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March 09, 2005

Another take on Nasdaq's anniversary

Amey Stone

On March 10 it will be five years from the day the Nasdaq peaked at 5,048 (it's now 59% below that level). Let's take a look at how companies' attitudes towards information technology has changed since then. (Yesterday I looked at how investor attitudes have changed since the tech bubble burst.)

Peter Cohan, an author, management consultant and one of my favorite sources, has written a paper on IT spending that has two major themes, neither of which are very optimistic for tech stocks.

First, IT departments are much tighter with their cash, demanding to see a return on investment before buying, but rarely going back and checking to see if expected outcomes were achieved. Second, companies see few exciting IT developments on the horizon. When Cohan asked IT execs if the have seen anything exciting lately in sales pitches from vendors, one exec said, "Not much." Another responded, "Nothing earth-shattering."

Cohan agrees that no new revolutionary advance that will propel tech spending is imminent. But he does think there are at least three exciting tech developments that will be widely adopted and eventually save executives a lot of time. They are:

- The Semantic Web. Cohan describes it as an extension of the current Web, where machines will be able to communicate without human intervention -- for example, scheduling a meeting for several participants at once by hooking into their scheduling software to see when everyone is available.

- Sensor Networks. By putting sensors (Radio Frequency Identification (RFID) tags are the best example), on products, companies can gain valuable information from customers, improve security, and streamline the supply chain.

- Easier-to-use PCs. Cohan believes the PC needs an overhaul to make it easier to use. He cites suggestions from academics like automating email displays, adding tons more storage, and making menus three-dimensional.

Cohan concludes his paper: "Even if this decade doesn't create an innovative wave that drives markets, spending can happen. But, it will likely be more individualized -- on a company-by-company basis, and based on what technologies each views as most value-producing."

Thanks for sharing, Peter!

11:57 AM

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