DAVOS: Technology executives have been scrambling to tone down expectations for 2003 after hard-learned lessons that their customers cannot predict the future.
From Microsoft's Bill Gates to Michael Dell, the founder and chief executive of the world’s 2nd largest personal computer maker, few are prepared to predict a recovery in global demand for technology after the Internet bubble burst.
“There’s no big uptick,” Gates told the World Economic Forum.
“It’s OK, but not good,” said Dell.
Many of the CEOs of the world’s largest technology companies have spent the past week in this Swiss ski resort, host each year to some 2,000 political and business leaders.
The corridors have been full of talk of war on Iraq and the sluggish US economy. But technology executives have been taking the pulse of their market, often in back-to-back meetings with customers, ranging from aircraft manufacturing bosses to the heads of global retail chains.
John Chambers, chief executive officer of US network equipment maker Cisco Systems, who prides himself on being close to his clients, stressed the volatility of the short-term outlook.
A sales uptick like the one seen last spring, and which was widely seen as the beginning of a recovery, was followed by a slowdown after the summer. This was the reason Scott McNealy, CEO of US-based network computer maker Sun Microsystems, which had a better-than-expected October-December quarter last year, was hesitant to call a trend.
“Anybody who thinks they can forecast has been proven dead wrong,” he said.
Infineon Technology's Ulrich Schumacher, CEO of Europe’s 2nd largest chip maker, who last year predicted that 2003 would be hard to spoil after the industry’s worst-ever downturn, now said: “In Europe at least in 2003 I’m not very optimistic.”
Some executives grumbled that the looming war in Iraq put a reward on being cautious.
To be on the safe side, most companies said they had tightened their belts and were investing even less in new technology compared with 2002 when many cut their capital investments sharply.
KT Corp., South Korea’s largest fixed-line telecoms and broadband company, will cut investments by up to 10%, in a move that is typical for most telecoms companies.
Eric Benhamou, CEO of handheld computer market leader Palm, forecast modest growth in IT spending and a slight decline in telecoms investments.
Top 10 chip makers like Intel, ST Microelectronics and Infineon, which are among the world’s biggest spenders on new technology together with telecoms carriers, have already said they would trim budgets or keep them flat at best.
Cisco’s Chambers voiced the new reality when he said that “tech for the sake of tech is over.”
And Carly Fiorina, CEO of the world’s largest computer maker Hewlett-Packard added that “this focus on value will be long-lasting.” She said she could see no recovery in the US economy yet. – Reuters
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