Tech spending to be flat in 2002

Conflicting predictions of how the economy will behave this year continue to
surface. After Bill Gates said on Monday that he sees no chance of global or US
recovery this year, the White House on Tuesday predicted a "vigorous"
economic recovery this year. But also on Tuesday, a newly issued study showed
that 47 per cent of technology managers at major US companies said they expect
high-tech spending to be flat this year compared to 2001, and almost a quarter
of them see spending even falling.

The pessimistic forecast was released in a report by the Wall Street
brokerage house of Goldman Sachs. If correct, there will be little or no chance
the technology sector will see a rebound in sales this year and spending on
anything from mainframe and desktop computer systems, software, and storage and
security products.

"Budgets could gradually loosen in the same way that they tightened over
the course of 2001 as the economy shows improvement," said Goldman Sachs,
which surveyed information technology (IT) executives at 100 companies with
revenues of at least $1 billion.

According to the survey brand-name technology vendors are likely to pick up
market share. "More often than not, our respondents cite traditional market
leaders as gaining share of their spending in the current environment,"
Goldman Sachs said.

Among the companies picked by the IT managers to see their marketshares
increase are Microsoft, IBM, Cisco Systems, Dell Computer and EMC. The biggest
gainers in computer hardware were seen as Dell and IBM, with 39 per cent of
surveyed managers and 34 per cent, respectively, saying they would get more
business. The biggest share losers were expected to be Compaq and
Hewlett-Packard.

Almost half of the surveyed managers (49 per cent) said their spending on
laptop and desktop computers would remain flat in 2002. Some 38 per cent of
managers said they had lengthened their replacement cycle for personal
computers.

With regard to software, 50 per cent of managers surveyed said they would buy
more from Microsoft, while 41 per cent said they would increase spending with
enterprise software vendor SAP. Novell, however, was seen losing sales.

The top five spending priorities for the year will be influenced by last
year's hijacking attacks. Managers listed security, data networking, database
software, storage software and disaster recovery as key spending priorities. The
lowest priorities for the year included Linux servers and desktop PC upgrades to
Microsoft's Windows 2000 and Windows XP operating systems.

Linux in particular, despite the enormous push by IBM is not impressing IT
managers as more than two-thirds said they had no plans to use the Linux
operating system in 2002. Only 1 per cent of managers said Linux would be their
main system for running powerful servers over the next two to three years.