Who really knows? - Editor's Note - Industry Overview

Communications News, Jan, 2003 by Ken Anderberg

No one really seems to know what to expect from the enterprise technology market in 2003. Predictions from various sources have been all over the map--and often quite ambiguous. Research firm IDC predicted, in November, a 5% growth rate worldwide for the IT industry. Yet, only a few months earlier, IDC said IT spending would rise 9% in 2003.

In November, Gartner pegged 2003 growth at 6.2%, but a month earlier it indicated tech budgets would decrease slightly next year. According to a spokesperson for American Management Systems, the IT recovery will be nominal to moderate, whatever that means. Another survey of major corporate CEOs shows that only one-fifth plan to increase business investment this year, and two-thirds say the economy will expand by less than 2%.

All this waffling--while interesting to watch and compare--leaves one to wonder just when organizations will ramp up investment in their corporate voice and data networks again.

As a publication that goes to subscribers in virtually every industry and size of organization, Communications News' ongoing research might be as on target as any of those mentioned. Through regular e-mail surveys, and daily reports about what products our readers are interested in and researching themselves, we can get an up-to-the-minute feel for their purchasing plans.

For example, assuming an average six-to-nine-month time frame from when companies begin researching new products to when they buy, we can predict that enterprise investments in fixed wireless solutions will perk up in the second quarter of this year. Likewise, we have seen a significant interest by our readers for the past six months in physical infrastructure products and would expect the sales of cabling and enclosure products to show healthy gains early this year.

A recent survey on IT security purchasing plans of our readers indicates that nearly half the companies responding plan to purchase virus-protection products in 2003. Firewalls will be a budget priority for 45%, and LAN intrusion detection solutions for 41%. Of those polled, 43% say their IT security-related budgets will increase in 2003, with nearly half of those planning on spending at least 10% more on security products than they did in 2002.

Other areas our readers are showing strong interest in are voice over IP, remote access, e-business and conferencing. Products in these categories should start moving off the warehouse floors in the first half of this year, based on the time lag between customer product queries and actual purchases.

You are now asking, "How much?" Don't know. If we had that answer, we'd be making a killing on the stock market and basking in the Caribbean sunshine. Even the president of the Technology Association of America (TAA) doesn't know.

"The one thing that has fairly universal agreement is that the bottom has been reached," says TAA's Harris Miller. "Corporate spending has gone as low as it's going to go. The question now is how much it's going to go up, and when."

kena@comnews.com