Top 10 stories of 2007: Age of realignment

The big fish get bigger, Apple redefines a market again, the rise of the botnets and more.

This year has been a time of realignment and redefinition, as Apple launched its second zeitgeist-defining product of the new century, Dell and Intel battled to regain their former dominance, the software sector consolidated, Google rallied industry heavyweights around a common mobile device platform, and major vendors scrambled to embrace social networking. These, not necessarily in order of importance, are our picks for the top 10 stories of the year:

Software consolidation: The big fish get bigger

While globalization has fueled IT mergers and acquisitions for several years, consolidation in 2007 fundamentally reshaped the software industry. Facing saturated markets and nimble, innovative rivals, SAP, IBM and Oracle have snapped up competitors and partners in order to expand customer lists and acquire expertise and technology in hot areas such as business intelligence and software as a service. Some of the bigger deals this year included: SAP's US$6.8 billion acquisition of Business Objects, IBM's US$5 billion deal for Cognos, and Oracle's US$3 billion buyout of Hyperion. As usual, Oracle provided the most drama, with a US$6.7 billion offer for BEA, which was successfully rebuffed -- at least, for now. While innovative entrepreneurs are bound to continue bringing startups to market, it's getting harder for medium-size vendors to refuse deals with the giants.

Dell reinvents itself

For years, Dell remained the world's number-one vendor in the cutthroat PC business by exercising unmatched control over logistics and sticking to its direct-sales model. But by 2006 HP unseated Dell as global PC leader. Dell seemed to lose its way as rivals adopted better supply-chain management techniques, and inquiries into accounting practices forced the company to delay earnings reports. In January, founder Michael Dell took back the CEO reins and the company expanded offerings for the enterprise, increased services for medium-size businesses, and departed from its traditional business model to start selling products in stores. Dell also plans to expand in growth markets globally. Early results are promising: Dell had record revenue growth for the third quarter, fueled by an increase in worldwide notebook sales.

The iPhone: Apple redefines a market, again

Some companies reinvent themselves. Apple, under the guidance of the mercurial Steve Jobs, reinvents markets. After redefining IT in the 1970s with the Apple II and then pushing the envelope in personal computing with the Mac in the 1980s, Apple stalled when its business model ended up giving the company a loyal -- but tiny -- user base. But the company started to ride high in 2001 after launching the iPod, and in 2006 breathed new life into the Mac by moving to Intel-architecture chips. Before the iPhone, there were many multifunction phones. But amid a June launch that had people lined up at stores from Tokyo to San Francisco, Apple proved its design mojo still works. The iPhone combination of cool design, phone functions, Internet connectivity and multimedia features has raised the bar for any manufacturer of connected handheld devices. Apple's revenue and share price have never looked better.

The Rise of the botnets: Software as a service ... for criminals

What do U.S. presidential candidate Ron Paul, the "Storm Worm," e-card invitations, and the country of Estonia have in common? They've all been associated with botnets -- groups of compromised computers, often numbering thousands or tens of thousands, that are remotely controlled by criminals. The scammers use the so-called "zombie machines" to pitch hot stocks or male-enhancement products, or simply to do damage, as when Estonian government Web sites were crippled in April. Botnets are now getting so sophisticated that they're being offered as software as a service products to scammers. That's what happened in November, when nearly 200 million spam messages supporting Paul for president were sent without permission from the campaign.

OLPC and the era of cheap laptops

The grand -- some might say grandiose -- plan of former MIT Media Lab chief Nick Negroponte to sell as many as 150 million US$100 laptops by 2009, getting them to poor children around the world, this year looked more like a pipe dream. Production of the laptops, under the aegis of the One Laptop Per Child project, was delayed, promised government deals fell through, and the price of the XO "hundred-dollar laptops" turned out to be closer to US$200. Current plans call for production of only about 300,000 laptops this year. But Negroponte's dream may not be permanently deferred, just co-opted by commercial vendors, which simultaneously face a slowdown in growth in mature markets and increasing pressure to cut prices and power consumption. For example, Intel has sold US$200 Classmate laptops in Mexico, Brazil, Nigeria, Pakistan and Libya, and in November, Everex announced it would sell Linux-based PCs with x86 processors for less than US$300.

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