CIOs see 1% spending dip in 2003

Also, the ‘Net celebrates its 20th birthday – sorta; Global Crossing CEO resigns; and more

Goldman Sachs last week rang in the new year with a report hinting that the cautious optimism of late 2002 regarding an industry resurgence didn’t make it through the calendar change. In the investment banking firm’s most recent poll of 100 CIOs, respondents said they expected IT spending in 2003 to decline 1%, down from the 2% to 3% growth predicted earlier. The survey also showed respondents’ view of long-term “normalized” spending growth dropped from a high of 7% over 2002 to an expected 5% in 2003. “Such severe declines in sentiment coming out of budgeting season confirm the ongoing business weaknesses that we have noted at key end markets – in particular telecom, financials and manufacturing,” the report said. CIOs surveyed indicated top spending priorities to be security, wireless LAN connectivity, Web-based application infrastructure, next-generation Windows operating systems, integration software, Gigabit Ethernet and storage networking.

Worldwide IT spending will grow 4% in 2003, rebounding from growth of just 1% in 2002, according to research released last week by Aberdeen Group. This level of growth will continue through 2006, with little chance of a return to the double-figure percentage growth rates of the late 1990s, the company said. At the moment, there are no compelling reasons for user organizations to spend heavily – whether on new technology or on upgrades to existing technology – to bring back those earlier high growth rates, Aberdeen said. According to Aberdeen, strong market sectors in 2003 will include Linux servers, which will see 40% growth in sales as Linux continues to make inroads into corporations; outsourcing, which will account for a greater proportion of IT budgets as corporations focus on IT cost reduction; wireless data services; and particularly wireless LAN systems, which will be a bright spot in a telecom market that will continue to grapple with issues of overcapacity and thin margins.

The Internet’s so-called 20th birthday on Jan. 1 passed by without much fanfare, perhaps because much of the ‘Net’s origins are a matter of debate among high-tech historians. There’s no question that on Jan. 1, 1983, a key milestone occurred when ARPANet – the predecessor of the Internet – switched from the older Network Control Protocol to TCP/IP used today. All ARPANet hosts were required to switch to TCP/IP no later than on New Year’s Day 20 years ago. There were only about 250 computers hooked up to ARPANet at the time, and many hosts made the transition to TCP/IP throughout 1982. Whether or not the switch to TCP/IP is the logical birthday for the Internet is a matter of opinion. By Jan. 1, 1983, ARPANet had been in use for more than a decade. It was conceived by the military in 1969 and was in regular use by 1971. So just how old is the Internet? 20? 32? 34? You decide.

Internet domain-name registrar Register.com last week won a preliminary injunction against a reseller of domain-name registrations that it accuses of deceiving Register.com customers into transferring their registrations. A federal judge granted a preliminary injunction against Domain Registry of America to block it from using alleged marketing tactics that Register.com said are deceptive. The case involves alleged domain-name registrar “slamming,” which is similar to a tactic in which telecom carriers lead competitors’ customers to switch their long-distance service through deceptive practices. In this case, Register.com alleges DROA tried to make domain- name holders believe their registration provider was DROA when it wasn’t and said DROA was affiliated with Register.com. An attorney for DROA could not be reached for comment.

Global Crossing Founder and Chairman Gary Winnick resigned last week, two weeks after a federal bankruptcy court accepted the carrier’s Chapter 11 reorganization plan. Global Crossing named independent directors Jeremiah Lambert and Myron Ullman as co-chairmen to lead the company through its emergence from bankruptcy, which is expected early this year. Winnick had been roundly criticized because he sold Global Crossing stock for $124 million in May 2001, eight months before the company filed for bankruptcy.

Finjan Software has acquired the assets and intellectual property of Alchemedia Technologies, a provider of digital rights management software. Included is Mirage Enterprise 3.1, Alchemedia’s product that lets users view and collaborate on documents while preventing the data included in the documents from further distribution. Finjan said the acquisition of privately held Alchemedia for an undisclosed price gives Finjan a technology that complements the watermarking technologies used in Finjan’s SurfinGate 7.0 mail-based content security software and will be integrated into future products.