Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: Quick Takes Tim Stinovic from Bloomberg Radio. Well, our world,
Speaker 1: the reopening trade, we are seeing it as we come
Speaker 1: out of the pandemic, but we've also known the pandemic
Speaker 1: has caused a lot of innovation and transformations definitely accelerated
Speaker 1: in things like healthcare, corporate travel. Think about all the
Speaker 1: meetings that conversations we've had virtually retail supply chains. A
Speaker 1: lot of things have been impacted. Yeah, they certainly have.
Speaker 1: And the big question is to what extent is the
Speaker 1: disruption continue with the transformation to the cloud. How much
Speaker 1: of this has been pulled forward already? And do we
Speaker 1: see the spend decline from these I T systems? Sounds
Speaker 1: like a question for next guest. Crawford del Prett back
Speaker 1: with US president at International Data Corporation i d C.
Speaker 1: As you know it, he's on the phone in Massachusett's Crawford,
Speaker 1: nice to have you here with Tim and myself. How
Speaker 1: are you, hey, how you guys been. It's great to
Speaker 1: talk to you, and yeah, what a what a crazy
Speaker 1: time this has been over the last year and a
Speaker 1: half or so. It's great to catch up. We talked
Speaker 1: with you, we were looking at our calendar. I think
Speaker 1: back in April of a lot has happened since then.
Speaker 1: Those are pretty dark times. How do you describe and
Speaker 1: explain the innovation disruptions that we've seen and what it
Speaker 1: says more significantly about the world to come? Yeah, you know,
Speaker 1: So what's interesting is we now have a lot of
Speaker 1: data right over the last eighteen months that we can
Speaker 1: look at and you know, anecdotally kind of what we
Speaker 1: thought we were we were seeing, we can now see
Speaker 1: in the numbers and I'll just go with you for
Speaker 1: a little bit. But what we saw over the last
Speaker 1: two years, it felt like, you know, tech kind of
Speaker 1: its strengthened, right, and there were some areas that got hit,
Speaker 1: but it definitely uh strengthened. But you know, what we've
Speaker 1: seen from a parallel standpoint, totally broke down in COVID.
Speaker 1: So if we go back all the way to the
Speaker 1: PC downturn of the nineties, if we go to the
Speaker 1: dot bomb or the dot com, if we go to
Speaker 1: the crisis of two thousand eight when GDP crashed, check
Speaker 1: would crash more. So you know, in two thousand one,
Speaker 1: g d P went to zero. Tech crash to minus
Speaker 1: three percent growth in two thousand and nine two eight,
Speaker 1: g d P went to minus let's call it to
Speaker 1: check went to minus five. In this downturn, GDP went
Speaker 1: to minus four. Tech stayed positive and actually core tech
Speaker 1: stayed at three percent growth. And so the story here
Speaker 1: and what we saw in is that companies leaned into tech.
Speaker 1: They use tech to get out of this mess, to
Speaker 1: create new experience for customers, to create a stickiness with
Speaker 1: their services. In some sectors, it boosted in another sectors. Um,
Speaker 1: you know, they were able to stay very very productive
Speaker 1: even as we know as the world work from home.
Speaker 1: So it was it was really a downturn unlike any
Speaker 1: other and in a lot of ways, tech kind of
Speaker 1: saved the day. Well the Crawford, when you use the
Speaker 1: term tech, you mean technology, but not all tech is
Speaker 1: created equally. And there's different segments of tech. Right, there's
Speaker 1: I T spend, there's spend for cloud transformation. So break
Speaker 1: it down for us and where we saw the spending
Speaker 1: grow and perhaps parts where we didn't see that weren't
Speaker 1: so resilient. Yeah, So I mean you're you're you're absolutely right.
Speaker 1: So we saw you know, application software and and and
Speaker 1: and core apps. You know, they they stayed with their
Speaker 1: double district growth. We saw you know, things like infrastructure
Speaker 1: as a service you know still you know, delivering you
Speaker 1: know over um growth. But you're right, I mean, if
Speaker 1: you're talking about you know, core infrastructure, you know, core servers,
Speaker 1: core enterprise network UM. You know that stuff in was
Speaker 1: you know barely growing or or or in the case
Speaker 1: of enterprise networks, you know, in terms of dollars, actually
Speaker 1: you know shrank almost um three percent. So you know,
Speaker 1: if it was something that was related to the cloud, um,
Speaker 1: if it was something that was um related to um
Speaker 1: uh a A A h an app, you definitely saw
Speaker 1: a massive acceleration. But then in terms of tech, you
Speaker 1: also saw some kind of not intuitive things. Right. It
Speaker 1: wasn't just you know that we couldn't build PCs, which
Speaker 1: is a situation we are now. PC demand went nonlinear,
Speaker 1: so categories that you know, we're kind of um left
Speaker 1: for dead. You know, we saw a PC shipments grow
Speaker 1: fourteen percent um uh sorry, we expect PC's uh shipments
Speaker 1: to grow about foe, so you know, continuing to grow,
Speaker 1: you know, very very dramatic. I want to get back
Speaker 1: to Crawford. Del Prett back with US president at ADC
Speaker 1: Research on the phone in Massachusetts. Heay credit, Uh, Crawford,
Speaker 1: we want to continue with you, but we just mentioned
Speaker 1: a story about Google scrapping its planned to offer bank
Speaker 1: accounts to users big tech. I mean, are they at
Speaker 1: some point do you think going to be Are you
Speaker 1: seeing or having conversations with folks in the industry that
Speaker 1: eventually they will be much more involved when it comes
Speaker 1: to finance, when it comes to healthcare? Absolutely? Um, yeah,
Speaker 1: you're this is gonna be. This is is gonna play out
Speaker 1: over a number a year. Pers And I think you
Speaker 1: know what you're seeing with Google is right now. I
Speaker 1: mean tactically, you know, Apple was able to and and
Speaker 1: everything Apple does is about leveraging the power of you know,
Speaker 1: people talk about the numbers in their ecosystem, it's also
Speaker 1: the quality of the number in their ecosystem. You've got
Speaker 1: a spender with more disposable income in the Apple system ecosystem,
Speaker 1: and Apple is able to do things like yet this
Speaker 1: spend this this customer to use the Apple credit card
Speaker 1: to aspire to an Apple credit card. Um, they you know, frankly,
Speaker 1: just have more means. And even though Google's ecosystem is
Speaker 1: larger in terms of units, they don't drive as much value,
Speaker 1: they don't drive as much revenue out of that ecosystem,
Speaker 1: and I think that's kind of the the rub that
Speaker 1: you're seeing right now. But over time, you will see
Speaker 1: healthcare companies and banks using more tech to create new
Speaker 1: experiences for customers, and that will involve tech companies that
Speaker 1: we all know. Does it present regulatory risk though, Crawford
Speaker 1: to these companies. I mean, if you the term big
Speaker 1: tech is sort of majority for Democrats and a blickens,
Speaker 1: and I wonder if they get into healthcare more so,
Speaker 1: if they get into banking more so, if that just
Speaker 1: puts a target on their back from regulators. Yeah, it
Speaker 1: goes well. I mean that's already happened, right, I mean
Speaker 1: bigger target for a lot Yeah, yeah, earlier for a
Speaker 1: lot of these companies. We gotta Yeah, it would be
Speaker 1: a bigger target. I guess. I believe that healthcare companies
Speaker 1: are healthcare companies and banks are banks, and I think
Speaker 1: you know, Apples figured that out and that's why they
Speaker 1: have done the partnerships that they've done. And I think
Speaker 1: you'll see more of those kinds of partnerships going forward,
Speaker 1: I I think these companies are going to be in
Speaker 1: a position of powering other companies to be stronger with
Speaker 1: their tech as opposed to jumping in and entering um
Speaker 1: these these these new sectors at this you know, kind
Speaker 1: of breaknext speed. I think you're probably gonna see that
Speaker 1: happening a lot slower than them going it alone, if
Speaker 1: you will. Hey Crawford, I want to get back to
Speaker 1: something that you said earlier, which was the growth of
Speaker 1: the PC market, and we saw that a lot of that, uh,
Speaker 1: demand for PCs get pulled forward over the last eighteen
Speaker 1: months as people were working from home and needed machines
Speaker 1: at their homes rather then at the office. And I'm
Speaker 1: wondering because earlier this week HP in check our HPQ
Speaker 1: was downgraded to neutral from overweight at JP Morgan, the bank,
Speaker 1: lowering its price target to thirty dollars, the bank saying
Speaker 1: that they see moderating tail wins for the PC market.
Speaker 1: And I'm wondering if if you're seeing those those tail
Speaker 1: wines moderate as well, if if that demand has been
Speaker 1: pulled forward. Yeah, So there's a couple of there's a
Speaker 1: couple of factors going on here. There's there's a ton
Speaker 1: of demand that you know, we just can't with the
Speaker 1: PC companies can't meet because of the semiconductor shortage. But
Speaker 1: if you look at right, we expect to see the
Speaker 1: market girl about four this year in the units. One
Speaker 1: percent of that growth happens in the first half, and
Speaker 1: about between two and three percent happens in the second half.
Speaker 1: Um sorry, you know, up in the first half, up
Speaker 1: between two and three in the second half of the year.
Speaker 1: So our forecast kind of kind of plays that out. Now.
Speaker 1: Having said that, this market, we expect um will continue
Speaker 1: to grow, but it'll grow oh at lower rates going forward,
Speaker 1: you know, more traditional rates. But the market expanded by
Speaker 1: you know, um double digit percentage in terms of units,
Speaker 1: and won't necessarily give that back because what we see
Speaker 1: happening is that PCs are now viewed as kind of
Speaker 1: a safety net um and and something was happening with PCs.
Speaker 1: People are consuming more media on them, they're using them,
Speaker 1: they're enjoying the bigger screams, and they're also basically saying,
Speaker 1: I got to have more of these in my you know,
Speaker 1: as as a family, we need more of them in
Speaker 1: our lives. So in the US, the average number of
Speaker 1: PCs for household prior to COVID was about two and
Speaker 1: a half. Now it's more like three. We don't see
Speaker 1: that necessarily going down. We don't see it rising, we
Speaker 1: don't see it going down. So so we basically there's
Speaker 1: been a shift here. So just to rehash some headlines
Speaker 1: crossing the Bloomberg and it does relate to our conversation present,
Speaker 1: Pine says that we're going to get this done. He's
Speaker 1: talking about the infrastructure legislation, completing his economic agenda. He
Speaker 1: says doesn't matter. After meeting with Democratic lawmakers on the
Speaker 1: US Capital are at the U S Capital he says, quote,
Speaker 1: it doesn't matter when it doesn't matter if it's six minutes,
Speaker 1: six days, or six weeks. He also uh says that, um,
Speaker 1: a smaller bill can make historic investments. So I'm assuming
Speaker 1: he's talking about the software infrastructure side of that. On
Speaker 1: the harder side. Crawford, UM, how do you what kind
Speaker 1: of analysis have you done that this potential infrastructure spending,
Speaker 1: which includes connecting more of America high speed internet access,
Speaker 1: which we have reported in here in Business Week about
Speaker 1: how many millions of Americans it's huge, don't have that access.
Speaker 1: What kind of analysis have you had because I think
Speaker 1: about our investment audience are saying, okay, so how do
Speaker 1: I maybe play this ultimately if this infrastructure bill goes through? Yeah,
Speaker 1: I mean so what So what you're going to see
Speaker 1: if this infrastructure bill goes through is you're going to
Speaker 1: see steady demand and what we call I C T
Speaker 1: so you know I T and communications technology. So you're
Speaker 1: gonna see UM, you know, significant interest in the telecom
Speaker 1: infrastructure UM and building out telecom infrastructure. You're going to
Speaker 1: see UM the carriers, you know, continue to be able
Speaker 1: to UM, see sustained demand. You're going to see uplifts
Speaker 1: and continued investment in things like security because the security
Speaker 1: landscape becomes more and more complex as you bring more
Speaker 1: and more people on online. So you know, that's why
Speaker 1: we believe that if you look at I T spending,
Speaker 1: you know that kind of comes back to about six
Speaker 1: percent by our forecast says that I C T including
Speaker 1: communications that gets over that gets to over seven percent
Speaker 1: growth by So it's really that idea that we'll bring
Speaker 1: in more people online, and that really means that more
Speaker 1: has to be spent on the foundational technologies, the core
Speaker 1: infrastructure in order to make this reality for you. All right,
Speaker 1: really appreciate the time with you. Crawford Del President at
Speaker 1: I d C on the phone from Massachusetts, so thank you.