Tech customers seek lower-specs in a recession

The lay-offs continue among the world’s top IT companies, some of which have reported a slow down in growth or even a loss for the first time in their history.
It’s all going horribly wrong for the ‘brave new world’ we live in and no one really knows where it will all end.

Microsoft has announced that it will cut up to 5,000 jobs, after posting a drop in net income of 11 percent, for its second quarter to end of December. Yahoo announced that it will cut 1,000 jobs as part of a realignment of its 14,300 staff to focus on growth areas. IBM’s “restructuring” will lead to up to 13,000 redundancies worldwide, and the aim is to make the company more focused in the long-term.

Still, conflicting reports emerge eveyrday. Some seemingly good news, like a projection that 35 million ‘netbooks’ will be sold in 2009, then a piece of news reporting a 34 percent drop in the sale of graphics processors (GPUs).

A quick deduction that could be made from these two particuar pieces of news is that people want to buy cheaper notebook PCs, ones that don’t neccessarily have graphics processing power. And that’s exactly what you would expect in a recession!

Go ahead, examine the news coming out of the IT indutsry and you shall see a trend that suggest users will still want to buy products, but they want them to be lower-end, lower-spec, just about enough features to get by.

This trend will have devastating ramifications to all companies who only have a high-end or luxury offering, and do not allow customers to drop down a level or two in the product range.

Here’s more proof. The switch from regular (analog) TVs to fully digital TVs is being halted, or rather postponed, in the US. For several years now, all the TV networks have been gearing up for digital transmission that would render the good-old roof antena obsolete. And, would require households to acquire digital-transmission ready TV sets.

Considering the drop in the prices of the latest LCD TV units, which now adorn almost every home I go to- except mine- it would seem perfectly reasonable that the switch to digital can continue. Wrong. The US government has decided to relieve the average American of the burden of having to buy a $500 TV! So, high-spec technology suffers again, waiting for the world economy to improve!

So what technologies or products will be recession prrof? A couple of weeks ago we predicted that mobile phones, digital cameras, game systems and laptops would still grow in sales. The question now is which models and at which compromise to overall quality and performance. We’ll see.

zanasser@gmail.com