We can only be sure of uncertainty

As we ease into the summer holidays and thoughts turn to weather forecasts and Ashes cricket, many IT leaders will be trying to forget about the economy for a few weeks.

Depending which newspaper you read, and which day of the week it is, green shoots are either emerging, or there are clearly no green shoots emerging. When even The Economist magazine writes an article titled “What went wrong with economics?” as its cover story, you rather get the impression that even now, nobody really knows what will happen next.

So all you can do is look at the facts we know, and in the middle of the latest IT industry financial reporting season we can at least see how the tech sector is changing.

IBM, the biggest bellwether of the lot, seems typical of the trend. Its latest quarterly results showed sales down 13 per cent, but profit up 12 per cent. Intel made another loss, but one that was much less than Wall Street expected. Dell, however, saw revenue drop 23 per cent and profit fall 63 per cent as the PC and server markets continue to suffer.

Every major IT supplier is going through a fundamental rethink of its operations, and a re-focus on profit even as sales decline. Sadly, this has led to tens of thousand of job cuts, but will result in a sector whose structure more accurately reflects that of a mature industry aligned for single-digit growth.

Dell in particular has suffered from the slump in capital spending, and the move to IT purchased from operating expenditure is only going to accelerate, bringing good news for proponents of cloud computing ­ – and perhaps increased interest in technologies such as Microsoft’s forthcoming Azure platform and Office 2010 web applications.

For now, uncertainty remains the only certainty. But the lessons of this recession for IT vendors and IT leaders alike will leave the sector in better shape to exploit the recovery –­ whenever it comes.