Overlooking this sector?ö?ç?ûs solid performance would be a mistake.
Amid all the focus on consumer social networks and possible takeovers of big portal companies such as Yahoo, it's easy to overlook the new products, services and healthy financial results of companies in the B2B space.
Yet overlooking those results would be a mistake for several reasons. First, if the nervousness about a U.S. recession becomes justified, it will be B2B companies rather than consumer businesses that will provide the foundation for a rebound. Second, consumer social networks have yet to find another revenue model beyond advertising, while B2B companies can still rely on selling real products to customers.
Consider the following: Among tech companies recently reporting strong financial results are IBM and Hewlett-Packard.
While I'll leave it to financial analysts to dive deep into the results, two aspects are clear. The most apparent revenue driver has been international sales. In its most recent results, HP noted that 69 percent of its revenues now come from international sales. Those revenues will provide a cushion from a U.S. recession, but more important, they illustrate the worldwide nature of the business technology market.
The rise of those revenues also should create something of an alarm bell for U.S. technology executives, as it indicates a substantial tech infrastructure taking place overseas while domestic companies cope with trimmed budgets in anticipation of an economic slowdown.
The second aspect of the healthy results from IBM, HP and other B2B vendors is the realization among customers that the current state of new products offers some real advantages over the existing, aging infrastructure.
If a customer is going to enjoy the economic benefits of virtualization, storage networks, mobile applications, cloud computing and blade servers, that customer has to make a decision to largely replace the systems that are more than 5 years old.
One of the harsher truths about technology investment is the need for regular, planned turnover of your fundamental servers and data networks if you're going to get the benefits of rapid technology innovation. The current capabilities of new systems have moved from the hype curve to the reality curve in getting real benefits from tech investment.
Currently, the pace of new products and acquisitions is very strong in the B2B space. I'm not sure why that is, but I suspect it reflects the fact that companies formed following the dot-com bust earlier this decade are now ready to enter the market??Ãplace by themselves or through acquisition.
Whatever the case, while reading about Yahoo or Facebook is fun, you really should be paying attention to the companies that are actually selling products and services to make your company run more profitably and efficiently.
Since 1996, Eric Lundquist has been Editor in Chief of eWEEK, which includes domestic, international and online editions. As eWEEK's EIC, Lundquist oversees a staff of nearly 40 editors, reporters and Labs analysts covering product, services and companies in the high-technology community. He is a frequent speaker at industry gatherings and user events and sits on numerous advisory boards. Eric writes the popular weekly column, 'Up Front,' and he is a confidant of eWEEK's Spencer F. Katt gossip columnist.