Taking last week off to recharge my batteries reminded me that for many IT companies, this was a summer that provided little time to rest. Between mergers and acquisitions, bankruptcies and downsizing, we’ve coped with a lot of bad news while looking desperately for signs of light at the end of the tunnel. Smart companies responded by taking a proactive approach, either through restructuring or partnering. Though there’s still a good four weeks left to the season, I usually equate the end of summer with the Labour Day weekend — a holdover from my days as a student. Even though there’s likely bigger stories still to come, let’s take a look at the winners and losers of Summer 2001:
Selective Shopping: Though the Canadian Advanced Technology Alliance (CATA) reported a 10-year low in high-tech acquisitions compared to the first half of 2001, there was enough activity to signal significant shifts in several markets. Busiest of the bunch was Telus, which scooped up the assets of PSINet Canada, just days after purchasing resellers Daedalian eSolutions and Arquana Technologies. These moves amount to a strong one-two punch that gives Telus some impressive infrastructure and considerable services strength while going even farther to establish its image as a national player than the Clearnet deal last year. Similarly, Nexxlink is better prepared to serve customers across the country by buying the Vancouver, Calgary and Toronto offices of Inacom Canada. Finally, Solectron raised its Canadian profile with the US$2.7 million purchase of C-Mac, a healthy sign for the OEM outsourcing market.
Two Companies Are Better Than One: On the other hand, a slew of big names sold or spun off parts of their business to demonstrate a renewed sense of focus to their customers and shareholders. Palm Computing is the best example, finally waking up to the fact that its operating system deserves more concentrated attention while its device manufacturing unit struggles to keep its head above water amid a sea of competitors. EDS also gave up trying to figure out how to integrate the former SHL Systemhouse into its core operations, wisely setting the consulting business now known as NextInnovations free to thrive in the project implementation and support services arena.
Don’t Count Your Incubators Before They’ve Hatched: As Palm and EDS got back to basics, the bankruptcy of Itemus left an ugly black mark on what was left of the Canadian incubation market. Itemus made so many smart investments — in companies like Name Inc. and Digital 4Sight, for example — that it should have been able to weather the dot-com downturn and attract additional financing. The failure of its Shooting Gallery subsidiary, however, shows that the market tends to remember failure more readily than success. It will be very difficult for first-stage companies to get the kind of help they’d been offered in the past.
Distributor’s Dog Days: It was one long, hot summer for nearly every major Canadian distributor. Layoffs at Ingram Micro and Tech Data Canada culminated in voluntary four-day work weeks for remaining employees. Others, like GB Micro and Empac, were not so lucky, closing offices or shutting their doors entirely. The only high notes over the summer came from Synnex, which bought both the assets of Supercom USA and the Canadian assets of Merisel, and EMJ Data Systems, which basically picked up what was left of Empac’s business.
Think Before You Brand: As it added a final nail in the CLEC coffin, the collapse of Norigen must have sent embarrassed shivers down the spine at Toronto’s Harbourfront Centre, which renamed its outdoor venue the Norigen Stage and its phone number the Norigen Hotline. Who ya gonna call now?
Getting the Message: Through a dogged awareness effort, government agencies worked with Microsoft to make sure the industry was prepared when the Code Red worm hit earlier this month. For once, Microsoft scored points for acting like a responsible global citizen, and at least in Canada, few major problems were reported. This was the best thing about this summer: we proved that it is still possible to communicate effectively without the Internet, particularly when its safety is at risk.
Anything I missed? Let me know your summer highlights (and lowlights) before we head into the Autumn.