Top 10 highs and lows of 2009

Windows 7 has largely rescued Microsoft's reputation as the default operating systems vendor for the corporate world

To say that 2009 was a wild year would be an understatement. It was a year in which the industry fought through an unprecedented crisis and struggled to see some rays of light at the end of the tunnel.

It was, however, a better year for some companies than others. While virtually every area of the industry felt the impact from the economic crisis, a few sectors were able to thrive amid the chaos.

This week we look back on the year and count down both the best and worst things about 2009.

HIGHS

5. Software-as-a-service
Iain Thomson: Few industries have weathered the recession quite as well as software-as-a-service (SaaS).

There are a number of reasons for this. First, SaaS is primarily being sold as a cost saver, something that always goes down well in a recession. Second, the marginal cost of new clients is relatively low.

But when you come down to it, SaaS has been rather lucky. Just as the industry was coming to maturity, a recession kicked in and it found it had a selling point that few can resist.

One of the biggest losers in the SaaS space is Microsoft. Google and others are steadily eating into Redmond's lucrative applications market and the software giant has been slow to react. Nevertheless, we are now seeing concrete evidence that Microsoft is taking the threat from SaaS seriously.

However, one potential stumbling block for the SaaS industry remains, and that is security. Leaving key corporate data in the hands of third parties is a security minefield and I suspect that in the next year we will see some security breaches that make people doubt the wisdom of moving to a service platform.

Shaun Nichols: Despite what Salesforce chief executive Marc Benioff will tell you, SaaS was very much a concept that happened to hit in the right place at the right time.

Virtualisation and datacentre consolidation had come to maturity, then the recession hit and nobody wanted to have a major purchase on the balance sheet. This created a near perfect storm for SaaS, which required no hardware investment and a monthly subscription cost that looked very good on the budget.

Granted, because it had the 'hot new technology' spotlight largely to itself we have all become a bit sick of the cloud computing label, but the concept is still strong and it makes a lot of sense.

I can understand the security concerns associated with SaaS, but I don't entirely agree with them. As Bruce Schneier noted, no new attack vector is opened up by cloud computing, and many companies already outsource some degree of infrastructure to a third party.

Aside from that, the virtualisation platforms used by many cloud systems have 'sandbox' protections that can isolate systems and, in some cases, make them as - or more - secure than an on-premise systems.

4. Spam host shutdowns
Shaun Nichols: It started in late 2008 with the shutdowns of estDomains and McColo, but in 2009 law enforcement and web authorities continued the push to take down shady hosting firms.

In June hosting firm 3FN was shut down amid charges of hosting spam and botnet control centres, and two months later authorities were able to take down notorious hosting service RealHost.

However, the efforts were not entirely fruitful. Just months after McColo's shutdown devastated the market, spammers had recovered and pushed junk mail levels back up to record numbers. Security experts are also worried that the shutdowns have led cyber criminals to wise up and make efforts to distribute their command centres and attack systems rather than rely on a single host or system.

Still, it's great to see an effort to finally put some pressure on not only the malware writers and botnet operators, but the hosting companies that harbour and protect cryber crime.

Iain Thomson: Botnets are like dragon's teeth: kill one and another springs up in its place.

While it has taken a while for the internet industry to get around to shutting down ISPs that run malware systems on their servers, the result has been less than effective. Spamming is such a profitable concern that malware operators have got wise quickly and now have backup servers ready to continue deluging our inboxes with junk.

We are seeing a rapidly evolving criminal underworld reacting to the pressure of the legitimate computing industry trying to win back the high ground. I fear it will lose in the short term. It will take nothing less than a rewriting of the internet protocols to beat this problem.

3. Android
Iain Thomson: This year has been an exciting one in the mobile operating systems sphere and Android has been gaining the lion's share of interest.

With Google pushing the system aggressively and significant interest from handset manufacturers, Android has been getting a lot of attention. Motorola is betting the company on Android being a success and Apple is becoming seriously concerned about the new threat.

The battle is now on for developers. Apple rules the roost in mobile phone applications, with the App Store proving a phenomenal success. Android is offering developers a bigger slice of the financial pie and will also block fewer applications, a practice which is winning Apple no friends. If Android can build a solid developer network in the next year, it has a real chance of success.

Android has also benefited from the poor year other mobile operating systems have had. Symbian is still the leader in the market but has little or no public image and handset manufacturers such as Nokia have failed to excite the American market.

Meanwhile, Windows Mobile is in a death spiral as manufacturers drop it and its features fail to compete, as even Steve Ballmer admits. We'll see a new version out early next year but it will most likely be too little, too late.

Shaun Nichols: I'm fairly confident that either Android or another mobile platform will eventually knock the iPhone off the top spot, and I don't think Apple is too worried about it.

Why do I think that? The Macintosh. Apple has managed to do extremely well with the Mac despite only controlling about a tenth of the total market, because it is able to make a hearty profit on both hardware and software sales.

Much as Microsoft has to sell a lot of software licences to many system bu ilders to make its money, Android, Symbian and Windows Mobile all have to appeal to a number of smartphone builders. This will lend them a larger market share but much like Windows' driver and hardware spec troubles, those platforms will have to support many configurations.

Apple has no such problems. It tailors the hardware to Mac OS X and vice versa, just as it does with the iPhone. As such, I don’t think it will have much of a problem if the iPhone is only the second or third most popular smartphone OS.

2. Apple defying the market
Shaun Nichols: 2009 was supposed to be a terrible year for consumer electronics vendors, but someone forgot to tell Apple. The Cupertino computing icon overcame both the recession and a health scare from co-founder and chief executive Steve Jobs.

After undergoing a liver transplant, Jobs returned to the company and Apple saw a summer that would bring an incredible string of record quarterly returns. While other vendors struggled to stay above water, Apple was moving record numbers of hardware and paid downloads.

Much of the success stemmed from the iPhone and iPod lines as well as the iTunes store that provided content for the devices. Apple's flagship Macintosh line also thrived, with both the MacBook and iMac lines posting strong numbers.

With 2010 bringing whispers of a new tablet device, Apple's strong run may not end any time soon.

Iain Thomson: Apple has shown that good products and a fanatical fan base can really make a difference to the bottom line, no matter how bad the economy gets.

While the rest of the tech world was running around like a chicken with its head cut off, Apple continued to bank profits and produce new products that sold by the bushel. No wonder the company is so smug that it's driving its rivals nuts.

Apple has also bucked the trend by producing very expensive laptops that people actually buy. Microsoft may have based a whole ad campaign around this, but it has not helped erode Apple's market share at all and may have actually improved it. Based on my experience of Macbook users, they are willing to pay because of the perceived quality behind the hardware.

Apple also looks to be grooming successors for Steve Jobs' role, something that is sorely needed. Microsoft has successfully handed over Bill Gates' role to Ray Ozzie and Apple looks to be doing something similar, but hasn't yet decided on the successor. Tim Cook seems a likely candidate but Phil Schiller is also in the running, although his marketing background might hurt him. We shall see more as the year progresses.

1. Windows 7
Iain Thomson: Shaun and I seriously considered putting Windows 7 in both the high and the low category but decided against it. Windows 7 has largely rescued Microsoft's reputation as the default operating systems vendor for the corporate world.

Despite expensive advertising campaigns and service pack improvements, Microsoft never really sold the corporate market on Vista. It was just too much for many systems and had no real selling point. Windows 7, on the other hand, gives IT managers some clear advantages, and sales will do very well in the coming years.

But don't expect a big rush towards Windows 7 next year. Budgets are still tight and running a corporate upgrade will be tricky. Those companies that moved to Vista will find it easier, but the bulk of firms that have stuck with XP will have a much harder time. An XP-to-7 upgrade needs a complete drive wipe, and that adds a lot of time and effort to the process.

Shaun Nichols: In a time when so many firms were cutting development budgets and cancelling big projects, it was nice to see a company make a major product launch, even if it was Microsoft.

Windows Vista had become so universally loathed by 2009 that Windows 7 was almost destined for success based on history alone. Microsoft had learned some painful lessons in both development and marketing from Vista (notice the complete absence of Jerry Seinfeld.) The release also gave Apple plenty of new material for its own ads.

Windows 7 also helped to give PC vendors a sorely needed shot in the arm. With so many users deciding to hold off on Vista, the move from XP to Windows 7 gave many users a reason to upgrade their hardware or buy completely new systems.

LOWS

5. Botnets menace the web
Shaun Nichols: One of the biggest worries for the security community this year was the growth in both numbers and power of botnet systems.

The most-publicised story was without a doubt that of Conficker. The botnet created big waves and near hysteria in some circles when researchers discovered that certain machines had been instructed to dial up a command server and await further directions on 1 April.

That deadline come and went with little fanfare, but the story was a wake-up call for many as to just how dangerous botnets were becoming. Networks of infected machines grew into the millions, and the attacks that they used were increasingly sophisticated.

Just as disturbing could be the way that handlers change their behaviour. Researchers recently predicted that botnet controllers will begin to capitalise on the infected systems themselves and look to cash in by installing controlled machines with further malware and collecting a commission.

Iain Thomson: The first botnets were simply a numbers game, with geeks competing to see who could build the largest network of slaved computers. You can see the attraction for the maladjusted – having all those PCs under your control must be a hell of a kick.

But now the criminal element has moved in and botnets are big business. Initially they were hired for denial of service attacks or spamming campaigns but, as Shaun mentions, this is now old hat and infected PCs are being sent software directly to maximise returns.

There is technically a cure for botnets. If everyone protected their PCs, the number of infected machines would drop. But that isn't realistic. We're already seeing botnet herders concentrating their infections on developing nations, where the cost of security software is too high for many people to consider, or they are simply unaware of the need and the availability of free anti-virus protection such as AVG.

Botnets will continue to be a part of the computing landscape. We might see a few people prosecuted for running them this year, but I'm not hopeful.

4. Network neutrality
Iain Thomson: The year started well for those who believe in the principle of network neutrality.

Barack Obama was in the White House and had talked the talk on neutrality during his campaign. Then the FCC signalled it would be getting more aggressive on the topic and started pushing for formal powers to enforce a level playing field.

In the US this triggered a massive disinformation campaign. Net neutrality laws were called extra government regulation of the internet and mainstream commentators went as far as linking it to government control of internet content and Marxism, of all things.

Currently, the situation is confused. Telecoms companies are saying that they will proceed with tiered pricing but public reaction against the move has been strong and plans are now on hold. Meanwhile, politicians are vacillating over an issue I suspect few of them understand. The next year will be crucial to the future of net neutrality.

Shaun Nichols: Listening to Congress debate network neutrality would have been much funnier had it not been taking place in my own country. The level of complete ignorance on display was almost surreal.

So many of those handling the matter couldn't tell broadband from a marching band. I was half hoping one of the senators debating the matter would bring in the black box containing the internet to prove their point.

I suppose it is a testament to the telcos and their legal departments that they could get people to believe such a fundamentally flawed concept. Imagine if, 50 years ago, RCA had convinced Congress to allow it to charge users extra to view primetime TV, or cut off reception to users who watched more than four hours of television a day.

That said, here's hoping that clearer heads prevail in 2010 and the internet can remain free and open to all users.

3. Budget cuts
Shaun Nichols: It is only natural that budgets shrink in the midst of an economic crisis. Therefore, it's no surprise that budget cuts were occurring virtually everywhere, and IT departments were among the hardest hit.

Unfortunately, the cuts came at a time when many companies were trying to deal with ever-expanding amounts of data and aging hardware. Add to that the rollout of Windows 7 and the emergence of cloud computing systems, and you had smaller departments being forced to do more work with fewer resources.

It might not all be bad, however. Forced to do more with less, many companies are becoming more efficient with their management and developing a better understanding of how their systems work. Hopefully when the market finally recovers, IT staff will be able to come back stronger than ever.

Iain Thomson: Budgets cuts are hard, but they can be very useful for cutting away the fat from an operation.

The trick is to not cut too deep. Get rid of the vanity projects and cut down on fixed expenditures but don't stop funding the core business. I have seen too many companies implode from the death of a thousand cuts inflicted by the finance department.

The luckiest firms out there are the ones with wise IT managers who recognise that while a recession is a time to cut, it is also a good time to invest in next-generation technologies that will give the company a leg up once the economic situation improves. Investment shouldn't stop in a recession, it should just be better targeted.

2. Digital Economy Bill
Iain Thomson: It's a sign of governments in distress at the end of their term that stupid laws are put on the books, either to try to whip up support via populism or to settle old scores.

One wonders what the motivation was behind the Digital Economy bill. In its current form, the bill will raise the cost of being online significantly by forcing ISPs to police content, a role they neither want nor feel able to do. Having to perform deep packet inspection is not only costly but also raises the possibility of legal action from privacy groups.

Developers are also up in arms about the bill, since it will significantly increase their costs and photographers and authors are also voicing protest. But it is Lord Mandleson's support for zero tolerance on piracy that is going to cause the most fuss if the bill is passed.

As it stands, the bill will enforce a “three strikes and you're out” policy on internet users suspected of illegally downloading pirated material. The evidence for this will be provided by media companies and won't be subject to a judicial review, so a lot of companies and individuals will receive letters threatening to cut them off. Thanks to the use of IP-spoofing technology, we're going to see an awful lot of false positives on this one and the resultant havoc may show unworkable the system is.

Shaun Nichols: As with net neutrality, the Digital Economy bill was a stunning example of just how completely clueless lawmakers are when it comes to technology. They are basically letting the record labels and studios write the legislation for them.

Fortunately, law schools around the world are filled with young people who will one day take over those government positions with the memories of these sort of heavy-handed tactics fresh in their minds. Woe betide the record studio exec who has to deal with a congressman who was sued for thousands of dollars for downloading music while in college.

This is what gives me confidence that many of these ludicrous rulings and laws will not hold up. The digital age divide may still be strong, but once the current generation of legislators moves on, virtually all its successors will have a far better understanding of the technology and will be less prone to manipulation from studios and telcos.

Here's hoping that day comes sooner rather than later.

1. Job cuts
Shaun Nichols: This was an easy choice for number one. While the falling budgets and security issues could make work difficult for IT staff, at least they could take home a pay cheque. Hundreds of thousands of people in the industry were not so lucky.

The cuts began in late 2008 and became heaviest in the early part of 2009. At one point it became difficult to even write about all the layoffs, it was almost like having to write obituaries every day. And it was a thousand times harder for those who lost their jobs and those who had to push friends and valued co-workers out the door.

One thing that the technology industry did well was pre-emptively make the staff and budget cuts. Though some may have cut a bit more than they needed to, many firms were able to ultimately save jobs and preserve the health of the company by making cuts early in the crisis.

Going forward, things look to be picking up a bit. The bleeding is starting to slow at the hardest-hit firms and the rise in cloud computing and hosted services is giving some hope that the tech market will pick up again and there will be new jobs to be had.

Iain Thomson: There has been a lot of blood on the floor this year and a lot of people have lost their jobs. In some cases this was necessary, in others it was definitely not.

The IT sector was particularly quick to start cutting jobs and scaling back production. On one level this was a good thing as it allowed companies to be more flexible. However, some companies (HP, I'm looking at you) have cut to the bone and severely damaged morale within their own companies. Nothing destroys team spirit faster than seeing your friends being told that they are no longer required even when the company is showing profit.

It looks as if the cuts still haven't finished. A recession is the best time to reduce your headcount because there is an easy excuse, and companies know that staff will work all the harder to keep their jobs. But there is a feedback loop that some in management are missing.

People can only do so much and in an understaffed department the first people who leave will be those with good skills who are in demand. Squeeze the workforce too hard and you end up in the same position as Apple was in the mid-1990s – with the smart people leaving and the dullards left clinging to jobs because they had nowhere else to go.