We are in the midst of earnings season right now and different companies are faring very differently:
- Google revenues were up 18% – as I wrote last week
- Yahoo! yesterday reported revenues down just 1%
- Sun Microsystems also reported yesterday with revenues down 10.9% on the year ago period
- IBM reported last week with gross revenues down 6% on the year ago period (apparently only 1% if you take out currency fluctuations). But that overall performance masked double digit declines in their hardware business and good performance in services and software.
The overall position is, I think, that it is better to be in the web than in software, and better to be in software than in hardware. This is because the lowest layers of the stack are commoditised already, software is starting to get there and web based services have yet to really begin that painful process.
My guess is that they will though – and then the attention will move somewhere else – e.g. shared data services.
I have focused on revenues in people’s results as a proxy for overall market size, which I think is the best single indicator. Profitability is important too though, is more influenced by company specific factors.