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Tech Industry

Tech spending could crawl back to life

IT demand could pick up toward the middle of next year, according to a poll of chief information officers--a trend that could benefit Microsoft among a select few.

Tech spending could accelerate toward the middle of next year, according to a poll of chief information officers, a trend that could benefit Microsoft and a few select companies.

Fifty-one percent of the respondents in the poll conducted by Merrill Lynch said that information technology demand should pick up in the second or third quarter of 2003. Seventy-five North American and 25 European CIOs participated in the poll.

"A number of users pointed to aging equipment and a backlog of user requests for reasons why spending will improve," the study stated.

Microsoft, Cisco Systems, IBM and Dell Computer could be the main beneficiary of this trend, Merrill Lynch added, as all these companies were viewed as becoming more important to the internal operations of the CIOs' companies. Sixty-two percent of the respondents said Microsoft was becoming more important to their business.

By contrast, SAP, EMC, Hewlett-Packard, Sun Microsystems and Electronic Data Systems were seen as becoming less important. Thirty-one percent of the respondents, for instance, said HP was becoming less important, while only 28 percent said it was becoming more important.

Thirty-four percent said storage giant EMC is becoming less significant, compared with 22 percent who said the company is gaining in prominence. The "more important, less important" weightings have been predictive, sometimes, of future buying patterns, Merrill Lynch said.

Still, the future looks somewhat rocky. Although Microsoft had the strongest poll numbers of any company in the survey, reducing software costs was an issue respondents felt most strongly about. Large companies are increasingly using their power to negotiate lower software license fees. This past year, Microsoft has been embroiled in a controversy over its new licensing plan that effectively forces customers to accelerate purchases.