Thursday, 18 September 2008

So, which forecasts do you want? The optimistic ones or the realistic ones?

For nine months now, since the end of 2007, I’ve been warning readers that our sector is in for a downturn. I’ve warned of no real growth in 2008 and a real decline in 2009. For almost all of that time I seem to have been a lone voice amongst analysts. Indeed, yet again, I’ve been branded ‘too gloomy’. Those same critics have short memories. They accused me of being ‘too gloomy’ in the run up to the last downturn. As it turned out I was not gloomy enough. It seems a shame that my critics do not look at my track record. Risking being accused of 'blowing my own trumpet' (again) I think my trend forecasting record as an analyst is second to none.

It almost seems as if people want to believe the most optimistic forecast – regardless of the track record of the forecaster.

Getting market forecasts right really is a matter of life and death. As I have said before, people die on the fells here in the Lake District when they ignore the weather forecast and go out unprepared for the changing conditions. Likewise I have seen IT companies go bust simply because they ignore market forecasts, increaseing overheads (property, staff etc.) and then running out of cash when the market conditions turned against them. Any trip down the M4 will give witness to the still vacant tech parks built in the late 1990s in anticipation that the Y2K and boom would continue unfettered.

I won’t repeat all my warnings yet again. I won’t even repeat my lists of the type of companies that will fare badly – and, of course, the companies which will actually benefit from these chastened conditions. You can re-read them in the HotViews archives anytime you want.

What, I suppose, really does ‘get me’ is that it would seem that so many others observers seem to have suddenly caught up with this thinking. If you read Businessweek 16th Sept 08 Tech no safe haven or the FT 17th Sept 08 Tech industry faces tough times (both excellent articles, by the way!) you might be forgiven in thinking that the forecast downturn has only occurred in the last week. Of course the Lehman collapse etc has had a detrimental effect. As George O’Connor from Panmure Gordon reported yesterday “Matt Bienfang, senior research director of TowerGroup estimates that “Between Bear, Lehman and Merrill you’re talking about 4-5% of the entire industry spend on technology."” But the downturn was pretty clear well before that happened.

You may remember that I had a very public ‘disagreement’ with a presenter from Forrester at the Regent Conference in Feb 08 when he forecast ‘double digit’ IT growth for 2009. I was prepared to take any bet at any odds for this happening but even the guy making the forecast wouldn’t take up the challenge! This week Forrester has reduced its 2009 forecast to ‘just’ 6.1%. I’d take bets against that happening too and I’d strongly advise readers against basing any business decisions on that happening either.

Sorry to say this, but if I was to revise my "2% decline in real terms in 2009" forecast right now it would be, in the words of my critics, to make it even more gloomy.

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