New business models dominate CEO agendas

Even David St. Hubbins from England’s loudest band, Spinal Tap, had his eyes on a piece of the lucrative technology market from an early age.

He said that around 50 years ago his father, a leather-bag maker, had predicted that one day computers will have shrunk to the point where executives would be carrying them in briefcases.

“And when the handles on those bags break, and they will, my dad was going to be there,” he said at Oracle OpenWorld in San Francisco. “My dad’s dream did come true. The handles still break, as do those retractable cup holders that come built into better consoles.”

Playing a few bars of tinny music in front of the This is Spinal Tap backdrop, St. Hubbins welcomed Craig Barrett, president and of Intel Corp. to the stage.

“You just needed more processing,” Barrett said of the hollow sounding music.

This isn’t the first time the cult-icons have shaken up technology crowds. During the 1996 Olympic games in Atlanta, David, Nigel and Derek promoted IBM Corp. as the choice for people looking for creative solutions.

“My job here today is to tell you how to take your enterprise data centres to an 11,” Barrett continued. “If you don’t know what that means, you have to go our and buy the This is Spinal Tap DVD today.”

Barrett spoke about how adopting a ‘macro processing’ model – a model that applies volume economics found in microprocessors to the Internet-enabled enterprise – creates more efficiency, lowers costs, and advances technology for business. That, he added, is one of the new trends in response to customers who are looking for more for less.

“I think if you look at the history of economics over the last couple of centuries, you see this (slowdown) fits in every time a new technology comes along, whether it be steel or railroads or the automobile industry,” he said. “The technology comes along, then there is an irrational exuberance, then there is usually a crash and people become convinced again that it has to be real products and real customers that make companies successful. Then you see the golden age of the industry following that.”

Michael Capellas, chairman of Compaq Computer Corp., also spoke about the new economics of today’s market.

Capellas predicts a period of consolidation in many industries and a trend toward “getting back to business.”

“The IT industry has to go through the mega-trends of the last couple of years to go through the mega-trends of the next couple of years,” he said. “On the low end of technology, there will be an increased drive of comoditization where we can roll our some basic building blocks of which we can drive standardization. While we are going through a business change, you have to think about driving projects that have a return on investment.”

He added that just because macroeconomics is going to dominate in the short-term, the Internet isn’t going, to go anywhere and businesses will have to commit themselves to basic good business.

But Warren Shiau, research analyst of software at Toronto-based IDC Canada, thinks all the talk of “getting back to business” is part of another business – marketing.

“Honestly, I think it’s a public relations exercise,” he said. “All this talk is great in hindsight, but if someone would have said this a year and a half ago, they would look a lot smarter than they do saying it now. Nobody wants to miss an earnings report and by saying that now it is back to real business, making money and doing the hard slog of going out and getting a sale, it is just another way of saying that it is going to be very, very hard to maintain anywhere near the growth rates we had in the dot-com era, so don’t expect us to do that.”

Shiau added that he thought Oracle’s offerings at OpenWorld were doing a good job of reflecting a changing economy.

“Oracle is driving the price pressure,” he said. “It is driving a lot of the price economies in the sense that they are getting more functionality for a lesser price. The application server market is a good example of that, because you have all this additional functionality added, but do you see the prices that the vendors are able to charge increasing? No, you don’t.”

Garnering fewer people but almost as many laughs as the Intel presentation was Open World’s first keynote, NBC News anchor Tom Brokaw.

With a cautionary tone, Brokaw spoke about the advancement of technology and the newest generation’s ability to use it, saying that it was a group of people “used to being able to press the delete button on things” they didn’t like.

He concluded by comparing the dot-com era to the gold rush, adding that he thought that people and businesses are still rushing to find their plot of riches.

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