Leader: Recovery?

The end of last week saw optimism from three key companies in the technology sector. But news from one camp we find, shall we say, a little hard to believe.

Microsoft turned in healthy results on Thursday, largely buoyed by a steady increase in spending on PCs. It also benefited from rises in sales in all its seven divisions apart from Home and Entertainment – hardly a bellwether for business IT.

Meanwhile the mobile handset giant stuck by a positive between-results trading statement earlier this month, forecasting industry volume growth of 10 per cent this year. We knew it had a bumper Q4 last year but the message seems to be that this year’s 3G launches and general recovery by operators should see everyone in telecoms benefiting.

But the final announcement of the week, from last Friday, was the hardest to swallow. SAP, Europe’s largest software vendor, has predicted a 10 per cent rise in software licence sales this year.

Now nobody goes out and buys SAP systems on a whim. It’s in a market that depends not a jot on consumers and small businesses. SAP forecasting a significant upturn – given its health is defined by decisions in enterprise IT departments and at board level – is something special.

The company finished last year strongly in the US, which accounts for a third of sales, and the idea is that the rest of its operations will also pick up.

Nobody doubts SAP is winning the race to sell big, company-wide software systems against rivals such as PeopleSoft (distracted by its efforts to be bought) and Oracle (distracted by its efforts to buy PeopleSoft and a generally sickly applications business). But 10 per cent, over the next 12 months, for the type of product that carries with it a weight of expectation and no little adverse publicity?

Poll after poll tells us most people across the industry are optimistic – certainly in relation to the last three years – but if SAP can pull this off, matching the onward march of the likes of Microsoft and Nokia, it could well be time to smile again.