http://www.abqjournal.com/biz/2bout12-27-99.htm

Monday, December 27, 1999

Training for Y2K Has Gotten Firms in Fighting Shape, Computers have been updated

By Aaron Baca

Journal Staff Writer

Fear about the dreaded Y2K rollover was supposed to be enough to send the country's technology sector into a kind of deep freeze during this last business quarter of 1999.

But spending by thousands of businesses large and small on new computers during the final months of 1999 is bucking that expectation.

Not only are companies buying new systems, some are investing heavily to expand the capabilities of their businesses to make them more competitive in the new year, creating an unexpected dividend.

Take Old Town's Casa de Avila.

"I have to say I may not have been budged this year (to upgrade computer equipment) if I hadn't known about Y2K," said Kathleen Avila, president of Casa de Avila.

"We had the same computers since 1990, '91 or '92," she added. "We ended up with a system that was about 10 years old. We had no choice but to get new equipment. This just turned out to be a good time to do it."

In all, Avila said, her company is spending about $15,000 to $20,000 per store. The company operates nine gift and handicrafts stores in three states.

Numbers like that, along with booming computer and software sales at such companies as Computer Corner and Baillio's, are driving what's becoming more than just a push in the economy.

Earlier this year, industry analysts were calling for a chilly fourth quarter in the technology sector. Money would be drained from the sector, the experts said, as companies poured money into Y2K fixes rather than long-term purchases and expansions.

A survey conducted in September and October by the Gartner Group, the parent company of Dataquest, found that 12 percent of hardware and software buyers intended to freeze purchases. Products that would primarily be affected are application software, servers and network equipment, it said.

Added to that, IBM gave Wall Street a scare in late October when it projected dismal sales for the next six months. Customers, IBM said, were delaying purchases until after they were sure the year 2000 problem wouldn't affect their computer networks. Other companies echoed IBM's concern.

But just as it did for Casa de Avila, spending in the technology sector is beginning to generate its own kind of dividend.

"The fear that business would simply just patch their problems turned out to be wrong," said Mark M. Zandi, chief economist at RFA-Dismal Sciences Inc. in West Chester, Pa. "We're much better off for it."

In the case of Casa de Avila, the company has invested in new software for inventory, accounting and point of sale to complement the new hardware it has purchased.

Such purchases are driving strong sales numbers at local computer retailers as the year draws to a close.

"In terms of new computers, the second half is double what we did during the first half. And that's number of units," said Carole Petranovich, president of Computer Corner in Albuquerque. "We're seeing a lot of technology freshening. It's across the board."

Petranovich said her store has been selling to plenty of small and medium-size businesses that are interested in investing in productivity.

"It comes with the technology," she said. "Early on in the year, we saw sales where people were trying to stay current with technology. Now we're seeing the last wave of that."

In particular, Petranovich said, businesses are keying in on software packages and hardware that enhance such functions as accounting and inventory management -- things to improve productivity and efficiency.

Other retailers are seeing the boom in their businesses, as well.

"It's been very strong," said Doug Hart, general manager at Baillio's Electronics and Appliance in Albuquerque. "I'd say we're up 30 percent over last year."

Hart said the increase is in the number of units sold. He said his company has been selling more computers as prices have declined over last year.

The results are technology packages whose benefits will linger long after Y2K.

"We originally thought of this as making sure we were Y2K compliant," Avila said. "Now we see it as an investment in the company, too.

"We can access information in so many different ways than before," she added. "Our capabilities have expanded; they are better than before."

Ultimately, the value of all this new technology will depend on how well companies use the Y2K glitch repairs to learn better ways of solving future technology problems, said Kazim Isfahani, a Y2K analyst for the Cambridge, Mass., technology consulting firm Giga Information Group.

"We'll find out about how organizations are going to respond to this knowledge after 2000," Isfahani said. "You'll begin to see the productivity gains at that point." The Associated Press contributed to this story.

-- Uncle Bob (UNCLB0B@AOL.COM), December 27, 1999

Answers

That is good news too. Now let me see. Their sales have bee twice what they were last quater. But the systems being upgraded are a mixed bag of systems bought five or ten years ago. Now I know sales have sky rocketed... but I'll bet one hell of a lot more systems were purchased between 1990 and 1996 than were sold in the last quater. So let us just take a stab in the dark and estimate that 25% of what SHOULD have been replaced HAS been replaced... Where does that leave things?

-- (...@.......), December 27, 1999.