IT Spending News Is a Reality Check

By John Taschek  |  Posted 2001-11-12 Print this article Print

Contrary to popular opinion, IT is not in a meltdown. There are fewer companies out there to do IT buying and all of our egos may have been fractured, but we're still doing all right—or we will be fairly soon.

Contrary to popular opinion, IT is not in a meltdown. There are fewer companies out there to do IT buying and all of our egos may have been fractured, but were still doing all right—or we will be fairly soon.

Thats the news from Techtel (, a company that for 17 years has surveyed what companies have actually bought, rather than what they plan to buy.

Obviously, the news isnt all rosy. It appears that enterprise spending has taken a 14 percent dip in the quarter ended Sept. 30, although overall IT spending has remained flat. The reason: Instead of purchasing large-scale servers, storage boxes and accounting systems, companies are buying more PCs and lower-end goods. Thats great news for PC vendors with corporate accounts, but the enterprise vendors are hurting.

Take the database and application server space, for example. It appears from Techtels surveys that companies buying databases and app servers deferred purchases en masse. One reason, said Mike Kelly, Techtels CEO, is that a massive misuse of supply was created when companies overpurchased products because their CEOs thought they would grow.

When the CEOs and CIOs realized that growth occasionally depends on revenue, they cut off new purchases but kept them under consideration, which is far better than canceling them outright. Companies are deferring purchases, but theyre still considering them, priming the enterprise space for a re-emergence. Kelly believes the next two quarters will be tough, but after that, sales of databases and application servers should boom.

But it will be a different world. Kelly said in the application server space, specifically, IBMs WebSphere has rocketed ahead of its competitors in terms of awareness and overall positive opinion. IBM is also doing well with DB2. Meanwhile, Oracle, after suffering in opinion polls over the last year, is coming on with a vengeance, especially with Oracle9i.

The survey shows competitors in the space are dropping off. Apparently, vendors have been unable to connect their products to the issues and problems companies face right now. If this connection remains severed, those vendors will be short for this world.

What are IBM and Oracle doing right? Write me at

As the director of eWEEK Labs, John manages a staff that tests and analyzes a wide range of corporate technology products. He has been instrumental in expanding eWEEK Labs' analyses into actual user environments, and has continually engineered the Labs for accurate portrayal of true enterprise infrastructures. John also writes eWEEK's 'Wide Angle' column, which challenges readers interested in enterprise products and strategies to reconsider old assumptions and think about existing IT problems in new ways. Prior to his tenure at eWEEK, which started in 1994, Taschek headed up the performance testing lab at PC/Computing magazine (now called Smart Business). Taschek got his start in IT in Washington D.C., holding various technical positions at the National Alliance of Business and the Department of Housing and Urban Development. There, he and his colleagues assisted the government office with integrating the Windows desktop operating system with HUD's legacy mainframe and mid-range servers.

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