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EDITORIAL: Watch your back(side)!

EDITORIAL: Watch your back(side)!

I don't know about you, but I'm tempted to use some royal language and describe 2001 as IT's annus horribilis. So far, it has been nothing but a pain in the, errr, anus. And, if I didn't respect all things royal as much as I do, I'd go as far as to call it an anus horribilis. A "horribility" in our backsides.

Though it may sound like a scary growth in a sensitive place, biology won't help you here. Think about it in geographical terms instead. For instance, in January, Lucent sacked the equivalent of the entire population of Palau. It has just announced its second round of lay-offs, which will see another 15 to 20 thousand employees go. By the time the deed is done, the combined figure of Lucent's Les Miserables will allow for another handy, if euphemistic, analogy: the company will have sacked more than the entire population of Lichtenstein.

It seems as if the real reason the Yanks are relentlessly laying off staff is not the freakish "industry deceleration", but to finally learn their geography. I mean, it has to be good PR practice to quantify the number of "sackees" geographically, rather than numerically. It kills not two, but three birds with one stone: it makes market analysts happy, the newly jobless employees feel less isolated in their predicament, and the company gets to learn world geography. Now, how's that for efficiency!

Ah, yes - efficiency! That's what business - and especially business in the Internet economy - is about. Right? No, I'm not picking on Lucent here. All I'm saying is the Yanks have fooled us again! There is no crisis in IT. And no new, inexplicable, frightening economic phenomena worthy of an X-file episode. It's just that the "industry deceleration" has accelerated for some, but not for others. To paraphrase Harry Truman, a slowdown is when your neighbour loses his job; a rapid deceleration is when you lose your own.

So, for Borland, the industry outlook may not appear that grim. It has just posted its fifth consecutive profitable quarter. Similarly, EDS reports strong services growth, while France Telecom and its subsidiary Orange claim to have recorded a 33.3 per cent revenue increase, with mobile communications, Internet and corporate networks accounting for 60 per cent of the revenue.

Even Cisco agrees - it's all a matter of semantics. It has just released the first report on Australia's Internet economy, with Cisco's local MD, Terry Walsh, acknowledging the troubled vendor "cannot afford to let the poor perception ofa the Internet simmer away". According to the report, there is no evidence the Internet economy Down Under is slowing down. In fact, the current $28 billion-a-year Internet economy spend is expected to grow to $49 billion per annum by 2003-2004, with 77 per cent of businesses participating in the Internet economy anticipating higher growth.

Admittedly, playing around with words and numbers has a lot to do with what caused the pain in the industry's bum in the first place. Unrealistic market projections, refusal to accept that IT is part of larger economic context with its own rules and cycles, and a blind belief in rhetoric all played their role in forcing the likes of Lucent to learn some sad lessons in geography and world demographics.

Having said that, the role of the Internet economy, Internet technology, Internet business models, and other virtual concepts with very real effect on our body economic, is a lot clearer now than it was a couple of years ago. As the Cisco-commissioned report states, key issues - the potential to reduce prices, changes in market structures, competitiveness and productivity, and impact on employment, are all closely interconnected. And it's only natural that we saw its first and most radical incarnation amongst the first and most active participants of the Internet economy.

But while the IT anus might experience more horribility, it helps to pretend the annus horribilis is already behind us. A matter of semantics? For all I know, that may well be the case.


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