Q1 2011 Results For Accenture And Oracle Point To Strong 2011 For IT Services And Software

On March 24, 2011, both Accenture and Oracle released better-than-expected financial results for their fiscal quarters ending in February 2011.  In both cases, revenue growth was stronger than expected, with Accenture's revenues up 17% and Oracle's reported revenues up 37%.  Note, though, that Oracle's reported revenues were measured against a period in which it recorded only one month's of Sun Microsystems' revenues following the completion of that acquisition; adjusting the base period to show a more complete picture of the Sun revenues (which we estimate at about $1.8 billion in the three months ending in February 2010, compared with the reported $458 million), Oracle's revenues were 13% higher.  Still, its software and services revenues were up a strong 19%.

Because their fiscal quarters end one month earlier than most other vendors, Accenture and Oracle serve as early indicators of how the IT services and software segments of the tech market do each quarter.  The 27% increase in license revenues for Oracle's database and middleware products and the even stronger 34% growth in its application license revenues are signs of growing demand for software products -- not just SaaS products, but also classic licensed software products.  Purchases of those products typically lead to purchases of systems integration consulting services from IT services vendors like Accenture.  And indeed Accenture reported 20% growth in revenues from consulting services, compared with more modest (but still good) 13% growth in its outsourcing businesses.  So, my expectations that software and IT services will be the leading tech market growth categories in 2011 are supported by these results.    

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Japan's Troubles Raise A Red Flag But Don't (Yet) Alter Our Global Tech Market Outlook

With Japan's triple hit of earthquake, tsunami, and nuclear power plant dominating newspaper headlines and TV news, I have gotten some questions from clients about the impact of the disaster on the overall tech market.  In general, I think the effects of these disasters on the total 2011 outlook will be small -- at worst, they will hurt tech market growth in Q2 2011 while strengthening growth in Q3 and Q4.  However, that outlook assumes that the problems at the Fukushima Dai-ichi nuclear complex improve or don't worsen.  If that situation turns into a Chernobyl-type disaster that causes permanent evacuations from a multi-mile radius around the plant and possible shutdowns of other nuclear power plants, the impacts on the Japanese economy and on the Japanese tech industry -- not to mention for the people of Japan -- would be very negative, and cause a downward adjustment in our tech market forecast.

The potential impacts of the Japanese disasters show up on both the tech supply side and on the tech demand side, so let's look at both angles. 

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