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Does IBM signal strength for tech spending?

Sure, the company posted some good numbers, but it also signaled a softening in IT expenditures.

On a day when the stock market continued its race to the bottom, IBM showed resilience by posting a 20 percent gain in its third-quarter net income. Much of the growth and strength derives from "international diversification, especially in emerging markets, and its emphasis on signing long-term services contracts, which account for more than half its revenue."

Like Red Hat with its growing hoard of deferred revenue, IBM has been thinking long-term and it's paying off.

Unfortunately, IBM also reported slowing revenue growth, which isn't a good sign for technology companies. Analysts expected a 10 percent boom to $26.54 billion, but IBM instead delivered a five percent boost to $25.3 billion.

It could be, as SAP's US president suggests in a Wall Street Journal article, that this reflects a momentary stumble for technology as CIOs take a wait-and-see approach to the near-term financial crisis.

Then again, maybe not. According to a recent survey of 1,000 CIOs from the CIO Executive Board, 61 percent indicated that they're re-evaluating 2009 IT budgets, with 59 percent putting all nonessential projects on hold. Given that these "nonessential projects" may well include SAP's ERP systems, an IT spending freeze may be broad and deep.

I remain hopeful, however, that this market turmoil will benefit value-driving open-source companies. For the next few weeks we're going to sputter but I think once we reach some semblance of a bottoming out of the market - no matter how bad or how low it is - CIOs will spend on software that is already proven (that is, download and try before you buy) and comes with no long-term commitments.

Click here for ongoing coverage from CNET News, 'Tough times for tech'