WTC Attacks to Delay Tech Revival

Hardware, software, and services companies providing essential infrastructure for e-business and e-commerce will generate $5 billion less in revenue in 2001 than in 2000 thanks to the Internet Recession, while the September 11 attacks might only delay by a quarter the stabilisation of the US technology buying originally anticipated in third and fourth quarters of 2002.

Worldwide spending will reach $31 billion in 2001 for hardware, software and services targeted for e-business, as against the $36 billion in 2000, while the 73 per cent rise in worldwide expenditures in 2002 over 1999 has drooped by 12.5 per cent in revenue, says a study by US-based technology market research and consulting company Strategy Analytics (SA).

"2001 will be remembered as the year when the fearful and financially strapped temporarily forestalled the future," said report's author Donald Bellomy, Director of SA's E-Business Supplier Strategies, sharing with ET the details of the report -- "E-Business Infrastructure Expenditures and the Internet Recession: Making Money on the `Net, 2001."

"Until September 11 of this year, we were anticipating a stabilisation of US technology buying in the third and fourth quarters, and a return to moderate health in most geographies early in 2002. In the aftermath of the destruction of the World Trade Center and the attack on the Pentagon, there are now too many imponderables for our original assumptions to continue in force," the report said.

However, unless new levels of violence ratchet up the destruction and further depress confidence in Northern America and Western Europe, we don’t see any intrinsic reason why the additional period of economic weakness should last longer than a quarter," it said.

The study noted that besides the dotcom bust and global economic slowdown, the important reasons for the e-business infrastructure spending downturn arises from confusion and doubt about the probable return from e-business in leaders of many enterprises, who are lowering spending for e-business projects.

In view of this situation, the study suggests that the best suppliers can do is protect their own flanks by trimming expenses and to help customers and clients appreciate the degree to which e-business and e-commerce can help, even in the all-critical short run, provide efficiencies that can directly and indirectly nurture the bottom line.

"In addition, broad-gauge suppliers like IBM, Oracle, Sun, and SAP will need to more closely integrate their e-business offerings with the vertical expertise that their sales and marketing forces have developed over the years. More broadly, suppliers need to hone their product development strategies to address the real concerns of enterprises desiring to be shown how and why e-business can work for them," the report adds.