A fter the excesses of the Christmas season, January is a time for exhausted revellers to take a sober look at the past and ask what they might do better. For an optimist, the New Year is a time to look ahead. It is the time to throw out the mistakes of the past and take a generally more positive approach to the future. The pessimist might just say he has seen it before and it can only get worse. The information technology (IT) industry is feeling optimistic this New Year, after spending the past two in a cloud of post-boom gloom. Clearly, no one in their right mind expects to see a return of the euphoria and greed of the late 1990s. But with the chief cheerleaders out of the picture, today's hype is beginning to coalesce around real technologies and ideas rather than crooked accounting and punts on the Nasdaq. Despite the industry's hard-learned sobriety, recent months have seen rising optimism over the future of Asia's IT industry. The latest predictions from International Data Corp (IDC) suggest the region's IT and telecoms services sectors will each grow by US$11 billion this year, to US$81 billion and US$137 billion respectively. Compared with the rest of the world (at US$900 billion and US$975 billion), that still leaves us looking pretty small, but after the past couple of years, it makes a welcome change. In contrast with the dotcom days, today's IT investments are more likely to focus on productivity instead of promises. The growing maturity of open standards and the falling price of servers and network equipment means technology can now be deployed in places where it was unheard of two years ago. And as governments such as our own confront a harder economic climate, IT, and particularly open standards such as Linux and XML, will be seen as the sensible way to cut costs and improve efficiencies. Not that this will be a bad year for Microsoft. After its victory against the United States Justice Department, Microsoft is free to go full ahead into the networking, telecoms and home entertainment sectors, which it is doing with gusto. The telecoms industry should bring some of the most interesting advancements. Smart phones, multimedia applications and the tentative arrival of third-generation services stand to make this a very interesting year for communications. The Asian Internet will become increasingly important this year, with users soon to outnumber the whole of the Americas. Add to that the region's growing mobile data market, and you have a powerful market for any applications business. Of course, we have been here before. In pre-portal days, research firms routinely pumped out figures so optimistic they could make the dead dance. But despite the cynicism of many outside the industry, most of those predictions have played out and Hong Kong, according to the International Telecommunications Union, is now the most wired place in the world. And China is planning a manned space mission. What a year. Unfortunately, there are still issues that will continue to plague the industry. As reporter Carolyn Ong finds out on her year ahead interviews with three technology and telecommunications analysts (page 8), not everyone is as optimistic as IDC. Economic uncertainty and the threat of war can only slow the recovery. The fact that so many businesses were burned by ill-considered IT investments means many are still nervous today. Meanwhile, the long shelf-life of last year's gear will continue to hurt equipment vendors and slow the roll-out of new technologies. Online retailers will still have a hard time persuading Asian shoppers to part with their cash online. Though their numbers are increasing, the total value of Asian Internet commerce is still just a 10th of the world total. Unfortunately, the one area online in which Asia clearly excels is in sending spam. And if all that was not bad enough, we have China to consider. A recent survey by the Productivity Council found that the number of independent software vendors in Hong Kong dropped by 10 per cent last year, while the number of people working in the industry fell from 18,000 in 2000 to 14,000 last year. The survey also found a massive drop in the number of young people entering the industry. Meanwhile, recruitment firm Michael Page reported that IT salaries were down by as much as 40 per cent from the highs of 2000. Both surveys agreed that the reason for the fall was the inevitable shift in production to the mainland. With the limited local market accounting for the vast majority of Hong Kong's software income, the problem can only get worse. So while we enter a new year with a new sense of optimism, there are plenty of reasons to keep the enthusiasm in check, lest we end up starting next New Year with another hangover.
