Information Age Index May 2009
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IT industry at its lowest ebb since the dark days of December 2002
Top-line growth in the IT industry is well and truly over for several quarters to come. The Information Age Index, which tracks the growth of the world’s largest technology companies, plunged to -2.8% in April, down from -0.3% in the previous month. That puts the growth rate at its lowest point since the dark days of the dot-com bust in December 2002.
At the same time, the pace of the European-headquartered companies covered by the Index was heading in the same direction. The IT service-centric European Index fell from 3.1% to 1.9%.
Leading the negative impact on the global figure were some of the industry’s hardware bellwethers. Compared to the same period last year, Intel’s latest quarterly figures crashed 26%; growth at Cisco was reset to -16%; and Nortel Networks reported a 37% slump in revenues. That reflects the sharp fall-off in capital expenditure by many customers.
The picture for enterprise software companies, while negative, was not so pronounced. Microsoft’s revenues declined by 6%; CA and Symantec both shrunk by 5%; and SAP was down by 3%. With their large maintenance fee component, software companies are a little better insulated from the recession than their hardware-dominated peers.
In IT services, there was mixed news as plenty of customers chose outsourcing as a route to cost cutting. Cognizant reported a 16% uplift in quarterly revenues and CGI recorded a 2% rise, even as Perot banked 9% less.
There were some companies that looked immune to the cold chill of recession, however. Sage’s half-yearly revenues jumped 17%, helped by a weak pound and its high proportion of overseas business; in utility storage systems, 3Par and Compellent recorded stunning numbers, up 37% and 53% respectively; and, in hosting, RackSpace pushed revenues up 21%.
As these numbers show, there are only a select few areas where businesses are spending on IT, and that is not going to change for several quarters to come.
