Weathering the storm

The talk of the United States going into recession really focuses the mind on how this is going to affect the IT industry.

Greg Linden in his Geeking with Greg blog has a very good take on some of the effects on the industry. I particularly like his view that the 2001 dot com crash was part of the reason for the spyware explosion.

Personally though, I think Greg is understating the effects of a full blown recession. I suspect the VCs are going to find their cash reserves largely aren't there and the "Google dollars" that have funded much of the dot com 2.0 splurge will either be greatly devalued or turn out to be ephemeral.

As we've found in previous downturns, when homes and businesses fall on hard times the first thing that gets cut is IT spending. It doesn't matter if we're talking about household luxuries like iPods or business necessities; it all gets cut.

This means problems for everyone in the industry.

For the smaller computer tech, there's two big effects; first your customers stop spending money and, second, thousands of new businesses start up as unemployed programmers, web designers and even carpenters who "know something about computers" setup their own tech support businesses.

This puts the local support guy in a squeeze his income's cut as customers stop buying or calling, customers become more price concious and the competition is going to get much, much more intense.

A storm is coming and all small business owners need to be trimming their sails, but proprietors of IT related businesses really need to be reviewing their costs and operations and looking at just what they currently have stashed away.