New Year dawns with major companies in a state of flux

Rethink IT, Jan, 2005

Just as it seemed the industry would slow down a little aronnd the holiday season, December saw huge upheavals in the technology sector that will have knock-on effects for user organizations in 2005.

Most dramatic was IBM's decision to sell its PC business to Lenovo of China, a clever many-faceted strategy to defocus on what has become a non-core business, while retaining some interest and profits; increasing influence in the critical Chinese market; and using that as a useful beach head in the plan to challenge Intel on its home territory with the new Cell chip architecture, coupled with IBM-dominated Linux. The combination promises to put IBM back where it is most accustomed to being--in the driving seat of the enterprise and consumer technology industry, its influence pervading everything.

A viable alternative to Intel in PCs and servers should be a good development for users, especially if IBM grows closer to AMD too, taking that chipmaker beyond its habitual role of gaining just enough market share to keep Intel out of antitrust court, and giving it a real control over future directions, something it startcd to achieve with Opteron.

This will make Intel even more dependent on the succcss of its own ambitious plan to gain control of a key sector, in its case mobility and wireless.

This sector saw its own upheavals in December, notably the planned merger of the number three and five US cellular carriers, Sprint and Nextel, a move that establishes a whole new pecking order in the American wireless market. This is important for the enterprise--the earlier merger of Cingular and AT&T Wireless numbered, among its many motivations, a need to focus more aggressively on the corporate sector, an area where AT&T was stronger than its new parent. Similarly, Sprint will gain such benefits from Nextel, as well as the chance to combine both companies' spectrum holdings, and Sprint's wireline systems, to create a true twenty first century converged network on which to deliver enterprise services.

Against this backdrop, 2005 will be a make or break year for many companies, including Research in Motion, whose BlackBerry devices and software have been the main tool of many early wireless enterprise roll-outs. RIM needs to settle its patent lawsuit with NTP and establish its software as a standard on all mobile plattorms if it is to survive as its PDAs are overtaken by new models from rivals such as Nokia and its corporate customers look to extend their mobile systems beyond simple email.

Of course, the final big transaction to be announccd in December was the takeover of PeopleSoft by Oracle, after 18 months of bitter battling. While PeopleSoft users will be well prepared for the outcome, 2005 will provc a trying year for many ERP sites, seeking to upgrade their major systems to support new business requirements as well as the changes of the main suppliers.