Reply #13: Tech companies face another difficult year [View All]

http://news.ft.com/cms/s/eb812fd6-576e-11d9-a8db-00000e2511c8.html

A mere handful of big technology companies around the world stands to shrug off the industry's sluggish growth next year to record the sort of rapid expansion that once made the sector a magnet for growth-hungry investors.

Increased spending on some areas of wireless data equipment, low-cost services from offshore centres such as India, better computer security and more data storage capacity will boost the fortunes of businesses focused on these areas.

The success of the iPod digital music player is likely to leave Apple Computer as the only tech company with revenues of over $10bn and a growth rate of over 20 per cent, according to an FT analysis of expectations for the global tech giants. For most tech companies, though, the outlook is much as it has been for the past two years: a slow recovery in demand along with overcapacity and fierce pricing pressure.

snip>

That makes the long-awaited revival in demand from large companies all the more important though slowing corporate profit growth and rising interest rates would weigh on any recovery, said Mr Milunovich.

Despite the lack of a “killer application” to drive higher spending, trends suggest corporate demand will remain robust, said Peter Sondergaard, research director at Gartner. Those trends include the “virtualisation” of corporate data centres to make better use of computer resources; a drive by companies to outsource business processes; and a realignment of the software industry around fully integrated product “stacks” from companies such as SAP and Oracle.

more...