• by Dana Blankenhorn , April 3, 2003

There is yet more bad news for tech publishers from two new studies on purchase intentions.

Big businesses are just as likely to be cutting tech budgets for the next quarter as raising them, said a study from Ziff Media's CIO Insight. Consumers are still cutting back on their technology spending, said the NPD Group.

This should be no surprise to publishers, who have faced depressing business conditions for three years now. "Anyone who would be surprised by those numbers can't be savvy at this point," said Stephen Baker, director of industry analysis for NPD, based in Port Washington, NY.

Ed Baker, executive editor for CIO Insight in New York, emphasized the positive. "There's no absolute 1-1 correspondence between ad pages and economic uncertainty," he said.

Technology magazines boomed during the 1980s and 1990s, but they've busted in the 2000s. The recent closing of Red Herring is just the latest example of the trend.

The only good news for the industry is in gaming, where Ziff's GMR Magazine said it will nearly double its rate base in September, from 225,000 to 425,000. The magazine is distributed free by "Electronics Boutique" stores.

But the new studies indicate the slump continues, and even when it ends tech magazines may not be the prime beneficiaries, said Stephen Baker of NPD.

"Whatever comes back will be different than what it was a few years ago," he said. "Retailers say time and time again their best customers are those who surf their web sites, get the information they need, then come in ready to buy."

Channels have also changed, he said, with "big box" retailers like Best Buy and direct sellers like Dell Computer now dominating.

Ed Baker of CIO Insight noted that 31% of small businesses plan to increase their IT budgets over the next three months, against just 19% planning cuts, and added that some sectors are showing growth. "There are attractive offerings in software, pre-packaged enterprise-class software. There is some movement in that market," he said.

But Chief Information Officers (CIOs) said by a 3:1 margin the Iraq war will hurt their budgets. If the war ends soon, as many large companies will increase spending as decrease it.

Baker of CIO Insight said his own magazine is holding up "pretty well" through the bust. "We're having a good April, a good May, and with any luck at all the war will be over soon, but who knows?

The cash hordes of industry giants like Cisco, Intel and Microsoft also assure there will still be business to do. "When times are tough it's time to gain market share and reach audiences that you couldn't reach in times of more noise," he said.

Still, with just 7.4% of consumers saying they will spend more on consumer electronics, against 60.5% saying they will spend less and 9% saying they will spend more on computers, against 54.2% saying less, silver linings will remain hard to come by, said Stephen Baker.

But even he insisted in a positive conclusion.

"The good news is this is not unexpected. If people had said they had no desire to ever buy anything that would be bad news. But we're just validating what you see in the market."