Rip Van Winkle could have slept through 2002 and not missed much in tech-land. I'm betting the same will hold true for 2003.
Information technology is mired in a sticky rite of passage, a prolonged transition as corporations and consumers struggle to digest the newfangled digital stuff they bought in the 1990s. They're still trying to figure out which technologies will remain relevant -- and which are destined to become relics -- when the shakeout ends.
Sad to say, there's no end in sight. Instability permeates the high-tech world, creating an eerie sense of dead dot-coms walking all around us, companies that seem vital but are decaying inside. Even the local phone giants and media titans like AOL Time Warner are looking wobbly. Expect more mega-flops before the great Internet collapse has run its course.
Throughout the boom and the bust, one thread has been common to most of the big business stories: the migration of every imaginable activity online. With two-thirds of Americans using the Internet and more signing on daily, the inexorable shift continues toward new ways of doing things. This has touched off a scramble by businesses to figure out how to profit from the new digital technologies or risk getting cannibalized.
Data traffic on the Internet is growing exponentially, while voice traffic on the plain old telephone system is in decline. Nearly 1 in 10 international phone calls is carried on the Internet. Online shopping, meanwhile, is growing 10 times as fast as offline retail, a shift that is changing manufacturing, distribution and retailing in ways that are still only dimly understood.
In entertainment, sales of music CDs tumbled 10 percent this year, a drop the recording industry blamed partly on the Web's free music-swapping sites. And the makers of video-game consoles (Sony with its PlayStation 2, Nintendo and its GameCube and Microsoft with the Xbox) all launched online multi-player versions this year, which should make video gaming more of a social force in the 21st century.
Already, online dating has gone mainstream, with millions of Americans forsaking bars in favor of Internet matchmakers. And despite the economic downturn, Internet education is on a tear: So far, nearly 500,000 students have taken courses at the University of Phoenix Online, the national leader in virtual classrooms.
Not to be left out, stodgy Uncle Sam committed to boost electronic government last week when President Bush signed the E-Government Act of 2002, allocating $345 million over four years to putting more federal services on the Net.
These were mere footnotes, of course, to the year's splashy headlines, which featured giant bankruptcy filings and accounting troubles at WorldCom, Global Crossing and other failed telecommunications players. It would have been easy to miss the year's significant technology trends amid all the breaking news about corporate scandals, closings, layoffs and restructurings.
But if Rip Van Winkle suddenly awoke and asked what he'd missed on the high-tech scene, I wouldn't harp on the scandals (except for the insider-trading investigation of Martha Stewart; poor Van Winkle would be socially handicapped without that juicy tidbit).
Rather, here's the short list I would offer.
1. WiFi trumps cellular for wireless Internet access. Arguably the most significant computer trend of the year was widespread adoption of a communication standard called WiFi (also known as 802.11b or "wireless fidelity") for wirelessly accessing the Internet. WiFi gear uses unlicensed (in other words, free) radio spectrum to send data over the airwaves. It is being built into most new laptop computers and handheld devices to be released in 2003. Moreover, public "hot spots" allowing WiFi devices to connect to the Internet (sometimes for a cost) are sprouting in airports, hotels and public buildings nationwide. These networks pose a threat to cell phone carriers, which took on debt to build high-speed wireless networks based on the assumption that people would pay extra for such services.
2. The broadband race remains a draw. The race to deliver high-speed Internet services to American homes and businesses pits the cable TV companies against regional phone companies. While cable companies have signed up more customers, the local phone giants have stepped up their lobbying to pry favorable deregulatory policies out of the Federal Communications Commission and Congress. The outcome remains uncertain. Meanwhile, the federal government reported last week that it had counted 5.1 million digital subscriber line Internet connections over American phone lines, vs. 9.2 million high-speed Internet connections over cable lines. The report said the number of such broadband connections is growing, but more slowly than last year -- up 27 percent in the first half of 2002, vs. 33 percent during the latter half of 2001.
3. The Internet's next frontier: business automation? For a second year in a row, the world's top software makers worked frantically to fashion new programming languages for automating business transactions on the Internet. Microsoft is betting its future on an Internet version of Windows called .Net, which is similar to the Sun ONE software initiative from Sun Microsystems and WebSphere at IBM. All are designed to let computers owned by different companies running disparate software applications collaborate automatically over the Internet, with little or no human intervention. That in turn will make it easier and cheaper, or so the theory holds, to create Web-based services that pull data from various sources at once, such as automatic travel alerts, personal financial investment advice or dating screens. Skeptics counter that Web services are too ambitious and could prove to be the Internet's Waterloo.
4. Media decentralization continues. The music and movie industries unveiled weak Internet subscription offerings (Movielink.com for movies; Pressplay and MusicNet for songs) as they sued file-swapping Web sites and lobbied for legislation mandating copy protection in digital devices. Expect more copy protection to be built into commercial CDs by the end of 2003, but don't look for an end to digital piracy. The public is growing accustomed to playing a more active role in what they read, hear and watch. In addition to music sharing, personal Web publishing is exploding in popularity. Look for "Web logs," or online diaries, to become an even bigger cultural force in 2003, when America Online is expected to launch its own Web logging tools.
Leslie Walker's e-mail address is firstname.lastname@example.org.