Events of the Year: A Reflection


Sept. 11 dominated our thinking, but other major events shaped 2001 as well


Each December, the editors of VARBusiness sift through their notes to determine the biggest high-tech stories of the year. While this is always an enjoyable challenge, it was especially difficult this time around because of the September terrorist attacks. Clearly, nothing can come close in terms of impact,not just on the solution-provider community, but on the world.

Still, I think there are other stories worth revisiting, some of which are ongoing. For example, shortly after Labor Day, the biggest high-tech story of the year began to unfold with the announcement that Hewlett-Packard intended to buy PC pioneer Compaq. I've been witness to some big mergers in the past, but this one was decidedly more political. Barbs have been thrown at the press for not truly understanding the deal, partisan supporters were dragged out of the closet, a major stockholder came out against the deal, and all the while HP's spin doctors have been hard at work trying to convince the industry that this deal makes sense. Meanwhile the solution-provider community remains caught in the middle.

Second to the HP-Compaq deal is the Microsoft settlement. Microsoft avoided a breakup thanks to the pro-business Bush administration and is now hammering out settlements with states that didn't support the Justice Department's proposal. I don't think there has been a time when Microsoft seemed more important.

Next on my list: the change in channel management inside the vendor community. After years of stability, we now have a new generation of executives responsible for managing the indirect sales efforts of Cisco, Compaq, Computer Associates, IBM and Microsoft. Those executives face the daunting task of keeping the peace between those inside the company who want direct sales to play a bigger role and others who understand the value of partnering with solution providers.

Channel conflict also reared its ugly head in 2001. Dazed, confused and grasping at straws, high-tech executives scrambled to salvage the year any way they could. If that meant trampling over longtime VARs and selling partners, then so be it.

The year was also notable for its lack of technical innovation. Sure, we witnessed some great evolutionary steps, such as the introduction of XP, but vendors seemed more content to talk about changes in their channel programs than they did about innovative new products that could open up selling opportunities. It says a lot that one of the year's best was Apple's iPod.

The demise of second-tier PC makers was a major event that went by relatively unnoticed until just prior to Comdex in November. In the past, our phones would be ringing off their hooks. This year, calls from second-tier manufacturers were almost nonexistent. Clearly, the second-tier is now made up of what we call the white-box market, or companies that build private-label systems.

Speaking of Comdex, imagine you threw a party and no one came. That's exactly what happened at last year's trade show. The top-drawer executive keynotes were the show's high point, but the industry stayed home. There used to be a saying: As Comdex goes, so goes the industry. If that's the case, the picture is not pretty for the first half of 2002.

Still, all is not lost. The launch of Windows XP,a good old-fashioned $200 million, pull-out-all-the-stops event,was just what we needed. Forty-four days after his city was brought to its knees, Mayor Rudolph Giuliani stood on stage with Bill Gates to usher in Microsoft's newest operating system. Gates typed in "exit" at the C: prompt one last time and the lights went out on MS-DOS.

Finally, the channel's sheer persistence and lasting power must be acknowledged. Despite sales conflicts with vendors, credit restrictions and spending cuts by customers, the solution-provider community has emerged from 2001 poised for a rebound. The community this magazine is dedicated to serving remains the most resilient part of the high-tech economy.

Well, those were my picks for stories and events of the year. Please visit www.varbusiness.com to see what else we came up with. Let me know what you think at rdemarzo@cmp.com.