News and Analysis to 16th October 2003
Merrill Lynch gets frosty on market recovery
Having
promised us a mild recovery last month, Merrill Lynch has reviewed its IT
recovery forecast to H2 2004 or beyond. A more recent survey of 50 CIOs from
large US end-user organisations concluded that recovery in respect of IT
spending, particularly in respect of services, will lag that of the broader
economy. A significant number of CIOs said that their spending will remain at
current levels for the indefinite future. The Tech Sector will become
increasingly brutal as the players fight for what little business there is.
India responds to outsourcing backlash
Negative feeling within the US towards the exporting of IT
and other well paying jobs to cheaper countries is running high. India
recognising this has, through its IT trade body NASCOM, produced a report that
shows how outsourcing will in fact increase the competitiveness of US companies
through cost reduction. Outsourcing will also help with the impending labour shortage
caused by an aging population. This reality should be of no surprise. If a
computer or a lower cost and smarter offshore alternative can replace you then
it will happen. This is the new reality. The West needs to give serious thought
as to where it plans to sit in the value chain and make the necessary changes
now at school, university and employment levels to ensure that it is not
providing offshore services to the emerging economies in 50 years time.
Californian Governor plans to print money
The people of California have taken a chance on voting in
Arnold Schwarzenegger as Governor. Watching from abroad one could say that
those impressionable folk have opted for style over substance. But that doesn’t
appear to be the case. Arnie, acutely aware of the substantial budget deficit,
has taken a rather lateral approach to solving the problem by appointing HP
leader Carly Fiorina to his transition committee. Possibly he has heard that HP
is the world’s leading printing company and thus plans to resolve the dollar
shortage by ‘leveraging’ HP’s technology.
IBM dominates outsourcing
Traditional outsourcing (onshoring?) looks to be a healthy
pursuit for at least the next 4 years. IDC sees the market growing annually at
almost 8%. The research firm claims that the current market is worth circa
$70bn and that IBM owns almost a quarter of it. EDS came second with 16%. Then
came CSC, then Fujitsu and in fifth place HP. Accenture is also enjoying
healthy growth in this arena as it morphs itself out of highbrow consulting.
Microsoft facing security backlash
Microsoft, despite its woeful security record, has managed
to fend off customer dissatisfaction through its well-worded end user license
agreement (EULA), which users must accept as a condition of using the software.
But now there are signs that a class action suit is bubbling in California. The
plaintiff claims that as a result of Microsoft’s unsecure software, hackers
were able to steal her personal financial details (identity theft). The legal
case is being built around the restrictive nature of the EULA. The migration to
an online world is inevitable; the migration to an online Microsoft world is
quite possible. Hopefully this case will give Microsoft the incentive it needs
to go back to the drawing board and reengineer its products so that our online
future will be a secure one.
IT industry braces itself for cancer claims
Never mind RSI or backache from lugging laptops, the
possibility exists that IT can give you cancer. Three IBM workers plus the
family of a deceased worker are taking legal action against their former
employer, claiming that they were exposed to dangerous chemicals through their
work in the ‘clean rooms’ where electronic components are made. According to
the prosecuting lawyers IBM’s records show that over a period of years, clean
room workers developed more of certain types of cancers and died younger
relative to the rest of the population. The outcome of this case could trigger
many more such claims, with potentially enormous financial implications for the
industry.
Monkeys driving brain-machine interface
Scientists at Duke University in the US have taught monkeys
to control a robot arm using thought. The experiment involved connecting up the
monkeys’ brains with electrode sensors whilst teaching them to control a cursor
on a computer screen using a joystick. The experiment was extended to change
the cursor into an icon of a robot’s arm representing a physical robot’s arm
situated in another room. Finally the joystick was removed and for a while the
monkeys continued to use the ‘air’ joystick, before putting down their arms and
manipulating the robot arm using thought alone. The scientists believe this
discovery could be used in developing prosthetic limbs. Hopefully the
scientists will ensure that these limbs do not cause the users to involuntarily
scratch themselves. Grooming one’s mates down the pub could also prove
embarrassing.
Oracle takes a shine to Sun
Tech Sector bad boy and CEO of Oracle Larry Ellison used the
platform of the annual shareholders meeting to reiterate the commitment to grow
by acquisition. The recent attempt to acquire PeopleSoft appears to be running
out of steam, what with legal hurdles, poison pills and a high price tag to
negotiate. The Oracle ‘game hunter’ appears to be training his cross wires on
Sun Microsystems. Overweight and directionless, the prey looks vulnerable.
Though it is not obvious what the value would be to Oracle, unless Oracle had
aspirations for becoming the next IBM.
