Punishing tech slowdown will last through next year

By Published on .

For an unapologetic technology booster like myself, the past several months have been a rough ride. First, rock-solid technology providers were caught, unfairly, in Wall Street’s mass rejection of dot-com start-ups. Now they are struggling in an anemic domestic economy, trying to sell solutions to businesses that are slashing their budgets and worrying about the future.

Earlier this month, there were somber reports coming out of Las Vegas and the mammoth annual computer industry trade show, Comdex. The event, organized by Key3Media Events, saw a 25% drop in attendence, to between 100,000 and 125,000, and its fewer than 2,000 exhibitors occupied roughly 650,000 square feet of space. Last year, 2,300 exhibitors occupied more than 1 million square feet of space.

Meanwhile, industry forecasts layer on bad news. Research firm International Data Corp., which revised its numbers after Sept. 11, believes makers of computer hardware will see no rebound before 2003. IDC is forecasting a 35% decline in chip sales this year
compared with last, and another 10% drop in 2002. Personal
computer sales, it says, will be off 14.2% this year, followed by a 7.5% drop next year. And it predicts telecommunications will see a 9.2% falloff this year, followed by a 1.3% decline in 2002.

IDC forecasts the computer hardware sector will return to positive territory in 2003, with a gain of around 6.6%. Interestingly, IDC sees more resilience in the software market, with growth of 1.1% this year and 5.6%—primarily from enterprise security software—in 2002.

The downstream impact of all this on computer-related
magazines has been dramatic. According to the latest Adscope numbers, ad pages among some 20 titles were off 42.3% for the month of September and 32.5% for the year. Not surprisingly, titles in this sector are cutting staff, consolidating and folding. Just this month, for instance, Ziff Davis Media shuttered Smart Partner and folded Interactive Week into its newsweekly eWeek.

Still, there are encouraging signs technology spending continues in some segments. Along with a surge of interest in
security systems, buyers still see the value in automated systems for improving their interactions with customers. Patrick Marketing Group’s online study of big company executives found that five out of six are making "significant" investments in customer relationship management; another 80% are investing in data warehousing technology; and 75% said they plan further investment in computer telephony integration.

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