LookBack '98: Top stories of 1998 Part I

What a year. Apple came back from the brink, Linux became a star and Bill Gates was in court -- albeit over a satellite link.

What a year. Apple came back from the brink, Linux became a star and Bill Gates was in court -- albeit over a satellite link. Here are the top stories from a year dominated by mergers, Microsoft's troubles and more than a few industry rows.

AOL buys Netscape

It was the merger of the year. After much speculation, Netscape was bought by America Online in a deal worth £2.5bn in November.

E-commerce and portal power were at the heart of the deal and AOL's CEO Steve Case admitted he wanted to take e-commerce "to a whole new level". In addition to selling existing Netscape software through its new found pal, Sun, Case wanted AOL to help build turnkey e-commerce solutions and provide e-commerce application hosting services. AOL was certainly living up to its marketing strategy `AOL everywhere'.

AOL has seen rapid growth and now has 14 million registered users. With the deal wrapped up, the way ahead is clear to create a new generation Netscape browser incorporating the latest Java technology and, more importantly a new Internet superpower has emerged providing much needed balance to the ubiquitous presence of Microsoft.

Compaq buys Digital

Compaq muscled its way up to the no. 2 spot after it bought Digital for $9.6bn.

The deal, which made Compaq the second biggest computer maker in the world, was designed to harness Digital's strength in Unix, the mid-range and high-end, and will mean a bigger share of lucrative contracts for Compaq which previously lost out on because of its Windows NT bias according to Compaq CEO Eckhart Pfeiffer.

40-year old Digital may have kept its brand name and focus, but it was forced to axe 15,000 jobs as a result of the pact. Compaq may boast of combined revenues of about $37 billion as result of this mega-merger -- the largest IT deal of its kind in 1998 -- but IBM is still the king of PC makers.

Courtroom drama

What a year it's been for legal drama, with no shortage of outspoken views, shock reports and a fair spattering of controversial testimony -- usually on the steps of the US courtroom, the DoJ trial looks like a classic in the making.

The trial, which centres on allegations that Microsoft abused its dominant market position, has involved key industry figures taking the stand. Netscape CEO Jim Barksdale, the government's first witness, accused Microsoft of bullying computer makers, Internet service providers, Internet content providers and corporate customers in a bid to crush Netscape. In another twist to the trial, the software giant warned the government to keep its nose out of industry affairs and ditch the case following the news that America Online was to buy Netscape. The deal, according to Microsoft senior vice president for Law and Corporate Affairs Bill Neukom, was proof that competition did in fact exist. Neukom will push for the dismissal of the case once the laborious cross-examination of government witnesses is over.

The rise of Linux

The infamous "Halloween memo" -- the "confidential" Microsoft memo detailing the threat that open source and Linux movements posed to the software giant's revenue sparked lively debate.

The Linux movement hailed it as proof of the free operating system's growing popularity and importance, especially in the enterprise arena. The Open Source operating system is now the fastest growing server operating system, according to IDC figures. About 510,000 copies of Linux were shipped this year -- an increase of 211 percent over a year ago. But after the Halloween drama died down, industry experts pondered whether Microsoft leaked the memos in order to prove to the US Department of Justice that it not a monopolistic despot and that it is vulnerable in the face of competition from the likes of Linux, Apache, Mozilla and other free products.

The resurrection of Apple

For Apple, 1998 has been a forgiving year. Steve Jobs may still not have committed to being CEO, but two years after returning to the company he co-founded some two decades ago, he is something of a hero even if he retains "interim" in his job title.

This year, the Cupertino company posted profits, saw its G3 range soar and launched a scorching new computer -- prompting observers to ponder the remarkable comeback of Apple.

Launched in August, the teal-coloured iMac caused a storm - the translucent iMac resembles a small TV from the font, is Internet ready and even has a handle to carry it around. The iMac sold a quarter million machines in the first six weeks -- 7.1 percent of all desktop computers sold were iMacs and the machine accounted for 8.2 percent of total sales in dollars.

Intel Boss does things his own way

Having steered the Intel ship for more than a decade, Andy Grove finally handed over the CEO's post to Craig Barrett this year.

Barrett wasted no time in asserting his views, particularly about global technological progress -- Europeans stink when it comes to technology, was his message. E-commerce red-tape, an unforgiving venture capital sector and a lack of IT in education were just a few European shortcomings, according to the new Intel boss.

In an exclusive interview with ZDNet's UK News editor, Richard Barry, Barrett spoke about government paranioa over terrorists using the Internet to shield their activities and the ensuing encryption restrictions, mainly from the French and the Brits which, he warned, threatened to strangle online business. He also gave his version of the PCI-X story -- "it's a bid to freeze Dell out". The PCI-X bus standard, backed by a consortium comprising Compaq, IBM and HP, is a wry move to isolate competitors who pose a threat, said Barrett. Meanwhile Katmai, which will come to market next year equipped with new 3D functions, received a lukewarm welcome from some in the industry.

...and goes on to attack Dixons

In one of the more surprising stories of the year Barrett accused Dixons of charging "ridiculous margins" on high street PCs in November. In response the high street electronics giant claimed it was a case of sour grapes as Intel lost market share to rival chip makers.

The debacle spilled over into a debate about high street PC pricing, with the general consensus being that Dixons is dominant in its market. Former Trade and Industry Secretary Peter Mandelson stepped in and promised a full investigation into Dixons' alleged monopoly position.

Cyrix joined the debate almost immediately when European applications manager Graham Jackson admitted that UK shoppers were worse off compared to German and French consumers. Jackson insisted that PC prices had more to do with market forces than efforts by Dixons to monopolise the UK market.

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