Reviewing 2008 Developments in Technology in Philadelphia
It took me awhile to finish putting this together, but at least I got it done before February. This is my take on what the most formative events in the Philly Tech World were in 2008. There was a great deal to cover here so some important things are not included.
Have a different opinion on what was important, or want to point out something I left out? Let me know.
1. Earthlink abandons Philly's fledgling, ill-conceived WiFi network. Local telecommunications investors create Network Acquisition Corp to take over the network infrastructure and operate it with a more realistic business plan.
2. The FCC wages war on Comcast on multiple fronts, and at times it becomes intensely personal with outgoing FCC Chairman Kevin Martin. The issue of Network Neutrality comes to the forefront with the apparent discovery that Comcast is throttling BitTorrent users indiscriminately regardless of their volume. The FCC slaps Comcast on the wrist, Comcast implements a 250 GB monthly cap and "protocol agnostic" management, rolling it out as the new year begins. However, the Network Neutrality issue is far from resolved, with Congress considering new legislation this year.
3. The financial crisis hits in September and Philadelphia is effected just like everyone else. Some major banks and financial institutions serving the area teeter on the brink, credit is nearly frozen, and SAP announces in early October that "these concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter". Layoffs ripple through many IT firms, and the market values of most of the area's publicly traded tech companies plummet. The outlook at the beginning of this year is highly uncertain, though perhaps a little less catastrophic than it appeared a few months ago.
4. Business ByDesign, SAP's major SaaS entry for midsized and smaller businesses introduced with great fanfare in late 2007, is virtually put on the shelf as SAP tries to figure out cost, customization and multi-tenancy issues. Implementation is limited to a handful of customers, SAP leans toward outsourcing hosting, and management remains skeptical about the long term viability of SaaS for hosting major enterprise applications. Meanwhile, Salesforce and NetSuite continue to make market gains, and area vendors such as Boomi and Aria Systems position themselves as important SaaS service providers.
5. Rohm & Haas agrees in July to be acquired by Dow Chemical for $78 per share (15.3 billion). Then the economic downturn hits, Kuwait pulls out of a large petrochemical joint venture with Dow, and suddenly Dow's ability to complete the Rohm & Haas deal looks shaky. Rohm & Haas is attractive because of its less commoditized specialty chemicals business, and its advanced materials business which has a range of high tech applications.
6. Oracle makes big moves into the area, acquiring leading project management vendor Primavera Systems, insurance software provider AdminServer, and training software firm Global Knowledge Software. With Oracle's market value holding up well and its new business units focusing on Healthcare IT and Insurance, more acquisitions in the region would not be a surprise.
7. Unisys plans to move its headquarters to Center City create a huge battle over the illuminated sign it wants to put on Two Liberty Place. Plans for the move are scrapped because of its continuing deteriorating performance and a change in CEO. Unisys's stock price sinks to 38 cents, large scale cuts begin before year end, and serious questions exist as to whether the company will still be around in a similar form by the end of 2009.
8. Lockheed Martin is awarded the primary contract for the next generation GPS satellite system, GPS 3, by the Department of Defense. In addition to having the potential to generate a great deal of revenue for Lockheed, this contract should help maintain the strong GPS and satellite technology knowledge base in South Jersey and the Philadelphia area.
9. The Philly entrepreneurial scene continues to mushroom, through both formal and more informal efforts. DreamIt Ventures creates considerable excitement, and other groups and events such as Philly Startup Leaders, the Founders Factory, Independents Hall, BarCamp Philly, the second PodCamp Philly, Ignite Philly! are also very successful. People generally have a much better idea of what else is going on locally and where to look for help and resources, and there is a lot of cool stuff planned or in the planning stages for 2009.
10. Conshohocken's First Round Capital continues to establish itself as a preeminent VC firm nationally, and becomes a model for seed and early stage investing. It remains to be seen whether there will be a major Web 2.0 shakeout in 2009, but since First Round has spread relatively small bets in a lot of different places my guess is they wouldn't be too badly hurt in any
event.
11. The new venture arena experiences some ups and down in the area. VC funding slows, but several startups are still funded. After growing 80% in 2007, business intelligence software provider Qliktech is still hot in 2008, but its IPO plans are put on hold due to the market environment. Ringside Networks launches with great acclaim in the Spring but is shut down by the early Fall. RedLasso creates a great machine for clipping broadcaster's video content but discovers that copyright laws are not that easy to get around. myYearbook.com of New Hope becomes the third ranked social networking site, though far behind Facebook and MySpace. Insurance software company iPipeline of Exton receives $18 million of venture funding and appears to be well-positioned for future growth. Medtech firm CardioNet is the area's only major tech-related IPO of the year.
12. Verizon's FiOS service continues its rollout, and becomes a viable alternative to Comcast in many areas, increasing its subscriber base to 1.6 million during the year. New York City is opened up, but plans for Philadelphia remain on hold at the end of the year, partly due to Comcast's lobbying against it.
13. Comcast debuts its Docsis 3.0 service, offering speeds of up to 50 Mpbs, to about 20% of its territory by year end including the Philly area. Completion of the rollout is expected to occur sometime in 2010. Horsham's Motorola Home and Network Mobility is a supplier of Docsis 3.0 modems to Comcast.
14. Philly's sizeable Healthcare IT community prepares itself for the anticipated boom to come from Obama administration investments aimed at accelerating its widespread acceptance. A major theme is consolidation, as firms try to put together pieces of the puzzle to provide more integrated services and position themselves to compete for larger contracts. Health Care Service Corporation of Chicago buys area firms MEDecision and TMG Health. Bio-Imaging Systems buys Phoenix Data Systems, Portico Systems buys Ethidium. Quality Systems is one of the few bright spots in the stock market, as its Horsham-based NextGen Healthcare Information Systems gains momentum in the emerging market of Electronic Health Records (EHRs).
Interactive Pharmaceutical marketing services continue to be a relatively strong performer for the area, as Pharma companies slash salesforces and focus more resources on new media channels.
15. The general newspaper/media meltdown hits Philadelphia hard. Philadelphia Media Holdings, owner of the Inquirer and Daily News, cannot make some interest payments and continues through a series of cuts and realigments, Journal-Register of Yardley is also in default and will probably be sold and broken up, and Gannett papers such as the Wilmington News Journal and Cherry Hill Courier-Post are also affected. Ad declines are in the double-digit range; online revenue growth isn't nearly enough to make up for the dropoff in traditional revenue sources. Local tv and radio stations also face layoffs.
16. Comcast invests $1 billion in Clearwire, a planned nationwide network of WiMAX services. Cleawire, also backed by Intel, Google, and other cable companies, is merged with Sprint Nextel's fledgling WiMAX service by the end of the year. Service is initiated in Baltimore and Portland. Philadelphia was originally slated to get service in 2009, though that seems uncertain now as Clearwire has indicated it may slow its expansion timetable.
17. SAP and Oracle remain engaged in a legal battle concerning Oracle's 2007 suit against SAP over the alleged theft of proprietary Oracle information by SAP's TomorrowNow unit, which is now shuttered. The legal process remains ongoing, with a trial possible early next year if there is no settlement.
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