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9/11 affects the tech economy

The Consumer Electronics show set records this year, underscoring the strength of the consumer side of the tech business. Comdex’s recent failure shows softness in B2B tech. 02/01/14 ReleVents hed: 9/11 affects the tech economy dek: The Consumer Electronics show set records this year, underscoring the strength of the consumer side of the tech business. Comdex’s recent failure shows softness in B2B tech. by James Mathewson

Yesterday I had one of those inspiring conversations that happens to me a couple times a year, at best. The owner of our company, Vance Opperman, and I sat down to talk about the tech market. He asked me what new technologies would drive business productivity this year. While I wanted to paint a positive picture of the coming rebound in business technology spending, everything I rattled off on the business side seems stuck in a rut. Insanely fast processor speeds and new client OSes are not enough to coax upgrades. Itanium and 64-bit technology seems like an expensive proposition to many CIOs when all the numbers come in. ASPs are struggling mightily. CIOs are waiting for .Net stability before committing to new B2B Web initiatives. The only bright spots are storage, security, and wireless LANs. Otherwise, everywhere you look it’s like walking the floor at 2001 Fall Comdex: Lots of empty space and scaled-down exhibits.

In contrast to the outlook on the business side, the conversation did get animated when we started talking about the consumer side. Handspring’s Treo and many similar PDA/Phone combinations underscore the importance of staying connected wherever you are. A slew of voice products–recorders, transcribers, translators, VR products–are near the threshold of viability. (The threshold is not a lot closer than it was two years ago, for reasons that I’ll make clear in my March Insights column. But commercial applications are still hitting the streets.) Everything wireless, small, and gadgety is hot right now. Digital cameras, DVD players, and music accessories led an otherwise flat holiday sales cycle. Everywhere you look on the consumer side it’s like walking the floor of this year’s CES: a hall full of buzzing booths, where the people push aside the spokesmodels to see the new toys.

As reported on BusinessWeek’s Tech section, CES participation reached record levels this year, which shouldn’t be a surprise. In contrast, Comdex had 10-year lows in participation (adding exhibitors and attendees). Sept. 11 had some effect, but considering that the shows were just eight weeks apart, the bigger influence is the market. Hugely profitable businesses are taking a wait-and-see attitude to upgrade to Windows 2000 while consumers are borrowing against the equity of their houses to buy new surround-sound HDTV systems with satellite dishes and DVD camcorder/burner/players.

This is the puzzling feature of the dual nature of the tech economy. Layoffs and pay cuts should have drastically reduced consumer confidence. The money companies saved from restructuring should have stimulated back-end automation and improved intelligence sharing within organizations. Yet the exact opposite is manifesting itself. Companies are tightening their purse strings while consumers can’t wait to spend money they don’t have. No compelling reason for this phenomenon jumps out at me, other than the often-cited “cocooning” factor brought on by 9/11. CIOs see the tragedy and say: “That could happen to my company. I’m going to spend most of my budget on mundane things like disaster prevention and security. What good are all these new initiatives if everything we do could go up in flames tomorrow?” Consumers see the tragedy and say, “I could die at any time; I’m going to enjoy life right now and worry about tomorrow when it comes.”

James Mathewson is editor of ComputerUser magazine and ComputerUser.com.

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