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The Infamous Eight: 2015's memes, themes and big pieces

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Icebergs and supertankers: slow moving, massive shifts

So, 2015 witnessed two major corporate reorganisations. Against a backdrop of struggling turnaround and falling share price, Hewlett Packard Co split into Hewlett-Packard Co (printers and PCs) and Hewlett Packard Enterprise (everything else). HP is an iconic Silicon Valley name, once a pillar of personal computing and scientific invention.

Years ago, and under a now ex-CEO, such a split would have been called “a spinning out of the HP PC business” ... now it’s called a split with the idea both firms can focus more clearly on their respective fields.

Dell announced the industry’s biggest ever acquisition – external storage system giant EMC for $67bn. EMC is the industry’s biggest maker of external storage drives, but suffered falling income and announced job cuts.

Dell, which dominates storage in terms of capacity, took on EMC to cover “digital transformation, software-defined data center, converged infrastructure, hybrid cloud, mobile and security". More likely the deal was driven by private equity announced as a strategy truce between EMC’s management and investor Elliott Management expired.

The big holdouts were IBM and Oracle. Missed quarters and falling revenues for both, combined with tumbling share price for the former and Oracle’s stock nearing the bottom of its 52-week low – yet management at both firms seemed untouched by the winds bashing the others.

IBM unleashed the biggest re-org in its hundred-plus-year history, but senior heads didn’t roll, and nor were there talks of sales or breakups.

Perhaps IBM’s shareholders were relatively benign and took a long-term view – those such as Warren Buffett were held prisoner by the fact they’d take multi-billion-dollar baths if they cashed out.

The most curious of corporate acts befell Google. The internet’s number-one search and ads firm became a subsidiary of a new firm named Alphabet, with chief executive Larry Page and his fellow Google co-founder Sergey Brin in charge.

Page handed the CEOship of Google to that company’s former head of products, Sundar Pichai. Alphabet was to run Google’s X Lab skunkworks and run prototyping, with Pichai in charge of the bread-and-butter ads and search.

This is a comment on the current state of Google: numerous failed social network initiatives yet continued dominance within ads and search. The moves freed Page and Brin to experiment while leaving the job of the core products to a products man.

Otherwise it was business as usual: another year, more trouble with Europe’s regulators continuing to grind out whether Google is an anti-competitive force.

Oh, and Google splashed out a record $25m to own – and sell – domains ending in ".app", beating off competition from 12 other bidders, including Amazon and almost every large internet registry.

Clock watching at Cupertino

There were more iPhones – including a mega pad with controversial stylus – and an electronic payment service that rapidly cleaned up and panicked banks.

But what got everybody excited was the April launch of Apple Watch, the product of years of speculation and hype. By November Cupertino shifted more than seven million smart watches, according to the analyst firm Canalys – far in excess of Samsung, Pebble, Fossil and Tag Heuer. Some had Apple’s timepiece heading towards iTunes and iPhone-scale market share – 68 per cent. Apple would not say how many it had sold.

Apple broke fresh ground in desirability, it seemed. A family of devices deeply challenged on battery life and an online lemon unless tethered to an iPhone, what Apple sold was a range of looks and finishes: starting a “merge” several hundred quid up to £9,500 for watches wrapped in 18-Carat gold cases.

The end of free cash

Abnormal became the new normal some time ago for the UK, US and the global economy. But in December 2015 the US Fed put interest rates up for the first time since 2008, with an increase of 0.25 percentage points. That means US banks can now charge between .025 and 0.50 per cent on loans to other banks.

That’s important because it marks the beginning of the end of the kind of cheap money that’s fuelled start-ups and corporations for eight years.

Start-ups such as Uber, Box and Slack inhabited a bubble – no need to make a profit, as the revenue rolled in from low-interest loans. Nose-bleed funding rounds of $30m, $40m, $50m and more using cash from banks, hedge funds and private equity. Big players such as Microsoft took on debt because it could pile up ready cash at low interest rates.

That reality has changed. Existing loans will be locked in, but what then? No more easy decisions supported by cheap cash, and a return to the fundamentals of business, essentially asking what’s doable and what’s justifiable, and a focus on profit.

That will mean questions over setting up new companies, offering new services, cutting prices, development of cloud data centres and hiring. It will almost certainly mean a slowdown in the number of startups and a shake out. It should mean the end of that tech bubble you’ll have read about.

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