3 Comments

Summary:

With PC sales stronger than expected, it was no surprise that Microsoft posted blowout numbers, even surprising some of the more skeptical company watchers. They gave a lukewarm forecast, but if you can manage to look beyond the myopic quarterly view of the world, you can […]

With PC sales stronger than expected, it was no surprise that Microsoft posted blowout numbers, even surprising some of the more skeptical company watchers. They gave a lukewarm forecast, but if you can manage to look beyond the myopic quarterly view of the world, you can see that Technology industry is on an upswing, starting primarily with the start-ups. Michael Copeland and I have co-authored a piece on Tech’s Big Comeback, and have posted an excerpt of that story on CNN/Money website.

The tech industry in many ways is following the classic arc of boom-and-bust cycles produced by transformative technologies of the past, from the steam engine to electricity to the automobile.

Here are some signs we found that historically have indicated an upswing. VC investments are rising, and no not in Web 2.0 companies that have garnered less than $100 million so far. Chips, Clean Energy, Networking…. you know the real technology companies. You can read more on this here. (The complete story is at Business 2.0 website, which required subscription.) A lot of people have looked at the rise of online advertising but missed its impact.

It starts with the melding of advertising, search and e-commerce developed by what are now referred to in Silicon Valley as the Big Five—Amazon.com, eBay, Google, Microsoft, and Yahoo. Advertisers are flocking to the Web; Internet advertising, $9.6 billion last year, was up 26 percent in the first half of 2005 and is projected to hit $12 billion for the year.

This money is going to the likes of Junipers, Ciscos and others. The tailwind effect, as one of my editors used to say! I think a lot of people are missing the signs because the current upswing is not like the ones in the past. It is a bottom up swing, as we highlighted in our last story, The Fifth Wave. Broadband, Wireless, Consumer Electronics, and other such trends are the forces of change. People are looking at folks like Microsoft and Cisco, when they should be focused on Qualcomm, Apple and Verizon Wireless.

You’re subscribed! If you like, you can update your settings

  1. One of the unsung heroes of this boom cycle will be the storage companies. These companies are not only planning ahead but are already seeing the results (the current growth rate in the midrange market has been 30%+ Quarter on Quarter), this despite the fact that the average density per disk is growing by factor of 2 every 2 years and the cost per disk dropping albeit at a slower rate. The good thing of staying out of the limelight will be that they can continue this growth and at the same time negate the speculation that comes with it, although I really wouldn’t mind some amount of speculation with the price of their shares ;)

  2. SATISH BHARDWAJ Saturday, October 29, 2005

    The article is totally misguided. There is no Tech Come Back. Microsoft did post strong results. But these strong results only show some 25% higher earnings on lower revenues. The Microsoft Share price is lower slightly. The reason is explained at

    The people have become so dependent on the applications. Companies have their own IT staff. But this IT stuff will n ot develop its own applications. Just use the applications developed by Microsoft and others like Oracle. What Microsoft results mean the losses at IT companies or lower revenue volumes for them. People have become lazy. They don’t mond paying the recuurring fees. Once I wote a letter to the Barron edidtor after reading an article in Barrons. Barrons published my letter although tried to justify the practice I attacked through an editorial note. It seems people are sold on the practicde of paying recurrent fee for the use of software developed by others.

    The practice has led to the proliferation of servers. All the IT people are complaing of high hardware and software costs. But these IT people will just not resort to inhouse programming although the outsourcing has made it all to easy to reduce the in house programming. In house programming does not have to mean your staff has to do your programming. It means the programming has to be specifically done for your company although by programmers not employed by your company.

  3. SATISH BHARDWAJ Saturday, October 29, 2005

    I totally disagree with the other Comment to the Article on “Tech’s B ig Come back. Of course the disk’s storage density is now theoretically higher. It does not mean that the disks are being used to capacity atleast so far as these disks are used for the servers. The technology has created the proliferation of servers. There is now a server needed for each application. Every Application needs a specific type of server. Then the server companies have servers that they want you to buy promising server efficiency. The result unused capacity because of the shift to a new server even if the server is not fully utilized.

Comments have been disabled for this post