Spending cuts could mean a sales slump for Intel, Microsoft and Oracle

TRADITIONAL IT VENDORS such as Intel and Microsoft might be facing a sales squeeze as government expenditures are cut.

With governments set to cut spending in order to balance the books, Bloomberg is reporting that Intel, Microsoft and Oracle can expect a slump in sales. Instead Morgan Stanley, believes virtualisation vendors such as VMWare and Citrix will see a boom in business as firms try to get more out of existing hardware.

Even in Microsoft's home town of Seattle, Bill Schrier, the state's CTO is delaying upgrading to Windows 7. He told Bloomberg that due to the likelihood of further cuts, he is paring down service contracts with IBM and looking for networking kit from vendors that cost less than Cisco.

Both Intel and Microsoft are known for their co-dependence on each other, with Microsoft's latest operating systems usually leading to a boost in PC sales. The problem is not only are people starting to realise they might not have to upgrade, Microsoft has already said that Windows 8 should not require Windows 7 users to replace their hardware.

Firms such as Microsoft, Oracle and other software vendors have built up dependency on their products through the use of closed practices and proprietary 'standards'. While governments ponder how to accommodate public needs as budgets are cut, it seems the environment is ripe for open source software to demonstrate the savings that can be realised with open, standards compliant software.

We asked both Microsoft and Intel whether they had felt any effects of government spending cuts, but at press time neither firm had got back to us. µ