Technology Buying Slump

mgcsinc writes "According to this Yahoo article from Reuters, IT buyers are continuing a trend of cutting costs, favoring utility over cutting-edge effect. Market researchers are estimating continuing doldrums in the industry and enterprise businesses see more 'bang for the buck' from making improvements in software as opposed to investing in new infrastructure. This is not necessarily awful, however, for those who hope businesses will start looking toward open source options as the cost effective alternatives..."

Comments

News Flash

[Anonymous Coward]

The party is over. What we now consider "doldrums" are here to stay. It's the new normal. Do you ever think businesses will return to extravagant spending?

Even when the economy heats up again (let it come soon!), people will point to the late 90s dot coms as the prime example of why they should not spend money on equipment that provides no immediate ROI.

Re:News Flash

[miu]

Do you ever think businesses will return to extravagant spending?

Sure, it may be another generation, but a new "next big thing" will come along and wild optimism will once again be in vogue.

Re:News Flash

[beta21]

Its not ROI that the dot coms burned ppl on. It was badly informed not well researched investments.

Pfizer spends hudge amounts of money on equipment that will not have an immediate ROI. I'm sure Viagra took a while to develop and quite a bit of money.

Its just that stupid ppl were oohhhed and aaahhhed into buying absoulate crap that did not and would not fit into their business model.

Rather than avoid infrastructure/software upgrades make an informed decision..rather than a blanket statement

Re:News Flash

[stinky wizzleteats]

Do you ever think businesses will return to extravagant spending?

Well, I've been in the IT industry for a while now, and I certainly hope not. What made the 90's bad was not the technological advancement and optimism, it was the avarice, the exploitation of the ignorant, and the mercenarism. People bought solutions because it sounded good while bragging on the golf course, or because their absurdly overpaid consultant recommended it, or because their ridiculous sustained growth pressured sales reps forced it down their throats. People and indeed very large companies made a lot of money with no meaningful work ethic nor valuable good or service to provide the customer. There were a lot of jackass cert mercenaries job hopping in the 90's, making 6 figures a year, who soundly deserved to get their asses fired, and I for one, was grateful to see them go. (Many good people lost their jobs for no reason, however. Such is the price of the elasticism of boom and bust.) And I don't think we even need to make the obvious corporate parallel to my individual example.

I am proud that IT consumers are figuring out they don't have to pay Microsoft every two years for the honor of using their crap. I am proud that technological efforts are directed toward useful result instead of name recognition or bragging rights. I am proud that the IT megacorp and consultant establishment is being questioned, and that in house IT specialists are being listened to (they are!).

I care about what I do, and I care about my customers. I find in these times that those qualities are in very high demand. From where I am sitting, the industry has never been better.

Re:News Flash

[darkov]

I agree. The "tech boom" of the 1990's was a pretty sad piece of history, but thankfully it didn't create another Great Depression.

Don't speak too soon. Debt is at record levels (not seen since the depression) and people are making noises about deflation (the big killer in the great depression). Japan's had it for a decade, Germany looks like it might slip into it and rates of inflation are falling in the US. Greenspan had made deflation "enemy number one" but 13 rate cuts and negative real interest rates haven't stimulated the economy. We've had a 3 year bear market and we're not out of the woods yet.

My advice: if US property prices collapse, which is not too likely, but if they do: run for the hills.

Play with fire and get burned.

[Tyler Eaves]

Maybe this is because companys have been burned enough times by "upgrades" that only cause downtime and break other apps?

Re:Play with fire and get burned.

[Billly Gates]

I think its due to y2k more then anything.

This is what really started the .com hype. Since many corporations had to upgrade old code, it made sense to upgrade everything else at the time and integrate them together. Now its done.

If you were a CEO and spent $40 million to upgrade your whole IT department why would you need to upgrade again? Another 20 million? I don't think so. Many of the systems upgraded were over 20 years old. If it took 20 years to get them in it will take 20 years to get them out.

My guess is the 2038 crises might cause another rise but that is just a theory. Corporations are cheap with good reason. It was reckless spending and unaccountable earnings pressure that started the whole DowJones nosedive. They learned their lesson and unless an emergency pops up they are will not upgrade.

Yes upgrades cause problems like you said but they are also expensive even if they do not cause any problems at all.

Re:cool!

[bad_fx]

Would be nice but I very much doubt it. This sort of attitude only hurts the more specialised, cutting edge companies. The already established, "reliable" places like MS will only gain from this, I'd guess, as people become less and less likely to "take a chance" on less well known products. (been like that for a while though hasn't it?)

Good for small business too!

[sammyo]

Well for small companys that provide quality, truely inovative products that solve REAL problems. The CA's and Peoplesofts that ship a product that require 2-3 years of independant consultants to get 'right' will be ancient history.

Open source

[MrWa]

The article is about IT becoming a part of businesses that must justify new expenses in terms of ROI. This goes along with the previous mentioned articles on /. about IT being an investment.

One could make the leap to believe that this means companies will embrace free, open source! software. Maybe. Or one could look deeper and see that companies are looking to standardize - something that open source software doesn't seem to doing.

There may be places in businesses that open source software will be able to make good progress in - I hope so - but it reads like IT managers are looking to the old standards (IBM, Microsoft, SAP, etc.) for the near-term fixes that they need and any new, whizbang ideas (e.g. wi-fi) will be met with strong resistance...

Re:The right tools

[Surak]

I'll probably be modded down for this, but let me candid here.

Well, certainly OS X wouldn't work where I'm at, where we deal with high-end CAD/CAM/CAE systems. They just plain don't write this stuff for Macs. And they never will.

The trend now is to Windows and (hopefully with the pending release of Pro/E for Linux) to Linux systems. I think a lot of non-open source, non-in-house developed UNIX applications probably won't ever be ported to Mac OS X because it's not taken seriously by folks who write these kinds of apps as a viable platform.

Don't get me wrong -- it certainly is. OS X is about as nice of a desktop UNIX as you'll be able to find in open or closed source UNIXes. Apple hardware is nice. But the guys who run UNIX at the high-end of the spectrum don't see it as a UNIX, it's a Mac, and it's nice for graphic designers and desktop publishers, and maybe even has some room for people doing surface modeling for design purpose, but it's not a CAD workstation, and it's certainly no server.

Re:Gosh, utility over cutting edge

[r84x]

I don't know how you fellows make a decision, but when I go to the store to buy something, the coolness factor is always huge. For instance, buy the Cheerios that I know will satisfy my breakfast hunger, or go for the Chocolate Frosted Sugar Bombs, with the awesome toy? I will often go with the latter, even though I know better. (apologies to Calvin for stealing his cereal)

The point I am getting to here is this: Americans have always, and will always, go with the shiny new "cool" object, even when they know better. This "slump" as with all slumps, is temporary. Americans, myself included, will come back to buy the product with the bells and whistles.

Do we really need to upgrade?

[lawaetf1]

No, seriously. Gamers aside, the average home or office user can get by just fine with technology from 2+ years ago. I have a p3-800 at work as do my 30 odd users and for email, web browsing, mp3s, terminals, etc it handles the work just fine. Sure a newer system would be nice but its impossible to justify the cost when things purr along smoothly as is.
I think the same applies for servers to a lesser extent. Unless you're anticipating a heavy load chances are good the job will get done fine with a box rustled out of the closet.
Unless the fundamental ways in which we interface with the computer change then the non-power user will have longer and longer periods between upgrades.

Re:We're going all open-source

[PierceLabs]

Oracle to MySQL? Whomever is your CTO needs to be fired. Yes Open Source is great, yes open source solves some budget issues - but a migration of data from Oracle to Mysql along with the associated training and support (yeah support still ain't free) is likely to cost you more than you're saving.

Re:No, really?

[LostCluster]

Most computer parts are good for about 5 years tops... if everything was replaced in late 1999, what's gonna happen in 2004?

Re:The right tools

[BWJones]

They just plain don't write this stuff for Macs. And they never will.

Actually, there have been a number of companies bringing their high end specialized *NIX code to the Mac including apps for molecular modeling, bioinformatics, GIS etc....

I think a lot of non-open source, non-in-house developed UNIX applications probably won't ever be ported to Mac OS X because it's not taken seriously by folks who write these kinds of apps as a viable platform.

Funny, I have had just the opposite experience.

But the guys who run UNIX at the high-end of the spectrum don't see it as a UNIX, it's a Mac, and it's nice for graphic designers and desktop publishers, and maybe even has some room for people doing surface modeling for design purpose,

I use OS X at the "high-end" of the spectrum to perform computational molecular phenotyping, manuscript preparation, creation of presentations, porting code, surfing the web, experimenting with performing reconstruction using yes, CAD software etc...etc...etc.... and....

and it's certainly no server.

Hosting several web_sites.

Mores law also is affecting buying decisions.

[Billly Gates]

In the late 1980's during the last recession, IT purchasers began to view computers as commidities like today. Some even questioned the increase of productivity of a pc compared to a typewriter. Instead of buying 386 and 486 systems they bought 8086's and 286's with only 1 or 2 megs of ram and cga and even monochrome video cards to save money.

At the same time they scaled down on large machine purchases. This was when SCO was mediocrely hot since a 386 server running Xenix or Openserver was cheaper then a mainframe.

Turns out the systems were not powerfull enough and caused more headaches when software evolved faster then the hardware. OS/2 and WIndows 3.0 came out and brand new things called Unix servers from Sun could provide the performance of a big mainframe for a fraction of the cost. (Back then it was mainframe/VAX or micro ).

Turns out it costs corporate America billions over the next decade to fix the problem.

Analyists today think history is repeating itself and the market will grow again. Ronald Reagan started this massive conservative business climate where tax cuts fueled stock prices and into profits. Same is happening again with an even more conservative president. But I think they are wrong.

The pc revolution is over!

Today a pc based file server running Linux can easily outperform most Sun's for a fraction of the price. A low end pc is just as fast as a high end one for basic office use. SGI is almost dead since a Windows box with a good video card can outperform them.

So unless a new technology on the horizon comes in I say the decline will continue.

What maybe next is bandwith and mobile computing improvements.

The desktop == mainframe. They are no longer where the industry is and the embedded/pda/cell phone is the next IT revolution. They are still evolving and thats where I guess the new market is.

May 1999 RIP. This is a permanent trend unless something pops up that requires new purchases that corporate American or even Joe sixpack can not live without.

This has always been the case

[Vandil X]

There hasn't been a single sys admin (or engineer in the pre-IT era) who didn't get financially clipped at some executive or corporate level.

It's a humbling gesture that keeps sys admins in their place and makes them come up with functional miracles with existing equipment purchases (think of Scotty from Star Trek).

Having been in the IT industry at all levels of the IT ladder, I've had to come up with my own fair share of miracles with existing equipment.

Basically, the rule is: Only buy when it's no longer cost-effective to rig something together with existing purchases.

This keeps bottom lines more realistic and prevents rogue sys admins from making their workstation into Pimp.Rig with company cash that could have been spent better elsewhere.

It's frustrating as hell, especially when no personal gain is intended, but such belt-tightening keeps companies afloat these days.

Re:This has always been the case

[ergo98]

Only buy when it's no longer cost-effective to rig something together with existing purchases... ...but such belt-tightening keeps companies afloat these days

Therein lies the crunch: Very few people actually do the math. I worked in one organization where we had 3 basically desktop systems in the field running antiquated processors: For months they had several programmers working on optimizing the code to allow it to run effectively on this underpowered hardware. The total cost to replace the hardware with machines 3x as powerful was around $6000 (and was necessary for further expansion plans), while refactoring the code came in at at least $24000. These sorts of idiotic refusals to do the cost analysis are common, and it's how many organizations spend far more by spending less.

As a sidenote, am I the only one that finds the Microsoft commercials running right now to be absolutely hilarious? In one of them you see an IT department apparently learning to dance between Windows 2003 makes life so much easier and "saves money". What they apparently fail to see is that the cost savings in manpower savings, and they're lambadaing themselves some pink slips. I'm all for efficiency, but that commercial just amazed me in the paradox of the message.

jobs

[rabbits77]

This is not necessarily awful, however, for those who hope businesses will start looking toward open source options as the cost effective alternatives..."
Those looking for jobs, however, will continue to deem the situation to be awful.......

Clueless...

[SmurfButcher Bob]

Slump? Or finally figuring out that we do not, and never have needed to "upgrade" every 5 weeks...

Re:Clueless...

[fatboyslack]

Personally, I think its because todays computers are fast enough for most office applications required, however up until even a few years ago in the sub-500MHz speed range computers would struggle with many day to day tasks (especially as the majority of computer used MS... and still do) My old PII-266 would struggle running more than one decent app at a time and squeal at four. Now I can listen to music, surf the net, have a document/email I'm playing with etc. with no drop in performance. I'll try to make myself clearer.
So my theory is that the majority of computer uses are only just beginning to get computers that are fast enought that upgrading would give no discernable difference... therefore no need for upgrade therefore slump. (therefore bargain computer for gamers!). Also, while gamers never have fast enough machines, and do drive development, they are in reality only a small section of the market.
Oh, the name SmurfButcher = Funny +3 in my book.

Re:That Explains Alot

[Billly Gates]

Do you ...correction.. they need a G5 mac?

Does a G5 bring a bigger return for them in productivity?

If not then your boss is right. Not to sound like a jerk or anything but the idea of a computer is to be a tool.

Unless you run extremely complex photoshop sessions that take several minutes to complete its just not needed. For simple page editing a G4 imac is fine.

Re:That Explains Alot

[deadsaijinx*]

Cheap? He doesn't have to buy you more than is necessary to get the work done. If it's only a lousy $2,000, why don't you pay for the G5 you seem to want so much? Because $2,000 is a lot to spend.

Keyboard got soda spilt on it, okay. Does it still work? You've been using it for 6+ months, so I'm going to say yes. So there is no reason to replace it then. Furthermore, keyboards are pretty cheap, and since you spilt the soda on it, you should pay for it.

And seeing as how you still have a job, you really can't do much complaining.

Stagnant until Carmack pushes the envelope again

[pariahdecss]

Not really large scale IT purchasing related but on a personal note my low end P4 system is simply not stressed by any of the current games or applications that I use. Mr Carmack will probably single handedly determine when my next upgrade will occur in lieu of the release of Doom 3. I think a lot of PC makers and graphics card manufacturers have their fingers crossed that Carmack and Valve will drive PC and hardware sales for the 4th quarter of 2003.

More of the Y2k effect

[ondasmom]

Much of the technology spending that happened in "the spending blow-out of the 1990s" was investment in infrastructure that IT people justified as preventing total collapse from Y2k. That stuff is just starting to wear out now, and it will be replaced gradually, rather than in another spending spree.

Electronics are going commodity

[indros13]

How often do people think "cool" when they buy a toaster or a washer/dryer? Electronics are becoming commodities as they become efficient and cost-effective a few basic tasks that people find entertaining and useful.

As it is so often mentioned on Slashdot, the average American just wants to word process, check email, and surf the web on their computer. Their cellphone can customize rings, play some games, and give them free long distance--fine.

If I can get the former for $700 with a monitor and printer and the latter for $40 a month, I'm pretty satisfied.

These aren't the killer apps you're looking for...move along.

Re:We're going all open-source

[G-funk]

I don't know what the application is for, but Oracle -> MySQL is a step backwards

A step? Oracle -> SQL Server 2000 is a step backwards. Oracle -> MySQL is like replacing your Ti80 with an abacus.

Re:Gosh, utility over cutting edge

[GregAllen]

Then why aren't we using metric?

Duh! Because it's French. :)