Top tech stories of 2013: Big Brother, wearables, and the struggles of aging tech giants
Bitcoin and tech IPOs were also hot stories this year
By Marc Ferranti | Published: 19:52, 09 December 2013
Politics collided with the world of technology this year as stories about U.S. government spying stirred angst both among the country's citizens and foreign governments, and the flawed HeathCare.gov site got American health-care reform off to a rocky start. Meanwhile, the post-PC era put aging tech giants under pressure to reinvent themselves. Here in no particular order are IDG News Service's picks for the top 10 tech stories of the year.
The feds fumble HealthCare.gov
While industry experts say that many if not most big IT projects have major problems, the fumbled Oct. 1 rollout of HealthCare.gov has the dubious distinction of casting a shadow on U.S. President Barack Obama's landmark legislative achievement: the Affordable Care Act, often called Obamacare. Thirty-four states chose to be part of the HealthCare.gov marketplace. The US$630 million website, built to let millions of Americans shop for heath care, was able to sign up a paltry six people on its first day of service, 248 in the first two days and just 27,000 people in the first month. Outages, incorrect data loading and security concerns plagued the site. The problems appear to stem from lack of overall project oversight, insufficient testing, and glitches in the system's ability to link to multiple government databases. On its Dec. 1 self-imposed deadline for fixing the problems, the government reported that since mid-October, tech workers had made more than 400 bug fixes and software improvements to the site. However, remaining kinks include multiple-hour queues to get into the system. The site's woes may end up seeming like a blip on the long road for health-care reform. For now, the site is being held up as exhibit number one in the case against the government's ability to handle the health- care initiative.
Blowing the whistle on the NSA: Big Brother really is watching you
Former government contractor Edward Snowden's revelations about government spying, appearing in news stories starting in June, brought together geopolitics and the world of technology. Though the revelations sparked a lot of "I told you so" talk, documents provided by Snowden helped confirm that the U.S. National Security Agency and Federal Bureau of Investigation have for years been conducting massive surveillance of American citizens, foreigners living in the country and foreign government leaders. Though details are still secret, it is clear that the FBI and NSA monitor an unlimited amount of phone records from telecom companies, emails, and other Internet communications and services facilitated by the big tech companies. Critics say aspects of the surveillance, such as the bulk collection of citizens' communications, are unconstitutional. The revelations have prompted the European Union to question its "safe harbor" data privacy agreement with the U.S. They have also caused foreign governments to be wary of buying U.S. technology. Meanwhile Russia has granted Snowden asylum, and there is no end in sight to the debate over government's prying into private communications.
Ballmer quits Microsoft
Steve Ballmer's announcement in August that he would be leaving Microsoft after more than three decades was an industry milestone but did not come as a shock. Ballmer, who will depart within 12 months of the announcement, took over as CEO from Bill Gates in 2000, leading Microsoft as revenue increased from $22.9 billion to $78 billion. Known industry-wide for his booming voice and manic exhortations at Microsoft meetings, Ballmer broadened the company's product portfolio beyond Windows and Office by, among other efforts, building up its data center, Xbox and search businesses. But Ballmer, a math-whiz Harvard classmate of Gates hired as the company's first business manager, operated under increasingly intense criticism for missing out on the mobile revolution and being outflanked by Steve Jobs as Apple soared in the consumer market with the iPod, iPhone and iPad. Microsoft's languishing share price is a sign that investors lack confidence in the company's ability to innovate under a baby boomer associated with the PC era. It will be up to Microsoft's next CEO to lead the company's transformation into a devices and services business, and ensure that its bold but controversial $7.2 billion acquisition of Nokia, announced shortly after Ballmer's resignation, is successful.
Bitcoin sparks a gold rush
Bitcoin was at once one of the most hyped and bewildering technology-related phenomena of the year. The most popular of the so-called "crypto currencies," Bitcoin is a peer-to-peer payment system devised in 2009 by a developer using the name Satoshi Nakamoto. It uses open-source cryptographic algorithms to enable transactions and create units of digital currency called bitcoins. Bitcoins are created or "mined" as computers on the network solve mathematical problems used to verify transactions. As speculators and tech faddists fueled the buzz, bitcoins skyrocketed in value from under $20 at the beginning of the year to $1,200 by December. Transactions are processed free or for low fees, and because no personal information is exchanged, are anonymous and touted as more secure than credit cards. Some of these qualities also attract criminals and when U.S. authorities shut down the Silk Road contraband website they also seized a cache of bitcoins. In early December the French central bank issued a warning about bitcoin volatility and a China central bank ban against banks dealing in bitcoins caused the giant search engine Baidu to stop taking them as payment. The value of bitcoins plunged by more than $500 over the next 48 hours. Bitcoin's volatility presents risks that it may remain just a niche payment system for the Web and a vehicle for speculators.
BlackBerry's death rattle
Diehard BlackBerry fans thought the company had a chance for survival when in January then-CEO Thorsten Heins debuted the touchscreen BlackBerry Z10 and a handset with a physical keyboard, the BlackBerry Q10. Both devices were designed around the BlackBerry 10 platform. The company had replaced co-CEOs Jim Balsillie and Mike Lazaridis a year earlier, after losing ground to Apple and Android devices that offered sleeker interfaces and bigger app stores. But the BlackBerry 10 phones were too little, too late. For its August quarter, the company reported a $965 million net operating loss. Then, the company announced it would cut 4,500 workers and go private in a $4.7 billion sale to Fairfax Financial Holdings. But Fairfax could not get financing for the deal, and in November the company appointed ex-Sybase CEO John Chen as chairman and interim CEO and accepted a US$1 billion loan from a consortium led by Fairfax. At this point, though, it is hard to see how a cash infusion can keep the company intact and solvent.
Dell opens new chapter as private company
When Dell announced in February that the company planned to go private, founder Michael Dell said the move was necessary to turn around the company's flagging fortunes. Fierce competition in the PC market had curbed profit for years, and the idea was that free of the scrutiny of Wall Street, the company would have the breathing room to better execute its strategy to focus on high-margin products and services and refresh its push into the midmarket. But first, so-called "activist investor" Carl Icahn swooped in and scooped up shares, insisting that Dell's offer of $13.65 per share was too low and that Michael Dell should be ousted. What followed was a nasty public battle to win over shareholders. After several shareholder vote postponements, Michael Dell prevailed by sweetening his offer to a total of $13.88 per share, or about $25 billion overall. While competition against the likes of Hewlett-Packard and Lenovo won't get easier, the company that Michael Dell founded three decades ago in his college dorm has a new lease on life.
Yahoo buys Tumblr
Yahoo's $1.1 billion deal to buy social networking and microblogging site Tumblr was not the biggest tech acquisition of the year but it marked the boldest move that Marissa Mayer has yet taken to reinvent the company. Yahoo's success as an Internet portal in the '90s has been overshadowed by competitors, including Facebook and Google. The 38-year-old Mayer, a star at Google, was hired as Yahoo CEO in 2012. Her predecessor, Scott Thompson, had taken the reins from founder Jerry Yang but lasted just four months before resigning amid controversy over a false claim about his college degree in a regulatory filing. The combination of Mayer's youth, programming chops, reportedly imperial management style, and all-American blond looks has fascinated industry watchers, and a jump in the company's share price during her tenure thus far has given her something of a honeymoon period. Mayer herself, though, has acknowledged that the stock has been lifted by investments made years ago, which include a stake in Chinese Web giant Ali Baba. Meanwhile, revenue and profit shrank for Yahoo itself in the quarter ending in September. At some point, the company needs to show that Mayer's strategy of expanding content such as news while boosting the company's tech infrastructure is paying off.
Twitter IPO a sign of the times
Twitter's November initial pubic offering was three bellwethers in one: a coming of age for the microblogging site; another milestone in the rise of social networking as a major force in contemporary culture; and a signal that a hot stock market was igniting the tech IPO market once again. After setting an IPO price of $26, Twitter shares shot up to $50.09 on its IPO day before closing at $44.90. The share price gives Twitter a $24.5 billion market capitalization, not bad for a company with no profit. Investors are banking on the company's ability to use the cash infusion from the IPO to build up its infrastructure and invest in mobile and video technologies. Twitter is just the marquee name on a roster of other tech companies that have gone public lately, riding a stock market that has fueled a 25 percent rise for share prices of Nasdaq tech companies so far this year. But the big question for Twitter is how it will be able to best monetize its millions of users.
Samsung's Galaxy Gear and the advent of smartwatches
Despite its poor reception with early reviewers, Samsung's Galaxy Gear, unveiled in September, has helped establish the smartwatch market. The watch sports a 1.6-inch screen and displays email, text or call notifications from a few Galaxy smartphones. Samsung is also working to make the device with products such as TVs and various network devices. The Galaxy Gear suffered from issues including intermittent notification problems for many users, and critics attacked Samsung's long-perceived weaknesses in software engineering and design. But the company reported that it shipped 800,000 of the watches to retailers within two months, making it the most popular such device. With Qualcomm and Sony also launching smartwatches, a Google device expected soon and an Apple smartwatch reportedly in the making, users can expect the competition to result in more polished, advanced devices.
Google Glass: sideshow or the future of computing?
Google Glass was first unveiled in 2012 year and is not expected to be generally available until next year. But it was the most hyped wearable in tech this year as developers got their hands on prototypes, followed by a select group of early adopters who had shelled out $1,500 to get "Explorer" versions of the devices -- essentially optical, head-mounted display computers that users can control with voice commands. Public reaction has provided an inkling of how wearable technology might affect culture. Police arrested a driver who was wearing the device; a surgeon used the device while performing surgery; government officials raised questions of privacy since facial recognition is an obvious application. Meanwhile, Google announced it would disallow sex-related applications and declared that facial recognition applications would not be enabled until privacy questions have been settled. Expect another wave of Glass mania when the lower-priced commercial version comes out next year.