Asian IT industry feels the heat
By Terho Uimonen and Rob Guth
TOKYO - Ask Srisakdi Charmonman what effect Thailand's recent economic nose dive is having on his business, one of the country's largest Internet service providers, and he will start off talking about air conditioning.
To cut costs, he now shuts down the air conditioners and most lights at night, forcing Internet KSC Group's workers, except for the help desk staff, to head home early. Hiring at the Bangkok-based ISP is frozen and the head count could drop nearly 20 per cent this year through attrition. Advertising has been cancelled, unless the company can barter Inter-net service for ad space, Srisakdi said.
"We are trying to cut costs in every direction," said Charmonman, adding that revenue this year will be half the level initially projected.
"It shouldn't have been this bad."
Throughout Asia, the recent freefall in currency and stock market values has cast an unsettling shadow of decline over the IT industry in a region where just a few months ago rapid growth seemed a given.
Market researchers, in turn, are scrambling to adjust their forecasts for IT spending growth rates in the region to reflect the unexpected economic slump.
"We have downgraded our spending growth rates since people obviously spend less in times of hardship," said Simon Barker, chairman of the New Century Group, a Hong Kong-based IT market research company specialising in the Asia-Pacific region.
Long range forecast
In Thailand, total IT spending this year is expected to shrink by as much as 10 per cent from last year's $US1.1 billion, according to a readjusted forecast from the New Century Group.
For the long term, however, Barker remains optimistic about Asia.
The region's IT market will soon return to more solid growth, he said. "All the reasons for spending money on IT infrastructure will still be there tomorrow."
But things might get worse before they get better.
A general slowdown in government spending - one of the biggest drivers of IT growth in many southeast Asian countries - is already making itself felt, while in some countries, other big consumers of IT equipment such as banks are also pruning back their computer and network deployment plans, observers said.
"Government spending has been cut down, but we do not know by how much," said Pichet Durongkaveroj, a top official in Thailand's National Electronics and Computer Technology Centre (NECTEC). He added that his organisation's IT infrastructure projects have not been hit by any cuts.
The effects of lower-than-expected demand are beginning to squeeze revenue drawn from the region by some major IT vendors. Cisco and NEC are among several blue-chip providers of infrastructure equipment that recently cited the financial chaos in southeast Asia as a reason for a reported slowdown in orders.
The turmoil is also resulting in lower-than-expected sales of PCs, as both corporations and consumers are finding it more difficult to justify buying a new computer, analysts said.
Dell leads in PC cybersales
By Wylie Wong and Cameron Tomes
SYDNEY - As PC vendors come to the conclusion that the only way to "move customised boxes" to end users is via the Internet, it's worth noting that Dell is dominating the online PC selling market in the US with about $US3 million in sales a day.
Sensing this growing trend, arch rivals Gateway 2000 and Compaq, which has a trusting bond with the channel, have also joined the fray.
In Australia, online PC sales figures are a little harder to come by. Compaq farms any "build-your-own-PC" enquiries out to its band of resellers, while Dell prefers not to release any local figures, and Gateway 2000 was last seen conducting a shameless stunt with cosmonauts on the embattled MIR space station who bought the first Gateway 2000 PC online. On a serious note, Gateway has recorded about 18,000 hits per month on its build-to-order service (www.gateway 2000.com.au).
Most major PC companies will market their wares online by the end of next year, with all of them getting online by the end of 1999, said analyst Chris Stevens at Aberdeen Group. And for good reason.
Electronic commerce sales will explode from an estimated $US10.6 billion this year to $US223.1 billion in 2001, according to figures released by IDC.
"It's not just tapping the growth of the Internet; it's an opportunity to steal market share from one another," said analyst Ted Julian at IDC. "What Dell is doing on the Web is keeping Compaq up at night," he added.
Is there a future for push technology?
By Ed Scannell and Martin LaMonica
SAN MATEO - While most corporate end users continue to push back on push technologies and other methods of electronic software delivery, most top-tier vendors still have an unshaken belief that it represents the future of software distribution.
Vendors see these emerging distribution mechanisms as a way to deliver software faster and, at the same time, reduce their costs associated with packaging and selling through the retail channel.
"From the vendors' standpoint electronic distribution makes it all look so simple and that they are being responsive to customers. But it is not dealing with the issue of complexity and bug fixes," says Paul Mason, a software analyst at IDC.
Who's doing what?
Meanwhile, push vendors are working their way into the application upgrade arena. Castanet, from Marimba, is a client/server system that updates client software on an as-needed basis by examining changes in earlier and later versions. When the client or Castanet "tuner" connects to the network server, or Castanet "transmitter", just the changes are downloaded to the client.
Resellers are also exploring possibilities to offer their own electronic distribution services. They, too, echo many of the same problems as analysts about why there is such reluctance among corporate accounts to receive software electronically.