The tech economy prepares for takeoff

There may be no more accurate bellwether for economic conditions than the behavior of the technology industry. When the economy starts nosing down, vendors get lost in a combination of denial and greed. They think that one clever move can shield them from the carnage, and that a sagging market automatically creates opportunities by pruning competition. No one escapes a true recession, and companies that gain ground because competitors fail only prove that their markets are worth going after. They’ll spend more to protect new territory after the recovery than it cost to conquer it.

Looking back at the past year or so, we saw that some vendors had to make their big moves at the worst time. AMD needed to get Opteron rolling early so it would have momentum when big OEMs started shopping for new technology again. Apple timed its PowerBook G4 rollouts to coincide with the uptake of wireless LANs, the migration away from desktops, and the proliferation of new independent businesses. Nokia accurately predicted that depressed consumers would cheer themselves with expensive new toys; putting an appointment calendar on the 3650 helped buyers rationalize a nifty gadget as a business necessity. These and other "damn the torpedoes” strategies gave us needed breaks from unceasing economic bleakness.

When economic winds shift toward recovery and the weather vane wavers only slightly, as it is now, companies strut their warehoused intellectual property in front of buyers. I think the smartest move Microsoft has made since Windows XP is the new release of Virtual PC. This software, acquired from Connectix, creates fast virtual x86 machines that safely mimic PC hardwarelike drives and network adapters. It’s essential for testing unstable software -- the Longhorn preview includes a copy of Virtual PC. Busy developers desperately need Virtual PC because one dual-processor desktop running several virtual machines will save space and eliminate a lot of KVM switches. Users will also buy Virtual PC in truckloads because it allows the simultaneous operation of Unix and Windows. That’s a configuration that Microsoft claims it won’t support, but I think it will be delighted to stem the loss of Windows seats to Unix operating systems.

Novell’s obviously got some world-class strategists of its own. With the acquisition of commercial Linux leader SuSE, Novell walks into the open software market with established customers and two highly respected brands. Novell was the only responsible steward of PC Unix System V. That effort failed for reasons unrelated to Novell. I’m ecstatic about having Novell back in the Unix business, and this time, it is backing the right horse.

Finally, IBM’s long, quiet courtship with Apple produced what IBM couldn't build on its own: an affordable mass-market, 64-bit RISC desktop -- namely, the Power Mac G5. IBM has now put the PowerPC 970 chip into its own blade server, spoiling uninformed conjecture that Apple might be this processor’s sole OEM. A blade server won’t interfere with Apple’s plans to implement the PowerPC 970 across desktop, notebook, and server lines. The proliferation of PowerPC and AMD64, which I believe will take very little time, will enliven the PC industry in ways we haven’t seen since the mid-'90s.

I did what any journalist would do during the recession: pointed out bad strategic decisions and identified what I saw as economic cowardice. I have a much better time writing about developments such as these, the good decisions that benefit customers as well as make money. I expect to get a big kick out of this job for the foreseeable future.