10 Years Ago: IT Solution Providers, Vendors In the News

Tech Bubble Loses (More) Air In August 2001

August 2001 saw the continuing economic slowdown, with more dot coms going under and traditional businesses, including solution providers, also feeling pressure. Some of those revenue challenges were due to their faltering client base; others were symptomatic of an unstable economy. Some companies, such as Cisco, introduced new channel programs, while vendors, including Microsoft and Compaq, were embroiled in litigation.

Of course, the headlines IT companies made 10 years ago are simply memories today.

Compaq Settles With One Defendant In Gray Market Suit

Compaq Computer has settled with Millennium Technology Group, one of two solution providers named in a $20 million lawsuit charging conspiracy, fraud, breach of contract and tortious interference with its contractual relations. The Houston-based manufacturer continued to seek legal action against Greenville, S.C.-based Creative Resources Group and its president, Stephen Pridemore. Compaq sought to recover what it alleges were millions of dollars in unearned rebates and marketing support funds for government contracts that the PC maker alleged never existed. The alleged fraud was related to $70 million in orders from August 1998 to October 1999. Compaq subsequently settled with CRG in February 2002.

U.S. Unlikely To Seek Halt Of Windows XP

A source close to government antitrust enforcers early in the month said they are "highly unlikely" to ask the courts to halt the release of Microsoft's new Windows XP operating system. Despite fears that Windows XP could hinder competition in the software business, most state and federal prosecutors opposed the idea of trying to block the scheduled Oct. 25 release because they doubted a judge would grant the request. Sources said that seeking an injunction to stop the release of XP would have taken up time and resources that could be spent pursuing a long-term remedy in the case.

Cisco Eases IT Solution Providers' Duties

Cisco launched eAgent, a program in which partners set the price of products for their customers and placed the order with Cisco. The vendor carried the receivables, delivered the products to the account and handled billing and collections. The customer received two bills, one from Cisco for product and a separate one from the agent partner for professional services.

Loudcloud Gets Flexible

Loudcloud offered customers more flexibility this month, providing an option to buy just one of its application-management services, mix and match services or use a single module within one of the services offerings. Previously, customers had to buy Loudcloud's infrastructure, operations-management and application-management services as a single offering, Loudcloud, which became Opsware, was bought by HP in 2007 for $1.6 billion.

VARs Need To Make Adjustments To Get Through This Recession

It's easy to forget that the tech sector has been through recessions before: In August 2001, CRN editor Bob Faletra wrote a column warning IT solution providers not to pull back in too many areas. He also outlined the steps VARs and vendors can take during slowdowns to maximize efficiency, and advised against making moves that could prevent a business from quickly advancing when the market shifts. The tips are well worth re-reading today, because, as Faletra (now Everything Channel CEO) pointed out, the thing about recessions is, they always end. Really.

Sun Sheds Jobs

Sun embarked on a redeployment effort in which as many as 2 percent of its 43,600 employees -- or up to 872 workers -- could be asked to find new jobs within the company or to leave with a severance package. The company's computer systems and software business units were affected by what was termed a "redeployment."

Power Failure Knocks WorldCom Toronto Customers Offline

It is standard practice for data centers to provide redundant backup generators in the event of a power failure. However, a technical glitch prevented the power generators in WorldCom's Toronto data center from activating. Customers were still reverberating from the power outage a day later. A Uunet customer told CRN on Aug. 1 that a power outage at a WorldCom data center in Toronto brought their servers down on July 31 for about nine hours. WorldCom, beset by accounting scandals, filed for bankruptcy in June 2002.

Distributor's eBay Sales Draw Scrutiny

August saw fallout from Ingram Micro's recent agreement with eBay and auction management website AuctionWatch to sell "end of cycle" and refurbished products via the Ingram Micro Technology Outlet on eBay's website. The number of products to be sold was "very small," said Ingram Micro, and would not pose a conflict to VARs. Solution providers needed a little more convincing.

Nortel Gets Cash From Bond, But Goes Deeper Debt

Nortel Networks aimed to sell as much as $1.5 billion in securities to raise money in a dry equity market. One analyst said the issue, convertible into Nortel stock, would lift the company's debt-to-capitalization ratio to 34 percent from its end-December level of 6 percent.

Flooz Flops

Though we didn't cover it at CRN, it is a sign of those times to note that Flooz -- an online currency solution -- went bankrupt this month in 2001. Flooz' concept was similar to that of a store gift card; users would load money into Flooz, and then use it while shopping on the Web. (Its competitor Beanz also went bust.) The trouble was, most people were just fine with using their credit cards online. Those who didn't like online shopping just bought and used gift cards -- or bypassed the experience altogether. Even an ad campaign featuring Whoopi Goldberg couldn't save the idea. Still, Flooz managed to raise $35 million from investors before closing up shop.