Budgets Budge, a Little
With 2004 budget cycles now under way, IT leaders say they will spend more this year than they projected at the end of 2003. A little more, anyway. According to a Forrester Research survey of almost 900 North American companies, IT spending will be up 2.4 percent this year over last. Companies had predicted only a 1.7 percent average increase as 2003 wound down, but higher spending by finance and insurance companies, as well as retail and media firms, raised the overall average. Those industries raised IT budgets by 4 percent, while, at the opposite end, manufacturers raised them by a mere 0.1 percent. Enterprise portal software topped the list of technologies most likely to benefit from increased IT spending, followed by wireless networks and content-management software.
A survey conducted in March by Financial Executives International and Duke University's Fuqua School of Business found that 75 percent of companies plan to increase IT spending, with the average increase pegged at 4 percent. Capital spending will rise by an average of 11 percent, so IT expenses are clearly still under pressure.
Terrible Things to Waste
While improving PC sales (see the related story that follows) are good news for the companies that make them, what about the rest of us? For every new machine being unpacked at work or at home, an old one may be headed for the trash. That adds up — to a toxic mess. So much so, in fact, that the Silicon Valley Toxics Coalition continues to sound the alarm about the environmental impact of all those old boxes and monitors.
The group issued its most recent Computer Takeback Campaign report card last month, and it's clear that grade inflation is not a problem. Computer companies were clustered into four groups: beginners, trailers, "still at the starting gate," and benchwarmers. Hewlett-Packard, Dell, and NEC qualified as beginners, the highest grade awarded, because they address multiple aspects of the environmental threat (first-place HP), or have launched new recycling programs (second-place Dell, which climbed from last place), or have worked to reduce toxic chemicals (third-place NEC). As the report card was released, both HP and Dell announced they would do more to foster recycling efforts and absorb a greater share of the costs. The issue is complicated by differing state laws and such issues as who, ultimately, should pay: makers of new machines or makers of the machines being discarded — a major issue as market share shifts away from some companies, such as IBM, and toward companies like Dell.
The trailers include IBM, Sony, Toshiba, Apple, Philips, and Lexmark. Many of the remaining companies received failing grades last year and refused to participate this year, although Gateway and eMachines said they are developing recycling programs.
Has the PC War Been Won?
Even as PC companies cope with environmental concerns, they have other battles to fight; namely, the one for market supremacy. As one sign of how difficult that fight can be, consider Dell: the company saw its revenue rise a remarkable 22 percent for the quarter ended April 30, but concern over its shrinking profit margins (from 18.3 percent in the same quarter last year to 18 percent this year) caused its stock to fall by about 3 percent.
However, says market research firm Techtel Corp., "Dell has won the war for PCs" in the business sector. Market-share stats bear that out, with Dell commanding 18.6 percent to Hewlett-Packard's 15.6 percent, according to an April report from IDC.
Will the battle now shift to printers? Dell CFO Jim Schneider says the company's nascent printer business, a partnership with Lexmark, has been "stronger than anticipated," although HP remains the overwhelming market leader. Printers are a profitable business primarily because of the high markup on replacement cartridges, and Schneider says Dell was pleased to see that one in four printer buyers opts for an additional ink cartridge.
Is the digital age financed by high-priced ink? Maybe we should be thankful that the "paperless office" has yet to materialize.
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