Silicon Insider: Yahoo Blinked

June 21, 2007 — -- When we began the current tech boom three or so years ago, it was already pretty apparent where the great competitive battles would be. We could even predict the antagonists. What wasn't so obvious -- and that has been proven by subsequent events -- is who the winners would be.

Indeed, in many of these duels, the least likely contender has been triumphant.

For example, in Intel versus Advanced Micro Devices, AMD had caught up so quickly, achieving parity in microprocessors after a 20-year race, it seemed inevitable that the company would at last sprint on ahead of its far bigger and more famous competitor.

But it was AMD that stumbled, and now is in pretty desperate shape. But that still didn't make Intel the big winner; seemingly out of the blue, Samsung, propelled not only by its strength across the chip business but in consumer products as well, ran all over Intel. The result was that Intel, for three decades the most consistently successful, and often the most powerful, company in tech is now the sick man of Silicon Valley. This has been the first electronics boom since the 1960s that Intel hasn't led.

Meanwhile, in the personal computer industry, Dell was dominant, IBM was strong, Gateway was faltering and Sony was ascendant. Giant Hewlett-Packard, choking on the acquisition of Compaq, and led by a CEO who seemed to love the limelight even while she was destroying the morale of her troops, seemed dazed and confused.

Who would have guessed that these days HP, under a tough new CEO, would go back to basics and crush all competitors? Or that Dell, so supremely confident, would suddenly lose its way, even its sense of purpose, and start to fall apart? Or that IBM, the 20th century's defining computer company, would leave the computer industry altogether, selling off its PC business to China?

It was also generally assumed at the beginning of the current upturn that Microsoft would remain the Evil Empire, crushing all in its path, dominating both the software (and by extension, hardware) and Internet worlds, its monopoly driven home by the expected announcement, in 2005, of the new Vista operating system.

Well, nobody seems to worry much about Microsoft these days, as it has slowly faded into a big, lumbering dinosaur. And Vista, of course, was two years late and almost sunk the personal computer business in the process.

What was accurately predicted at the time was that Apple, armed with the redoubtable iPod, the first great consumer product of the century, would be a major player in this boom, but few would have guessed that within a few short years this product line would become so important to the company that Apple, the company synonymous with the personal computer, would drop the word "computer" from its name.