This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic from Bloomberg Radio. Well, our world, the reopening trade, we are seeing it as we come out of the pandemic, but we've also known the pandemic has caused a lot of innovation and transformations definitely accelerated in things like healthcare, corporate travel. Think about all the meetings that conversations we've had virtually retail supply chains. A
lot of things have been impacted. Yeah, they certainly have. And the big question is to what extent is the disruption continue with the transformation to the cloud. How much of this has been pulled forward already? And do we see the spend decline from these I T systems? Sounds like a question for next guest. Crawford del Prett back with US president at International Data Corporation i d C. As you know it, he's on the phone in Massachusett's Crawford,
nice to have you here with Tim and myself. How are you, hey, how you guys been. It's great to talk to you, and yeah, what a what a crazy time this has been over the last year and a half or so. It's great to catch up. We talked with you, we were looking at our calendar. I think back in April of a lot has happened since then. Those are pretty dark times. How do you describe and explain the innovation disruptions that we've seen and what it
says more significantly about the world to come? Yeah, you know, So what's interesting is we now have a lot of data right over the last eighteen months that we can look at and you know, anecdotally kind of what we thought we were we were seeing, we can now see in the numbers and I'll just go with you for a little bit. But what we saw over the last two years, it felt like, you know, tech kind of its strengthened, right, and there were some areas that got hit,
but it definitely uh strengthened. But you know, what we've seen from a parallel standpoint, totally broke down in COVID. So if we go back all the way to the PC downturn of the nineties, if we go to the dot bomb or the dot com, if we go to the crisis of two thousand eight when GDP crashed, check would crash more. So you know, in two thousand one, g d P went to zero. Tech crash to minus three percent growth in two thousand and nine two eight, g d P went to minus let's call it to
check went to minus five. In this downturn, GDP went to minus four. Tech stayed positive and actually core tech stayed at three percent growth. And so the story here and what we saw in is that companies leaned into tech. They use tech to get out of this mess, to create new experience for customers, to create a stickiness with their services. In some sectors, it boosted in another sectors. Um, you know, they were able to stay very very productive even as we know as the world work from home.
So it was it was really a downturn unlike any other and in a lot of ways, tech kind of saved the day. Well the Crawford, when you use the term tech, you mean technology, but not all tech is created equally. And there's different segments of tech. Right, there's I T spend, there's spend for cloud transformation. So break it down for us and where we saw the spending grow and perhaps parts where we didn't see that weren't so resilient. Yeah, So I mean you're you're you're absolutely right.
So we saw you know, application software and and and and core apps. You know, they they stayed with their double district growth. We saw you know, things like infrastructure as a service you know still you know, delivering you know over um growth. But you're right, I mean, if you're talking about you know, core infrastructure, you know, core servers,
core enterprise network UM. You know that stuff in was you know barely growing or or or in the case of enterprise networks, you know, in terms of dollars, actually you know shrank almost um three percent. So you know, if it was something that was related to the cloud, um, if it was something that was um related to um uh a A A h an app, you definitely saw a massive acceleration. But then in terms of tech, you
also saw some kind of not intuitive things. Right. It wasn't just you know that we couldn't build PCs, which is a situation we are now. PC demand went nonlinear, so categories that you know, we're kind of um left for dead. You know, we saw a PC shipments grow fourteen percent um uh sorry, we expect PC's uh shipments to grow about foe, so you know, continuing to grow, you know, very very dramatic. I want to get back to Crawford. Del Prett back with US president at ADC
Research on the phone in Massachusetts. Heay credit, Uh, Crawford, we want to continue with you, but we just mentioned a story about Google scrapping its planned to offer bank accounts to users big tech. I mean, are they at some point do you think going to be Are you seeing or having conversations with folks in the industry that eventually they will be much more involved when it comes to finance, when it comes to healthcare? Absolutely? Um, yeah,
you're this is gonna be. This is is gonna play out over a number a year. Pers And I think you know what you're seeing with Google is right now. I mean tactically, you know, Apple was able to and and everything Apple does is about leveraging the power of you know, people talk about the numbers in their ecosystem, it's also
the quality of the number in their ecosystem. You've got a spender with more disposable income in the Apple system ecosystem, and Apple is able to do things like yet this spend this this customer to use the Apple credit card to aspire to an Apple credit card. Um, they you know, frankly,
just have more means. And even though Google's ecosystem is larger in terms of units, they don't drive as much value, they don't drive as much revenue out of that ecosystem, and I think that's kind of the the rub that you're seeing right now. But over time, you will see healthcare companies and banks using more tech to create new experiences for customers, and that will involve tech companies that we all know. Does it present regulatory risk though, Crawford
to these companies. I mean, if you the term big tech is sort of majority for Democrats and a blickens, and I wonder if they get into healthcare more so, if they get into banking more so, if that just puts a target on their back from regulators. Yeah, it goes well. I mean that's already happened, right, I mean bigger target for a lot Yeah, yeah, earlier for a lot of these companies. We gotta Yeah, it would be
a bigger target. I guess. I believe that healthcare companies are healthcare companies and banks are banks, and I think you know, Apples figured that out and that's why they
have done the partnerships that they've done. And I think you'll see more of those kinds of partnerships going forward, I I think these companies are going to be in a position of powering other companies to be stronger with their tech as opposed to jumping in and entering um these these these new sectors at this you know, kind of breaknext speed. I think you're probably gonna see that happening a lot slower than them going it alone, if
you will. Hey Crawford, I want to get back to something that you said earlier, which was the growth of the PC market, and we saw that a lot of that, uh, demand for PCs get pulled forward over the last eighteen months as people were working from home and needed machines
at their homes rather then at the office. And I'm wondering because earlier this week HP in check our HPQ was downgraded to neutral from overweight at JP Morgan, the bank, lowering its price target to thirty dollars, the bank saying that they see moderating tail wins for the PC market. And I'm wondering if if you're seeing those those tail wines moderate as well, if if that demand has been pulled forward. Yeah, So there's a couple of there's a
couple of factors going on here. There's there's a ton of demand that you know, we just can't with the PC companies can't meet because of the semiconductor shortage. But if you look at right, we expect to see the market girl about four this year in the units. One percent of that growth happens in the first half, and about between two and three percent happens in the second half. Um sorry, you know, up in the first half, up between two and three in the second half of the year.
So our forecast kind of kind of plays that out. Now. Having said that, this market, we expect um will continue to grow, but it'll grow oh at lower rates going forward, you know, more traditional rates. But the market expanded by you know, um double digit percentage in terms of units, and won't necessarily give that back because what we see happening is that PCs are now viewed as kind of a safety net um and and something was happening with PCs.
People are consuming more media on them, they're using them, they're enjoying the bigger screams, and they're also basically saying, I got to have more of these in my you know, as as a family, we need more of them in our lives. So in the US, the average number of PCs for household prior to COVID was about two and a half. Now it's more like three. We don't see that necessarily going down. We don't see it rising, we don't see it going down. So so we basically there's
been a shift here. So just to rehash some headlines crossing the Bloomberg and it does relate to our conversation present, Pine says that we're going to get this done. He's talking about the infrastructure legislation, completing his economic agenda. He says doesn't matter. After meeting with Democratic lawmakers on the US Capital are at the U S Capital he says, quote, it doesn't matter when it doesn't matter if it's six minutes, six days, or six weeks. He also uh says that, um,
a smaller bill can make historic investments. So I'm assuming he's talking about the software infrastructure side of that. On the harder side. Crawford, UM, how do you what kind of analysis have you done that this potential infrastructure spending, which includes connecting more of America high speed internet access, which we have reported in here in Business Week about how many millions of Americans it's huge, don't have that access.
What kind of analysis have you had because I think about our investment audience are saying, okay, so how do I maybe play this ultimately if this infrastructure bill goes through? Yeah, I mean so what So what you're going to see if this infrastructure bill goes through is you're going to see steady demand and what we call I C T so you know I T and communications technology. So you're gonna see UM, you know, significant interest in the telecom
infrastructure UM and building out telecom infrastructure. You're going to see UM the carriers, you know, continue to be able to UM, see sustained demand. You're going to see uplifts and continued investment in things like security because the security landscape becomes more and more complex as you bring more
and more people on online. So you know, that's why we believe that if you look at I T spending, you know that kind of comes back to about six percent by our forecast says that I C T including communications that gets over that gets to over seven percent growth by So it's really that idea that we'll bring in more people online, and that really means that more has to be spent on the foundational technologies, the core infrastructure in order to make this reality for you. All right,
really appreciate the time with you. Crawford Del President at I d C on the phone from Massachusetts, so thank you.