Fears of massive spending freezes on IT in the lead-up to the new millennium seem to have waned with Microsoft and its Australian partners predicting insignificant downturns in sales and dramatically increased spending in March 2000.
Jane Huxley, enterprise marketing manager for Microsoft Australia, said the revised position of analysts such as IDC and GartnerGroup, who now expect a much smaller downturn, more accurately reflects Australia's situation in terms of projected spending on IT in the face of the millennium bug. "The nuclear winter, or in our case summer, where companies freeze spending on IT, is not going to be as severe as some people originally projected," said Huxley.
Microsoft distributor Express Data's managing director, Ross Cochrane, agrees that initial projections were fear- inspired. "Twelve months ago people were predicting that the market would be very soft at the moment. It hasn't happened and time is running out for those predictions to come true," said Cochrane.
Huxley dismissed reports in the Sydney Morning Herald on July 27 attributing comments to Greg Maffei, Microsoft's chief financial officer, that suggested Microsoft would experience a cut in revenue growth of a third in the coming fiscal quarter compared to a year ago. "I don't believe he [Maffei] was referring to Microsoft's Q2 growth slowing down due to Y2K, but rather due to other factors such as declining PC shipments," Huxley said.
However, Huxley admits that some sectors of the market will be more troubled than others by Y2K spending freezes and does not dismiss the notion that a degree of caution will creep into IT spending patterns. "We are seeing a slow-down in ERP and mainframe expenditure but this is by no means reflected across the board," said Huxley.
Microsoft's enterprise customers may lock down IT spending during the November to March period but during that time Huxley expects to see a dramatic increase in development and pilot programs. "Spending on hardware and software will increase after March, making up for any decline during that period," explained Huxley.
Cochrane anticipates that any revenue lost to big corporations' conservatism will be covered by the growth in the small and medium market. "SMEs don't have a lockdown strategy, they aren't buying equipment, they're buying solutions because they don't have an IT department and any systems they already have need upgrading anyway. This is an opportunity for them," Cochrane said.
Express Data has increased its presence in this segment of the market with significant investment in its dedicated channel on the assumption that SMEs are driving the Australian IT sector. "Australia is primarily made up of SMEs who are looking at developing online trading operations, network infrastructure and Web applications," said Cochrane.
It now appears the fascination SMEs and large organisations have with Internet and e-commerce initiatives will override any downturn in software and hardware sales for mission-critical applications brought on by Y2K concerns. "Most companies have locked down their Y2K projects and if they haven't it's too late anyway," said Cochrane. "Because there are no more major initiatives in this area it frees up bandwidth for new projects," he added.
"They won't be modifying central applications but they are defi- nitely going to look at online trading opportunities."