Happy New Year! For IT, Enterprise Software Markets, 2008 Is Over

Dennis Byron

In my last post, I took a historical perspective on the relationship between previous stock market "corrections" (as measured by peaks and valleys in the Dow industrial average) and the fortunes of IT managers and staffers. In addition, each of these previous "breaks" had watershed meaning in terms of the IT market itself. That's not coincidental, but tying them together in one blog post got pretty long-winded.

From an IT market perspective, here is what each of these previous "breaks" meant:

1974 and next few years --

  • Dow fell 45 percent to bottom of a 20-year range (for more details, see previous post).
  • There was very little effect on the IT market directly tied to the 1970s financial crisis, although the shakeout that marked the end of the mainframe era and the beginning of the minicomputer era started around the same time. For every RCA that bit the dust, there were 20 Data Generals that rose up to take its place.
  • Perhaps enterprises were looking for more cost efficiency, because of the recession, thereby hastening the mainframe-mini transition. But odds are the switch from mainframes to minis in the enterprise would have happened anyway (minis had been popular for a decade in academia and scientific applications). The minicomputer revolution was as much about freeing IT from the room with the raised floor as it was about cost savings.

1987 into early 1990s --

  • Dow fell 23 percent in one day in October 1987, and 31 percent from its 1980s high over that week.
  • From an industry point of view, this was the period when the PC began to take over from the dumb terminal on the desktop. But only about 1 in 20 employees had either his or her own desktop (higher in financial services, lower in manufacturing). Personal, consumer-like use of PCs also began to take off, somewhat mitigating a downturn in IT spending by enterprises.
  • The key architectural buzzwords and their related benefits were
    • object-orientation/re-use
    • client-server-computing/services-orientation
    • all variations of the word networking (which became internetworking which became simply the Internet)/24x7 connectivity
  • Notice that the buzzwords have changed but we're still looking for those benefits.

2001-2002

  • In October 2002, the Dow fell 38 percent from 1990s highs
  • Commodity, mostly Wintel PC went into the server closet and began to replace the remaining mainframes in the server farm; proprietary hardware passed away. The Internet came onto the desktop (but still in a PC).
  • Packaged software was king, although a back-to-the-future movement to run software off-premise, by IT suppliers called application service providers, took a run at the packaged software industry, only to fall to the dot.com bust

If you are noticing that history repeats itself, you're getting the point of my opinion. In two succeeding posts I will blog on the implications of this historical perspective for both IT guys and the IT market in the near-term (2009-2010) and the long-term (2011-forward).

 

As for 2008, the year is over. Enjoy the year-end holidays. Start thinking about next year.



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