| The sales of PCs, desktops and laptops, are in | | | | down the value of the currency without driving |
| decline. It's not a forecast, it's a reality that didn't | | | | capital away, and it's no easy trick to pull off. The UK |
| begin when Mr Recession rapped smartly on the door | | | | is currently seeing the value of its currency fall, but |
| and the stock market fell out of bed. The trend | | | | capital is flowing out. |
| began a year ago (reported in surveys by | | | | The upshot of all this is that we can't know how |
| ChangeWave Research.) There was no sudden | | | | severe or long the recession will be, until we see |
| decline in buying intentions in November following the | | | | whether the governments of the world, and |
| nightmare on Wall St. The trend just stayed in place, | | | | particularly Europe and the US, choose to hang |
| indicating a drop of about 10 percent year-on-year in | | | | together or hang separately. The world is waiting on |
| buying intentions. This trend will continue. It's | | | | Obama. |
| inevitable. | | | | The IT Consequences |
| Unemployment is set to rise and that's going to add | | | | As a rough figure, 50% of capital investment |
| to the inventory of desktops and laptops lined up for | | | | worldwide is in IT. As capital investment falls, so will |
| disposal on eBay, both from consumers and | | | | IT spend. The dip in IT spend should, pretty much, |
| companies. The situation is further exacerbated by | | | | mirror the dip in GDP in a country. In the last |
| the fact that corporations currently aren't inclined to | | | | recession, the dotcom bust, IT had a bad time. The |
| upgrade their PCs just for the privilege of running | | | | damage to IT was disproportionate, because the |
| Vista. One of the first calls I got after Wall St went | | | | inflated dotcom values had translated into IT spend in |
| deep sea diving was from a CEO who simply said | | | | a a disproportionate way. |
| that Vista was out of the question for a year. He's | | | | On average, 10% of the IT spend in any country |
| thinking of skipping Vista completely and I'm sure he's | | | | comes from government spending. Given that |
| not alone. | | | | nowdays all the governments of the world |
| The practical reality is that most budget decision in | | | | understand the economic wisdom of John Maynard |
| most organizations will be implemented round about | | | | Keynes (the government isn't just the lender of last |
| now (January), so we don't really know what the real | | | | resort, it's the spender of last resort) IT spending |
| damage to the PC market is yet, but the signs are | | | | may not dip as low as it might otherwise do. In |
| not good. | | | | particular, in the US Obama intends to: |
| The Economy | | | | - Invest in healthcare, especially in IT in healthcare. - |
| Let's cut to the chase. There are some obvious | | | | Extend investment in the Internet |
| trends that have already taken hold and which will | | | | America also intends to restore regulatory sanity to |
| inevitably persist. Economically, the contraction in the | | | | Wall St and the banking industry, and that will |
| economy (worldwide) will not be reversed until | | | | probably mitigate in favor of IT spend to some |
| sufficient government spending has actually been | | | | degree. Put this together and it will alleviate some of |
| made to stimulate the deflationary trend. Reversing | | | | the economic pain for the IT sector in the US - but |
| the current economic momentum (or lack of | | | | not so much that the recession magically vanishes. |
| momentum, if you like) will not happen until the | | | | There is also what we can think of as a big |
| upside growth eliminates the downward momentum. | | | | psychological factor. Even if IT budgets hadn't been |
| This may not be an easy trick to pull off. There are | | | | cut at all, there's an irreversible psychological impact |
| unknowns and there are perils. | | | | from what has happened, which has flipped attitudes |
| Here are some things to consider: | | | | towards being cautious in purchasing anything. Having |
| - The dominant world economy, if you think of it as | | | | said that, it's fairly easy to lay down a few inevitable |
| an economic block, is actually Europe (with GDP | | | | consequent trends. |
| greater than $17 trillion). The US is a little smaller (with | | | | 1. PC spend, as we've seen, was contracting before |
| GDP of $14 trillion). Taken together the two make up | | | | the economy leapt off the balcony. It will continue to |
| about 56% of the world GDP. | | | | do so. Vista upgrades will be deferred. The netbook |
| - While the European economy is larger, the US | | | | will do well (it's cheap but cheerless.) |
| economy is more vibrant at the sunrise edge. It is | | | | 2. This will be the year when Open Office makes a |
| just more entrepreneurial and hence capable (imho) | | | | breakthrough. |
| of faster revival. We should expect the slump will be | | | | 3. There will be a trend towards more widespread |
| deeper in the US (because that's where the collapse | | | | use of open source products. Thus far its been |
| in values came from and where it's deepest), but | | | | mostly a bottom-up revolution. Now there is likely to |
| once it fires it will generate more momentum that | | | | be more "strategic adoption" of Open Source. |
| Europe is capable of. | | | | 4. The trend to desktop virtualization will accelerate |
| - The recovery will be politically driven. In the US | | | | to some degree. Vendors of desktop virtualization |
| there is resentment about "jobs being exported by | | | | technology will do better if they can minimize the |
| major corporations." Doesn't matter whether it's a | | | | capital spend involved and demonstrate quick ROI. |
| fair opinion, because it's a political fact. Therefore | | | | 5. The trend to server virtualization will remain healthy |
| recovery is going to be all about US jobs. Reversing a | | | | as a means of forestalling increases elsewhere in data |
| dip in the GDP will be politically meaningless if it | | | | center costs. |
| doesn't generate US jobs. The jobless figure will be | | | | 6. The cloud will be dominate. Every vendor that can |
| the metric by which President Obama will be | | | | have a cloud offering will have one, whether it makes |
| measured. | | | | sense or not. It will be like Web Services/SOA. |
| - The last time the world economy got this bad, the | | | | Everyone and his dog will be cloud-ready. |
| major economies (they were empires mostly) went | | | | 7. Mashups and mashup ecosystems will prosper. This |
| into a protectionist stance and raised import tariffs in | | | | is a trend in progress (Facebook and Twitter have |
| the hope of keeping home markets healthy, but it | | | | both done well in this regard. They've become strong |
| just made matters worse. There were also rounds of | | | | software ecosystems.) |
| competitive currency devaluations, which simply | | | | 8. Despite recent stirrings in the world of the |
| reinforced the slump. It's a different world now, with | | | | semantic web, this is not the year of the semantic |
| a completely different economic foundation (no gold | | | | web. That (I believe) will require a resurgent |
| standard), but the tendency will be for countries to | | | | economy. |
| engage in similar activities to move the pain | | | | 9. Despite the costs involved, BI (from simple BI |
| elsewhere. Remember that China has been artificially | | | | implementations to big BI projects with very large |
| suppressing the value of its currency (by buying | | | | databases) will do reasonably well. There's a gap here |
| wagon loads of US Treasury Debt) to drive exports | | | | that needs to be filled and which complements SOA |
| into the US. That game is probably over. | | | | developments. |
| - This time, it looks to me like there will be little | | | | 10. Despite the costs involved, service management |
| option for many countries but to print money in a big | | | | software of all varieties will continue to sell well. As |
| way, but in the end that's not much different than | | | | with the last point, there's a gap here that needs to |
| competitive devaluation - although the trick is to drive | | | | be filled and which complements SOA developments. |