How the meltdown will impact on tech, or not

23 Sep 2008

Just how will the financial meltdown affect the tech sector‾

With the best and brightest still battling to prevent the collapse of the world financial system, now may not be the best time to answer. But that hasn't stopped many from trying.

The FT reported that demand had fallen dramatically for electronic components. Japanese manufacturers predict sales of high-end parts for handsets, flatscreen TVs and other devices will be soft until the end of 2009.

FT also picked up on a research report that predicts the UK ad market will grow just 18.5% in 2008, compared with 28% in 2007.

Silicon Valley legend Bill Hambrecht told GigaOm that the worst of it for the tech sector was the reduced number of underwriters for IPOs. "I don't think it will have much of an impact on Silicon Valley as an operating entity," he asserted.

Wired/Portfolio blogger Kevin Maney agreed. "Tech IPOs have been essentially dead for the past couple of years anyway."

The fall of the investment banks would have a flow-on effect for IT vendors, noted the Guardian, anticipating a fall in headcount and, possibly, heightened interest in open source and cloud computing. Cnet columnist Dan Farber safely predicted consolidation among IT firms.

In a rare piece of actual reporting, Data Center Knowledge gleaned that Barclays had paid $330 million for two Lehman Brothers data centers.

Indian outsourcing firms were careful to play down the impact on their own business, where up to 40% of sales come from the financial sector. "[T]he Lehman Brothers episode will not have any impact on Satyam," said India's fourth-largest IT services firm.

Nielsen said the financial crunch would encourage even more Americans to cut the cord. Some 17% of US households are wireless only, up from 4.2% in 2004, and that's expected to rise to 20% by year-end. avoided speculation confined itself to imparting timely advice, with "9 Tips on Taking Control of Your IT career in the Face of Layoffs".

Ovum said it was "business as usual" for European cellcos.

"Apart from isolated cases, the operators are more susceptible to their usual competitive dynamics than to any credit crunch."

That's because mobile services have become quasi-utilities that people can no longer do without. Secondly, to offset declining voice revenues, operators are turning their focus to non-voice services, with mobile broadband becoming a big hit for them.

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