Enterprise Software Sales Dried Up In September

CurtMonash writes "As I predicted a week ago, it looks as if the third quarter was ugly for software vendors, due to the economic crisis. SAP said 'The market developments of the past several weeks have been dramatic and worrying to many businesses. These concerns triggered a very sudden and unexpected drop in business activity at the end of the quarter.' My old acquaintance John Treadway, who used to work in Sybase's financial services vertical unit, reports that things are even worse than that in the financial services industry, Wall Street and retail banks alike. So now what? Well, IT is a huge part of capital spending, and at enterprises that have to cut back capital spending, IT is going to get hurt. On the other hand, high-growth companies — Web businesses, analytic services providers, etc. — may try to power through the downturn. And the more directly an IT project affects near-term profits, the more likely it is to survive."

Comments

No real suprise there...

[sm284614]

The LCARS operating system has been in decline for years now.

wow

[nomadic]

As I predicted a week ago, it looks as if the third quarter was ugly for software vendors, due to the economic crisis.

Truly you are a modern day Nostradamus.

Re:wow

[Anonymous Coward]

Fail

But don't worry

[Reality Master 201]

The fundamentals of our economy are sound.

Literally - our economy is based completely on acoustical signals.

due to the economic crisis

[iminplaya]

Well, at least they're not trying to blame piracy this time.

How much were you making in 2003?

[Nova Express]

That being the tail end of the Dotcom Bust shakeout. Here's a hint: you might want to go ahead and downsize your lifestyle so you can live on that again.

I sincerely doubt we're going to see 25% unemployment, Smoot-Hawley II, or a government takeover of the IT sector the way FDR tried to takeover industry. But it's quite easy to imagine Dow-Jones hitting the 7,300 level, and venture capital frozen until the credit markets thaw. You better be prepared to last it out.

You might want to:

• Start increasing your savings until you have a year's worth in the bank, if you don't already.
• Learn as many new skills as you possibly can, in case you need to find a new job in a tough market.
• Learn some handyman/craft skills (carpentry, plumbing, drywall, auto repair) to get you a survival wage while IT jobs are scarce.

The economy will come back, just like it did after the Dotcom Bust (assuming the $700 bailout isn't as destructive as the Japanese propping up zombie banks for a decade after their real estate bubble burst), but in the meantime it could be a long, cold winter...

Re:How much were you making in 2003?

[oldhack]

I think this bust is much, much worse than the dot bomb. Dot bomb, despite all its excess, produced wide-spread internet coverage, computer as utility/appliance, web tech/commerce, and much improved communication infrastructure. This bubble was a sheer paper and real estate speculation - the only thing left are vandalized McMansions in locations unsuitable both ecologically as well as economically. All with borrowed foreign capital that will surely change the dollar's place as the undisputed foreign reserve currency.

Would this mean ...

[slashdotlurker]

... an upswing in the use of in-house customized solutions based on FOSS for new ventures that want to cut costs ?

This sucks

[coldtone]

From what I have personally experienced, and seen in the market in general it was not until mid 2003 that we saw a recovery from the dot com bust. It's only been five years, and to be honest wages have only recently gotten back in line.

How the heck am I supposed to get ahead when these downturns happen every 5 years or so? How does one build wealth, get married and raise a family? I mean I just got my 6 month emergency fund restocked, and now I might have to use it?

I've been in the business since 98. Are these 5 year cycles normal?

Re:This sucks

[grcumb]

I've been in the business since 98. Are these 5 year cycles normal?

Short answer: Yes. If by normal you mean recurrent.

Slightly longer answer: The number has in the past been greater than 5 years, but recently we seem to be tightening the loop between boom and bust. Likewise, many of the past booms and busts have not appeared to be quite so catastrophic as this one.

I've been in the workforce since the late 70s, and paying attention since a little before that. I've seen downturns of various kinds in every decade.

And yes, the US economy is more or less predicated on a boom/bust cycle. But don't take my word on it; greater minds than mine have looked at the phenomenon. Start with wikipedia and keep going from there.

Re:This sucks

[the eric conspiracy]

Most major financial institutions are undergoing a major deleveraging process which decreases the overall debt to equity ratio in the economy. This leads to a massive destruction of money supply and a crash in the value of assets in the economy, which we are seeing a start of with continuation of decreased real estate, equity and commodity prices, and unavailability of loans even to the largest and most stable entities in the US. This value destruction definitely exceeds 5,000,000,000,000 dollars over the last 12 months at this point in time.

It is getting to the point where some states are facing bond defaults because they cannot borrow at reasonable terms. Giant corporations like GE are facing a real prospect of bankruptcy because they cannot borrow working capital despite having a 22:1 asset to debt ratio. If the US Government were not trying to counter this by pumping money into the economy we would surely be looking at the stark reality of a depression.

The US dollar is appreciating greatly vs. the Euro, because at least the US realizes the problem and are acting with concerted vigor. The EU's economic policy is total shambles with individual countries acting unilaterally rather than in concert, and the refusal of central banks to lower interest rates. Some analysts think this may get bad enough to destroy the Euro as a currency. At the very least it has put an end to any talk of the dollar losing it's special place as the international reserve currency. Some small countries like Iceland, Ireland and Greece are on the edge right now. Iceland's problems are so bad that they are having difficulty importing food.

There is no practical limit to the ability of the US Treasury to pump money into the economy by loans against hard assets. The question is how much and how fast is needed to accomplish the desired effect, and can it be done without overshooting on the other side.

Re:Noo, really?!?!?

[2Bits]

No software should cost more than $10k ...

Right, if you are programmer and are willing to accept minimum wage, with no benefits.

Spoken like a kid who never had a job. Tell you what, we are a software company, and I can tell you that programmers cost a lot. Software development is darn expensive too. And you have to add up all the continual training cost for our staffs, not just the initial training to get them up to speed.

I hate to break that to you, not all softwares can sell millions of copies per year, certainly not enterprise softwares. You are not selling burgers here. A lot of companies would be really happy if they can sell 50 copies per year. Customizations, services, support, etc, all very expensive work.

Go to take a look at the "enterprise softwares" first, make sure you even know what all those terms mean (I'm not even talking about implementing them), and make sure you understand all the regulations/rules involved in the industry, yada yada yada... and then, we'll talk.

Re:Noo, really?!?!?

[afabbro]

If you're paying a lot of money for software odds are you are being taken advantage of. No software should cost more than $10k Exception: scientific software (and I mean the really advanced stuff, simulations, etc), math analysis, etc, etc AND EVEN THEN

Well, as much fun as sweeping generalizations are...

There is some fantastic commercial, enterprise software out there, the likes of which FOSS cannot touch. I'm a DBA and love Postgres, and to a lesser extent MySQL, but neither has the breadth of features or capabilities that Oracle has. Postgres is a great product, but it's like Oracle 7...there's a big difference between it and Oracle 11g. And yeah, there are a lot of shops that don't need that difference, but there are a helluva lot of shops that do.

That's just to take databases. There's a wide variety of engineering software that I've supported over the years that is just not going to be touched by FOSS people any time soon and represents literally tens of thousands of man-hours of development time. My employer uses some really intricate software designed for our old-school industry that would take hundreds of thousands of dollars to develop in-house...and no FOSS group is going to say "hey, let's do that in our spare time for fun! And also make sure it works with everything else!"

I agree that big ERP packages are often big nightmares and yes, there's a lot of junk out there, but you can't just say "if you pay a lot for software, odds are you're being taken advantage of."