a field sermon at the battle of Bataan, U.S. Army Chaplain William
Thomas Cummings made the now-famous remark, "There are no atheists
in the foxholes." Similarly, there are no Luddites as of September
in the form of telephones, cell phones, satellite, the Internet,
and cable TV kept America informed through the dayís terrible events.
Cell phones helped avert a second terrorist attack on Washington,
D.C., and played an amazing role in the rescue and investigation.
But if technology
performed heroically during the week America was attacked, its short-term
prognosis is uncertain. The sector had been reeling in 2001, and
while it has a lot to offer a wartime economy, there are still many
factors that could hinder its rebound. NRO Financial asked several
technology experts for their sector prognosis.
The real question is what happens next in a political sense, and
in a national security sense. If we assume that this country, as
it always has, rises to this challenge, as it did during World War
II, as it did during the Gulf War, then the basic pattern in all
previous crises has been a major shock to the stock market, sometimes
throwing the economy into recession, but then back into a recovery,
usually within a few months. And the recovery tends to be very good
for just about all sectors and certainly technology.
difference is that this could be a new kind of a threat. If terrorist
activities continue, then youíre going to have a gigantic depression
of consumer confidence, as well as investor confidence. I donít
think thatís going to happen Iím just saying that this could
be different, even from World War II.
In a somewhat
ironic way, these attacks have forced some policy changes
some of which are good and should have happened anyway. Number one
is monetary loosening, and weíve already seen that. Number two is
an abandonment of the obsession with a surplus, which is insanity
for both parties. Weíre seeing that ending with increased spending.
Third, I think weíre going to see a more sensible energy policy
come out of this, and increased supply. And fourth, I think we will
see better regulatory policy, especially in anti-trust. In other
words, weíre going to see the government allowing mergers, which
should have been the case earlier.
things are good. The only threat that continues to hang over the
market and the economy is the continuing anxiety over what might
happen next militarily. Thatís the big problem.
At least in
the short term, it's good that we have the technology today, which
we didnít have in the past, to allow people to do business from
remote locations. More and more of that technology is going to be
used. But we need to do a much better job with the infrastructure.
It's now more urgent that all Americans get access to broadband.
Why is it
that fewer that ten percent of Americans have broadband? I think
itís a lack of enforcement of the 1996 Telecommunications Act. Weíre
seeing the Bells extending their monopoly and monopolists are not
all that fond of innovation, and so we really need to solve that
problem and liberate the supply of broadband. Technologically, itís
not difficult, but as far as creating a real free-market, thatís
difficult, because itís generally not easy to de-regulate anything
thatís been a monopoly for a hundred years, and thatís the problem
Glassman is Host of TechCentralStation.com
Buchsbaum, The Yankee Group
Itís almost miraculous how well things held up. From the standpoint
of infrastructure, from the standpoint of IT services, I would say
that the system performed at and exceeded expectations as to how
it was built. Nothing severely crashed; the infrastructure was able
to handle everything.
doesnít mean that thereís not going to be a need for a lot of building
and rebuilding of solutions, based on what was knocked out on September
11. Telecommunicating and audio-conferencing are going to be areas
that people will strongly look towards as at least
temporary solutions. The ability to get people to fly is going to
be severely hampered for a long time, so those are strong alternatives
to business as usual.
Buchsbaum is Director of E-Sourcing Strategies at The
Crews, CATO Institute
There are a lot of implications over cyber-security and its related
issues. Weíve always faced hacking threats, and we probably always
will. Part of the problem with the Internet is that itís a commons
anyone can walk into a Starbucks or a public library and
get onto the network, and from that spot they can inflict a lot
of damage if they want to.
But part of
the market response is that companies have to secure their networks,
and theyíre getting better and better at that. And I donít think
that this particular terrorist act really has any implications for
shutting down the Internet in that respect. The Internet was designed
to withstand a nuclear attack. If you knock out a whole piece of
it, the traffic gets routed elsewhere.
On a different
note, you may see legislators who want to restrict the ability to
create anonymous communications. And I think thatís a risk, because
encryption technology is out there. Itís not going to do any good
to ban it for use in America. Criminals will get their hands on
it, and will use it, one way or another you canít ban ones
and zeros. Banning it isnít going to help, and it also impacts American
to Carnivore [the FBI's e-mail surveillance tool], nothing should
change. If you had to get a warrant to break down somebodyís door
after the Bill of Rights was passed, then you should have to do
the same thing in cyberspace. If government needs to track certain
individuals, and it has probable cause, itís not going to have any
trouble getting the proper clearance to do that. In fact, we were
tracking these terrorists and their associates for a long time,
and no one has any problem with that. The problem is if government
employs a drift net, and thatís what we donít want. There needs
to be probable cause, there need to be reasonable searches and seizures,
not unreasonable ones that implicate innocent citizens. You donít
need to pull innocent individuals into the maul here because we
can do the kinds of surveillance we need to do on a limited basis.
Crews is Director of Technology policy for the CATO Institute
Scott, Gartner, Inc.
Thereís obviously a lot of equipment that needs to be replaced
220 floors and some surrounding buildings that were totally destroyed.
So youíve got a lot of activity going on, leasing new space in and
around Manhattan, networking that space, and getting PCs, software,
and network components delivered. Itís a kind of one-time replacement
deal thatís going on.
is a positive for the technology sector. But at the other end, countering
that to a certain extent, are delayed purchases by customers that
are distracted by the disaster. Certainly, in some segments, the
net-effect is going to be positive. But this won't be enough to
jump start the whole tech industry. The jump start will occur sector
by sector: security, disaster recovery, business continuity, archiving,
off-site storage, etc.
Scott is a Vice President and Research Director covering
24/7 Availability, and Business Continuity and Disaster Recovery
with Gartner, Inc.
Yablok, Yablok & Associates
Most of my clients are smaller companies, but they have to have
a really good sense of the bigger technology sector in order to
have survived this long. The general feeling here is that we expected
third-quarter figures to show a bottoming out of an "almost recession"
with the start of a recovery in the fourth quarter. Now we expect
fourth-quarter results to show that the "almost" recession in fact
blossomed into a real recession. But recessions are basically Darwinian
events. The fit survive, the unfit do not.
are already seeing short-term equipment shortages. One client who
manages large telecommunication projects can't get telecommunications
switching equipment. Even equipment on firm delivery schedules was
re-directed en-route and sent to Manhattan. Those shortages will
result in a small and short-term benefit to manufacturers.
segment that might see some longer-term benefits is data back-up.
And companies that provide both the equipment to enable telecommuting
and consulting will be part of disaster planning; eventually this
will lead to wider use of telecommuting on a day-to-day basis. Companies
like AT&T, that have
been trying to establish themselves as telecommuting consulting
firms to a somewhat unenthusiastic business community, may find
increased interest in the concept.
in the way of the growth of this sector are archaic laws protecting
home workers, which harken back to the days when working at home
usually meant children and women doing piece work for virtually
no money. These are inappropriate laws for sophisticated telecommuting
executives. Likewise, IRS rules on home offices are totally ludicrous
in light of existing technology. If these impediments can be overcome,
this tragedy could be a jump-start to a new way of doing business,
which will be even more technology dependent than what we have now.
Yablok is a San Jose, Calif.-based business attorney
Menendez, Moodyís Investor Services
We expect to see some sharp increases in retail-technology buying
over the short term. A lot of people will be working from home,
and will need to upgrade or get connectivity for the first time.
I believe that there is also going to be more interest and more
awareness of personal connectivity around the country. As a result,
the buying of electronics, which really had been in the doldrums
for quite a while, will experience a short-term uptick on the retail
Menendez is Vice President and Senior Credit Officer of Moodyís
Corporate Finance Group