The news included Microsoft's antitrust trial, the spread of the sub-$1,000 PC, soaring Net stocks, and megamergers--some of them cutting across different industries. Here are the top 20 stories of 1998 as compiled by the News.com staff, and what to watch for as they continue into 1999.
1. The Microsoft trial
The software giant and the Justice Department and 19 states square off in a landmark antitrust trial over allegations that Microsoft illegally bundled its Internet Explorer browser with its predominant Windows operating system, to the detriment of Netscape Communications' Navigator and others. When the case resumes the week of January 4, look for sparks to fly during the testimony of Intuit chief executive Bill Harris, whose remarks are expected to bolster the government's case.
2. America Online buys Netscape
In November the online giant announces it will acquire the Internet pioneer for $4.2 billion. AOL also enters into a three-year development and marketing pact with Sun Microsystems. The three-way deal is expected to close in spring 1999. Watch to see how AOL handles the merger.
3. Apple introduces the iMac
The May announcement and August debut of the snazzy all-in-one desktop helps the maverick computer company's financial turnaround. Cofounder Steven Jobs, the interim chief executive, wins praise for his leadership efforts. The iMac has been one of the best selling computers in retail since it emerged in August, and sources say Taiwanese manufacturers will start to produce imitators in early 1999.
4. Convergence / megamergers
The television, computing, and telecommunications industries are colliding, as evidenced by this June's announcement that AT&T intends to buy Tele-Communications Incorporated for $48 billion. Expected to close in spring 1999, the deal could create a one-stop shop for phone, cable TV, and Net access services. Telcos also get the urge to merge: High-profile pairings include GTE and Bell Atlantic and SBC and Ameritech. WorldCom and MCI also wrap up a merger.
5. Sub-$1,000 PCs proliferate
The network computer idea fizzles, but more and more PCs fall below the symbolic low-cost price barrier, thanks to demand and acceptance of non-Intel processors. In October IBM announces a $599 PC, becoming the first manufacturer to break the $600 mark. Rivals follow suit. Look for more (and more powerful) low-priced boxes in the New Year.
6. Intel hits rough seas
In 1997 the chip giant enjoyed record revenues and an unassailable market position. Then-CEO Andy Grove was even named Time magazine's Man of the Year. This year, however, Grove hands his job to Craig Barrett and the company loses its low-end lead to Advanced Micro Devices, while suffering from employee cutbacks, lower margins, and delays in introducing its Merced and high-end Xeon chips. Also, the Federal Trade Commission charges that the chip giant used its market dominance to hurt competitors. By year's end, Intel rebounds in the marketplace; the trial starts in February.
(Intel is an investor in CNET: The Computer Network, publisher of News.com).
7. E-commerce goes mainstream
More people go online to buy products. This holiday season, retailers say online shopping boosted sales beyond expectations. The challenge in the New Year: keeping those customers online.
8. "Open source" software grabs the spotlight
Shipments of the Linux operating system jump more than 210 percent in 1998, fueled by anti-Microsoft sentiment, strong performance, and low pricing. Netscape fuels the trend by announcing in January that its Communicator browser and also its source code will be available for free. In 1999, look for Linux to gain more usage among corporate America's "mission critical" servers.
9. Windows 98 is released
Microsoft releases its newest consumer operating system, the successor to Windows 95. The upgrade didn't come without some glitches, however. Microsoft's next version of its corporate OS--now called Windows 2000--is expected in late 1999.
10. Starr report hits the Net
The House Judiciary Committee posts the report that led to President Clinton's impeachment. Net traffic surges, marked a coming of age for the medium, according to many analysts. Next year's epiphany is anyone's guess, but odds are that the population of Netizens will continue growing exponentially.
11. Child Online Protection Act passes
Congress adopts a law to shield minors from the Net's red-light districts. Free speech groups sue to block enforcement, saying it won't keep children from accessing pornography. A hearing is set for January.
12. Compaq buys Digital
To bolster its PC market leadership, in January Compaq agrees to spend $9.6 billion to acquire Digital Equipment. The buyout provides Compaq with high-end hardware technology, including the Alpha processor. Compaq announces it will take a $4.7 billion charge against its 1998 earnings as a result of the buyout, and discloses plans to cut 17,000 jobs--15,000 from Digital and 2,000 from Compaq.
13. Women's sites gain prominence
Last year studies showed that more women were coming online. This year editorial heavyweights step up to the plate. One example: iVillage wins investments from NBC and Intel. In 1999, iVillage may file for an IPO and Oxygen.com, a women's network founded by a former Disney executive, is expected to launch. (NBC is an investor in CNET: The Computer Network, publisher of News.com.)
14. Portal madness
Companies engage in a mad rush to launch their own "portals," gateways to the Net for consumers. This results in old and new media alliances, highlighted by Disney's taking a major stake in Infoseek and Netscape's strategic move to promote its Netcenter, as well as relanuches by Microsoft and America Online. Next year, look to see whether the hype generates any real profits.
15. Year 2000 bug gains notoriety
Executives and government leaders step up efforts to address the Y2K problem. By year's end, two precedent-setting Y2K suits are resolved and the White House claims partial victory in its battle to bring federal systems into compliance. The millennium bug is sure to be an even bigger story in 1999.
16. Net stocks soar
Many Internet issues skyrocket, led by America Online, Yahoo, and Amazon.com; some surpass "brick and mortar" blue chips. Newly public companies such as eBay also join in the runup. Next year analysts will be watching closely to see whether the bubble bursts.
17. Set-top box sunrise
The Internet fuels growth in digital TV set-top computers. Myriad companies from different industries, including Intel, TCI, Sun, NBC, and Sony, seek alliances in the burgeoning market. What to watch out for next year: The PC and TV factions battle it out as emerging goods and services begin to generate a market worth fighting for.
18. Library Net filtering ruled unconstitutional
The Loudoun County, Virginia, library installs software filters on all its Net terminals, and civil liberties groups sue for removal. In November, the U.S. District Court in Eastern Virginia agrees that screening Web sites for all library patrons violates the First Amendment. Next up: Will Congress pass a law calling on schools to proscribe access to Web sites?
19. Microsoft battles Sun in court
The two technology giants lock horns in a licensing dispute over the Java programming language, Sun claiming Microsoft modified the "write once, run anywhere" Java so that elements work only with Redmond's software. In November a U.S. District Court Judge rules that Sun is likely to prevail and grants Sun's request for a preliminary injunction. Microsoft appeals the ruling and asks for an extension in complying with the order.
20. Power over the Net's addressing system is transferred
The U.S. government starts the historic handoff of the domain name system--a key to the Internet--to a nonprofit corporation. The new group will create a system of governance and guidelines for the administration of ".com" and other domains. Worth watching in 1999: How Network Solutions, the main domain name registrar, prepares itself to handle the competition.