Lean Times for Hardware


So just how bad will things get for hardware manufacturers? Pretty bad, according to the latest research, but not quite as bad as the tech bust in 2001. And by 2012, things should be approaching normal again.


It's always difficult to predict future trends in technology buying. But it is pretty clear that the IT industry will not get through the recession unscathed. IDC has cut its forecast for worldwide IT spending growth in half, expecting a paltry 2.6 percent year-on-year growth from 2008 to 2009. Just a few months ago, before the financial crisis hit, the company expected 5.9 percent growth. Its estimate for the United States is particularly weak, just 0.9 percent, compared to an earlier estimate of 4.2 percent.


For those of you who glean more information by reading the tea leavers, some of the specific company numbers aren't too encouraging either. Douglas McIntyre over at bloggingstocks.com looked at Intel's recent announcement that it was cutting its fourth-quarter revenue by a cool $1 billion and concluded that corporate buying will be as weak as consumer buying this winter. Considering Intel chips are the heart of the vast majority of enterprise boxes, this will have ramifications far beyond Intel's own bottom line.


And the big headline at the end of the week was Sun's decision to cut up to 6,000 jobs off its payroll, pointing to the weakness in the company's hardware businesses. On this one, though, it's hard to lay it directly on the economy considering Sun has been posting losses and losing market share practically the entire decade.


But as I said, things are never as bad as they seem. And just as every boom lays the seeds for the eventual bust, every bust shows signs of future recovery. In this case, we can take heart in several of the points listed in this article on Webwereld, namely, that we've been through worse before and enterprise data and storage needs will continue to rise no matter what the economy brings.


The simple fact is that perpetual growth is never good for the economy. It makes industry fat, lazy and inefficient. As harsh as they are, recessions tend to weed out the weak and sharpen the competitive edge of those who survive, resulting in a leaner, more productive environment when the good times return. And they will.