was still apologizing for the defective batteries in October. By then the recall included some 9 million batteries and involved every major computer maker. Dell, on the other hand, was getting pats on the back from analysts last month for its recent focus on margins, rather than just market share, and a nice bump in its battered stock price after preliminary earnings beat expectations.
BlackBerry maker and publicity magnet Research in Motion Ltd. wins its place in the winner/loser circle this year for not getting crushed. Settling a four-year dispute over patent infringement: $612.5 million. Lindsay Lohan thumbings sent via BlackBerry? Priceless. The wireless email provider of choice for the business set, RIM survived the lawsuits, the court-threatened BlackBerry shutdown and media hysteria to sign up its 6 millionth subscriber and introduce its petite multimedia powerhouse, Pearl. The stock surged to an all-time high this fall, but some analysts believe that may be its zenith for a while.
Flawed Sun Microsystems Inc. spent another year in purgatory, trying to claw its way back to its place in the California sun on the back of the cheaper server market, while holding on for dear life to the expensive Unix market. That means the Santa Clara company now has Dell to worry about, but sales are better, and investors more pleased than in the past. But mostly, the company elicited the usual headshakes. When its charismatic founder, Scott McNealy, relinquished the reins, the comment from many of our readers was, what took so long?
Enough of the ambiguity, you say? What about winning winners, losing losers?
Another winner? Linux. Yes, we know former Massachusetts state CIO Peter Quinn was ridden out of his own town by enemies of open source. But the ultimate outsider operating system was welcomed into the Establishment this year, with Microsoft making its (some say unholy) deal with Novell Inc. and Oracle's Ellison promising full support to Red Hat users at half the price. The jury is out on Red Hat, the leading Linux provider. Some pundits argue that anything that speeds commercial adoption of Linux also advances Red Hat, but Microsoft is not exactly known for being nice to competitors. And our experts at TechTarget fear that Alexander, uh Ellison, has basically commandeered Red Hat's code as his own and will give the Raleigh, N.C., innovator a grueling run for the money. As for Novell? Techies might feel disgust for Novell climbing in bed with the D-vil, but Wall Street salivated, with Novell's stock climbing 16% on news of the accord.
Caught red handed
Ready for some losing losers? Here's two: former CA Chairman and CEO Sanjay Kumar and the U.S. Department of Veterans Affairs. With all the slipshod security out there and options scandals waiting to happen, it might seem unfair to pick on the VA and Kumar, but the two practically lobbied for their parts.
The VA was dumb to lose a laptop containing personal data on more than 26.5 million veterans, the largest data breach in government history. Even dumber? Keeping the bad publicity going -- even after the laptop was recovered unbreached -- by infuriating the House committee investigating the incident. On the bright side: Many VA resignations, committee hearings and an IT operation overhaul later, the agency's new CIO is "pretty confident" the VA will not have another large data breach like the one in May. No such silver lining for Kumar, who pleaded guilty in April to obstruction of justice and securities fraud for his part in a $2.2 billion accounting fraud. He was fined $8 million and sentenced to 12 years in prison in November. And his former company is suing him for the $14.9 million it says it paid for his legal defense, laying claim in its suit to the many goodies Kumar collected along the way, including two Ferraris and a yacht.
I wish I had thought of that
The winning winner? Top honors for 2006 go to the IT phenomenon that offers you endless opportunities for slacking off. YouTube, the online video-sharing site started in 2005 in the Menlo Park, Calif., garage of 29-year-old Chad Hurley, was bought by Web-search behemoth Google Inc. for $1.6 billion. (Notice we did not coronate the buyer -- yet.) In addition to the dough, the purchase gave Hurley and his 28-year-old chief technology officer, Steve Chen, entry to the highest circles of hell, um, media mogul gatherings. And, in the surest sign of success, rumor is the big boys are hopping jealous, with Fox, Viacom, CBS and NBC reportedly in talks to put their own stuff online rather than chasing it down on YouTube. Ho, ho, ho.
Wait! We've forgotten Microsoft, you say? Winner, loser, a linner or woser? Of course, the Redmond, Wash., entity is in league of its own. The unlovable software giant keeps going and going and going, working feverishly to marry its software to the Internet, and remain relevant. Besides, what can we say about Microsoft that CEO Steve Ballmer hasn't already shouted from conference stages all over the world? Still, any consideration of the year 2006 would be remiss not to acknowledge the milestone statement from founder Bill Gates that he will be stepping aside in 2008 and the mind-boggling proposition that the ultimate geek ultimately will be better known for his philanthropy than for his software. May the blessings of the season be with you.
Let us know what you think about the story; email: Linda Tucci, Senior News Writer