EDITORIAL - That familiar recession obsession

Companies planning to expand their operations over the next six months have much to worry about. With mainland Europe and the US looking like the only relatively stable economies worldwide, investment plans are going to have to be ingenious to succeed. While the corporate market may remain buoyant for some time, innovative ways have to be found to plug the revenue gaps created by the next recession.

The managing director of a memory manufacturer put it in perspective when he said: 'Recession is good for us because people don't buy new machines - they upgrade their old ones.' The signs are that vendors are looking to create original revenue streams in anticipation. Strategies such as ICL's second-hand PC and laptop scheme cannot be down to the green nature of the channel alone - I suspect it hides more than a little crystal ball gazing into small business purchasing plans for the next 18 months. Many will delay any improvement to their IT infrastructure until a recession has passed, but the knowledge that ICL, with its services history, is the one they are buying from could make this scheme a winner.

ICL claims it is going to sell the machines at a fraction of the cost of a new unit. But new unit prices are still tumbling, making pricing a bit of a black art at the moment.

It will be interesting to see how chip manufacturers react to the ICL initiative.

Had it happened four years ago, they could dismiss it as the hippie idealism of a giant past its best. But Intel shows all the signs of a company preparing to retrench. This week it launched updated versions of its Pentium II and Celeron chips, which will inevitably bring PC prices crashing down.

With the sub-#500 PC already a reality, a recycled one could be a good buy as a second or third home machine. Fujitsu's experiment in selling supermarket PCs (see feature, page 28) looks to have been a huge success.

If the volume of sales continues, the argument about whether PCs have been commoditised will be won by default.

You have to hand it to Dell - where others gingerly look at how they can expand into Europe, Dell has launched its direct strategy into China.

It is an excellently timed move. As the tiger economies fade into the background, the Chinese economy will provide Dell with fresh potential for growth. Quite how it intends to keep to its direct model in a country where people prefer to buy from the factory and whose government prevents many from having internet access is anyone's guess.

This venture will either be an enormous fillip or drag those huge share earnings back down to reality.

Or maybe the market will do that itself as it flattens some of the less astute players.