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The Year in Technology

By Cynthia L. Webb
washingtonpost.com Staff Writer
Wednesday, December 22, 2004; 11:05 AM

Will 2004 be remembered as the year the technology sector grew up? There are plenty of reasons to think so.

From Silicon Valley darling Google coming out of its cocoon in the biggest IPO since the tech bust, to the mainstreaming of open-source software and the rise of satellite radio, the year was full of signs that technology companies are not just done licking their wounds -- they're expanding, investing and otherwise preparing to write the next chapter of the New Economy manifesto.

_____Filter Archive_____
Tsunami Prompts Online Outpouring (washingtonpost.com, Jan 3, 2005)
Shooting for Video Game Success (washingtonpost.com, Dec 21, 2004)
The Incredible Edible iPod (washingtonpost.com, Dec 20, 2004)
Santa's Bag of Tech Mergers (washingtonpost.com, Dec 17, 2004)
iPod: The Gift That Keeps on Going (washingtonpost.com, Dec 16, 2004)
More Past Issues

In the past year, broadband outpaced dial-up connections in the U.S. for the first time, hinting yet again that the long-promised digital convergence is just around the corner. Desktop search applications and the major commitment by Yahoo, Microsoft, Amazon.com and a host of start-ups to challenge Google in the search-engine space ensures a heady competitive race that will surely pay off in great new features for consumers and businesses. For hardware manufacturers like Apple, Dell and Hewlett-Packard, the focus these days seems to be less on personal computers and more on a host of tech gadgets that play music, movies, games, or take pictures, record audio and organize your day. And don't forget the ubiquity of WiFi...

Here's my Top 10 list of the technology developments that I think were most notable this year and are likely to remain a significant influence on the sector in 2005:

10. VoIP's Big Leap: Vonage, Skype and other companies offering Internet telephone services proved in 2004 that the Web is about to revolutionize the century-old telecommunications industry. The rise of Voice-over-Internet Protocol forced traditional carriers like AT&T to devise their own VoIP offerings. Perhaps more importantly, VoIP highlighted the need for greater investments in rolling out high-speed wiring to the nation's households and businesses, as the broadband pipe of the future will be expected to carry a heavy stream of digital communications. Retailers are latching onto VoIP too. Just yesterday, Vonage announced that CompUSA will sell Vonage service at its stores and online. The VoIP revolution has just begun.

9. Merger Mania: The technology sector went on an M&A binge in 2004, especially in the last three months. The merger-of-the-year award surely goes to Oracle's Larry Ellison, who finally managed to gobble up rival business software firm PeopleSoft in a $10.3 billion deal. The security software space had its own whopper of a deal last week, with Symantec purchasing Veritas for $13.5 billion. Some of technology's heavies made smaller acquisitions as they seek leverage in the bigger battles for consumers' eyeballs and wallets. Microsoft recently added an anti-spyware firm into its empire, and Google has been boosting its search services by buying technology firms, such as its October purchase of digital mapping company Keyhole Corp. The giant Sprint-Nextel deal sets up a three-way battle for subscribers in the wireless industry in 2005.

8. iPod Nation: The iPod digital music player not only boosted Apple's bottom line in 2004, but also gave a big boost to the popularity of MP3 players and the commercialization of legal music downloads. Not since the debut of Sony's Walkman in the 1980s has a tech gadget become such a cultural phenomenon. Meanwhile, Apple's iTunes Music Store and competing services from Microsoft, RealNetworks, and even Wal-Mart are proving that fans can be trained to use the Internet to purchase music, instead of just downloading it for free from one of the many renegade file-sharing services. Case in point: Apple said last week that iTunes has sold more than 200 million songs so far.

7. Pay-For-Play: As Apple succeeds in getting people to pay for music downloads, the underground world of swapping copyrighted material online continues to grow. The Recording Industry Association of America and the Motion Picture Association of America continued their legal campaign against Internet piracy in 2004, but it's debatable whether slapping consumers and Internet service providers with lawsuits is cutting down on the problem or just pushing the practice into a deeper black market. The entertainment industry trade groups are showing no signs of letting up. But all eyes will be on the Supreme Court next year, as the justices weigh whether the makers of file-swapping software are responsible for their customers' violation of copyrights. Over in Congress, lawmakers debated several laws that would have imposed even tougher penalties on file-sharers. Congress will surely debate the copyright issue again next year, and, as my washingtonpost.com comrade David McGuire concluded, the direction lawmakers will take on copyright protection legislation in 2005 is an open question.

6. The Song in the Sky: It wasn't that long ago that it was an open question whether the two satellite radio companies -- XM and Sirius -- could lure enough customers to stay afloat. The past year certainly showed that the profit potential is there. Last month, Sirius hired ex-Viacom head Mel Karmazin as CEO and also brought on raunchy DJ Howard Stern in a $500 million deal. XM, for its part, hired NPR veteran Bob Edwards and continues to lead Sirius in the subscriber race. Will satellite radio turn FM into the next AM backwater?

5. Squelching Spyware and Spam: Cyber-security threats only got worse in 2004, just like all the experts predicted last year. Spam, by some estimates, now makes up 60 percent of all e-mail messages sent across the Internet. Spyware, meanwhile, infects 67 percent of all PCs connected to the Web, according to a recent study. "Phishing" attacks, which lure unsuspecting PC users to bogus online sites to steal financial and other private data, took off in a big way in 2004. New laws and a rash of lawsuits targeting online scammers look nice in the headlines, but aren't likely to make a dent in Internet crime. So what is to be done? It's going to take more diligence from individual PC users -- arm your PC with updated firewall, anti-virus and anti-spyware programs, and don't forget to download regular updates for your operating system (particularly if you are one of the more than 90 percent of PC users on a Microsoft-powered system).

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