THE GLOBAL downturn is an opportunity for strong and innovative IT firms and is not a disaster for the industry, according to Arnold Schwarzenegger.
“Some might say that this is the worst time for a big trading show like this, but they could not be more wrong,” the governor of California told other politicians and industry leaders in Hanover, Germany, at the opening of this week’s CeBIT tech fair.
“Losers whine but winners move forward in a strong and powerful way,” he said at Europe’s biggest tech fair, which has suffered a fall in vendor numbers of a quarter this year.
California, home to the Silicon Valley IT industry hub, is CeBIT’s official partner state and Schwarzenegger came to CeBIT with about 50 firms. He was joined by German chancellor Angela Merkel, who urged companies to spend more money on innovation.
“There are very secure future investments and for me those lie in the sector of information and communication technology,” she said.
The German government has earmarked €500 million for the IT sector as part of its €81 billion stimulus packages.
SAP, with headquarters in Walldorf, Germany, is the largest European software enterprise. Its co- chief executive Leo Apotheker said the industry welcomed the gesture but had hoped for more. SAP, the world’s biggest maker of business management software, announced in January it would cut about 3,000 jobs – a first in its history.
“The macroeconomic situation is not good,” Apotheker said, but warned that too enthusiastic cost cuts during a recession were dangerous.
He said SAP would increase its spend on research and development despite the crisis and would spend about 14 per cent of sales on RD in 2009, an increase on its long-term target of 12-13 per cent.
“We’re going to invest more in our own research, it’s our top priority at this time,” he said.
Software makers as well as IT services providers argue that their products help clients improve efficiency and save money while telecom groups say people are loath to skimp on phones.
Vodafone German head Friedrich Joussen said outsourcing was a topic in almost every conversation with business clients.
Reinhard Clemens, who heads Deutsche Telekom’s business client unit T-Systems, said that in a crisis, customers were reluctant to invest in completely new projects but were focused on cost saving.
The chief operating officer of internet-calling company Skype said it was confident of maintaining its growth in customer numbers of about 30-35 million a quarter. Scott Durchslag said the telecommunication industry had been affected by the global crisis but not as much as other industries.
“The underlying need to communicate is pretty much intact,” he said. “When people come under cost pressure, as is the case now, Skype offers an effective way to save money.”
Industry giants Microsoft and Intel are slashing jobs but are also vowing to beef up investments.
“My firm belief is that technology and innovation will help stabilise the current macroeconomic environment but also help rebuild it,” said Kevin Turner, chief operating officer at Microsoft. – (Reuters, Bloomberg)
