By John Rossant
The star attraction at the World Economic Forum's annual meeting in Davos this year? Not Microsoft Chairman Bill Gates, who has been expounding on his vision of a connected future. Nor is it Israeli leader Shimon Peres, who tried in vain to make nice with a more-than-usually dour Yasser Arafat. It wasn't even supermodel Naomi Campbell, who turned dozens of heads as she listened to sessions on the digital divide and how to close it.
No, the hands-down winner of the popularity contest this year is Compaq's iPAQ pocket computer. The Houston-based computer giant handed out 2,200 of the slick little devices (list price, if you can get one, of around $500) to every participant in the Davos conference. Presidents, CEOs, finance ministers, and central bank governors seem to be spending almost as much time playing with their iPAQs as they are trying to figure out how to solve the world's problems. "Not bad public relations for us," says Peter Blackmore, head of worldwide sales.
Hype aside, fascination with the iPAQ among the Davos crowd is one sign that technology is still very much center stage with the business and banking elite of the world. And the little iPAQ, with its promise of being connected to the Internet everywhere and at anytime, is an apt symbol of how some of the magic that once surrounded dot-coms is now rubbing off on technology's next big thing: wireless.
True, the mood is a far cry from what it was a year ago, when the Davos-fest was nothing short of a U.S.-led high-tech bacchanalia. "Panic buying" was the buzzword. Now, a couple of trillion dollars in market value to the poorer, things are much more subdued. Cisco Systems CEO John Chambers certainly didn't help things by going from room to room in the bunker-like Conference Center talking about the "challenging" outlook for tech spending. "Capital spending" he says "is down dramatically."
But Chambers' pessimism -- which was tempered, given that he predicts things will bounce back in the second half -- is not shared by a lot of big techno-players at Davos. Sure some dot-coms have become dot-bombs, but that's not the whole story.
Take Compaq (CPQ ). Company CEO Michael Capellas was roaming the halls at Davos and checking out how people enjoyed his iPAQ. No doubts in his mind: "Wireless is the future of IT," he told anybody who would listen. Compaq's share price -- which earlier in January seemed a victim of the high-tech sell-off -- closed at 23.55 on Jan. 29, up from a 52-week low of $14.90 earlier in the month. The company is now predicting 20% to 25% growth in earnings this year.
Indeed, far from the steep fall in capital spending noted by Chambers, Compaq says that large corporations -- some indebted telcos aside -- are maintaining their IT outlays. "Corporate spending [on IT], at least large corporations, has maintained its trajectory," says Compaq's Blackmore. "And it's sustained even in North America. Companies are extremely conscious that systems can take advantage of e-commerce."
True, notes Blackmore, corporate offices are also tightening budgets more as the economy slows. "But e-commerce is a reality," he says. "Over the next three years, the number of wireless transactions will grow three times, and the infrastructure growth is not slowing." In his eyes, saying that investment is slowing down "belies reality."
Consider the securities industry, for example. Despite the Nasdaq slump, online and real-time stock trading is growing steadily, according to J. Joe Ricketts, CEO of Ameritrade Holding Corp., which alone accounts for around 4% of the total trades on the New York Stock Exchange and Nasdaq. Ameritrade is now expanding in Europe and Asia. "Just the move to more real-time stock trading means companies will have to spend $18 billion to $25 billion on new IT investments over the next three years," says Cristobal Conde, president and chief operating officer of SunGard Data System, a leading supplier of software to financial-services groups. Those are numbers that should make even the industry's most dire Cassandras think twice.
Even the market turmoil and the implosion in the value of many Internet-based companies could have a silver lining. "The e-crack," says Jean-Marie Messier, CEO of French media and communications giant Vivendi Universal, "has opened up a period of tremendous opportunities. It means we are going to go through very dense consolidation in the Internet sector, which is great news for the strong players. We can get market share at low cost." Anybody for an iPAQ?
Rossant is covering the Davos event for BusinessWeek this year
Edited by Douglas Harbrecht