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How Google became Microsoft: A decade of hits, misses and gaffes

The Noughties weren't always nice

Internet Security Threat Report 2014

Much-needed correction of the decade: recession

To paraphrase Lady Bracknell in The Importance of Being Earnest - to have one recession in a decade may be regarded as a misfortune; to have two looks like carelessness. The decade closed as it opened: With Microsoft launching a new version of Windows just as business customers cut their spending and IT companies were forced to lay off thousands of workers.

The causes of both recessions were different, but both followed periods of IT-related excess - or as those in Silicon Valley kindly called it, "exuberance". In the early 2000s dot-com companies who had IPOed and lavished buckets of cash on expensive technology and flying first class finally had their legs cut out from under them when the stock market crashed. With them went telcos and hardware and software suppliers.

By the late Noughties, there was a new frugality: nobody was flying first class, while Linux and open source meant the technology had become cheaper, reducing start-up costs.

Still, many companies were going live minus sustainable business models and crazy deals were being done.

It made sense - Silicon Valley's talking heads said - for Google to buy video phenomenon YouTube, for Yahoo! to grab Zimbra even when it already had its own email, for eBay to snatch Skype with some vague idea of having buyers and sellers talk to each other, and for News International to strap teen sensation MySpace to its information empire for billions of dollars that they'd never see again.

In the dot-com boom, the exuberance had been "irrational". This time, the talking heads intoned, it was "rational". In a world of growing online destinations, it was all about the traffic. This would allow synergies and ad revenue to flow like honey. Exact details would follow later.

Funny, synergies were also what the dot-com flag wavers used to justify deals such as media giant Time Warner's purchase of bucket-shop ISP AOL in January 2000. As The Noughties closed, Time Warner was spinning out AOL, Yahoo! was reported to be hawking Zimbra, eBay sold Skype, MySpace was eclipsed by Facebook, and Google struggled to sell ads against YouTube.

Now, as at the start of the decade, when outside forces burst the tech bubble, it didn't matter whether the exuberance was rational or irrational - the effect was the same. People lost jobs and money, the hype was burned away, and cheerleaders were left polishing their resumes in quiet hibernation.

The response from tech companies was consistent then as now. Hucksters like Dell and Microsoft told businesses there was no better time to spend on technology, because it would leave them in a better position against the competition when the economy returned. No matter they were flogging wildly different things, like server hardware or business intelligence software. Just sign the check. Please. ®

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