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Panache Communications
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Techtel's Tech Demand Index™ Rises with Enterprise Technology Showing Growth

Brand Image Strength to Determine Where the Spending Will Go

Emeryville, Calif.- November 6, 2003 - The improving economy boosted by a rising stock market is slowly improving spending plans and resulting demand for information technology. This is despite lingering issues of trust and lack of innovation, according to the Q3 Techtel Tech Demand Index™ (TDI) from Techtel, a leading market research firm, which has tracked demand for information technology solutions since 1984. To access a summary of the report online, visit www.techtel.com and find Q3 2003 Techtel Tech Demand Index™ under research reports. A full report is also available and may be ordered at the site.

Overall, TDI indicated a 15% improvement from a year ago when pre-war jitters were a major concern. For the second consecutive quarter, overall technology purchases continued on an upward trend rising 2% from 91.4 in Q2 2003 to 93.0 in Q3 2003. Another positive sign is that tech consideration (potential demand) rose 2% from 105.4 in Q2 2003 to 107.3 at the end of Q3 2003, and in the process rising slightly above a flat trend that had lasted almost three years.

"This reduces the threat to further growth that we have been warning about for the past two quarters," said Michael Kelly, CEO of Techtel Corporation. "It's a promising sign of growth to come."

Within the overall index, the Enterprise High-End Component (servers and storage) rose 15%, while the General Business Low-End Component (desktops and notebooks) fell 1% from Q2 2003. In a sign of strength, consideration of the High-End component showed improvement increasing 10% in Q3 2003 over Q2 2003 and 21% over the same quarter a year ago. The Low-End Component (desktops and notebooks) has slowed in its growth as spending moves to more expensive hardware such as midrange servers and financial software in response to the Sarbanes-Oxley Act requirements.

Spending plans have dramatically improved over the past six months from the very negative to positive, which points to sustainable improvement in the tech sector. Besides new interest in financial applications software and midrange servers, consideration is increasing for customer relationship management (CRM) once again and interest in outsourcing and systems integration is again growing in the largest companies. Categories that are still flat include mainframe servers, eBusiness and storage area networks. But most of these will see improvement as demand picks up further down the supply chain of IT solutions, while others will not.

"IT market demand is now like a crowded Southwest Airlines gate 30 minutes before departure," continued Kelly. "Everyone is still sitting and watching everyone else to see what they're doing, ready to rush into a line when others move. When it happens, it happens fast, but not just yet. Once competitive factors and a fear of being left behind replace the 'asset protection' thinking of recessions, people give up their seat and head for the gate. We are seeing this thinking start to percolate through the economy. It takes time, and eventually hits a tipping point, up. How much up remains to be seen."

Market Opinion Good Indicator of Future Spending

With the increase in spending, brand reputations are a good indicator of where the money will be spent. Techtel tracks the market's opinion of a large number of companies. Companies with falling brand image are more likely to have a harder time attracting customers, employees, investors and partners versus organizations with higher opinion.

Dell, Hewlett-Packard, Intel and IBM are companies that remain strong brand leaders, with Symantec continuing to move up the brand leader echelons. However, Oracle and Microsoft have seen their brand image deteriorate.

"Opinion of Sun has suffered little in the market even with the pounding by analysts and press. Sun is a strong brand, which given a new relevant set of products and services, could recover quickly," said Kelly. "The market's opinion of Microsoft and Oracle, the number 1 and 2 software companies in the world, has each declined by over 20% in less than three years. Their brand images are in free-fall and no seems to know why, or even care."

Disclosure About The Techtel Tech Demand Index™

The Techtel Tech Demand Index™ is based on the Techtel Demand Truth™ methodology that bypasses the opinions of corporate management, financial analysts, and even accounting data, by going directly to the customers - where demand begins and ends.

The Techtel Demand Truth™ model is an independent, objective survey of IT sales and future demand utilized by technology investors and academia. It has served as a barometer for general IT sales trends as well as performance of specific technology companies in their respective categories for over 18 years.

The Techtel Demand Index™ is based on proprietary surveys involving 800-1,000 companies with 250 or more employees. Respondents are asked whether their company has purchased or are considering purchasing hardware products in each category. The results represent the percentage of respondents whose organization has purchased or considered the products in the quarter. Techtel also asks respondents for their opinion of about 60 companies, brands and technologies each quarter. The research and reporting methodology has remained substantially intact for 19 years and is not open to influence by the companies tracked, financial analysts, nor other groups.

Techtel sells subscriptions to the results of its tracking research to many of the companies tracked as well as financial and investment firms. Companies use the results to understand and improve their marketing processes, and may also quote from the results publicly if they so choose. Occasionally, Techtel comments publicly on these results to further its market presence. You should assume that many companies that Techtel comments on may presently subscribe or have previously subscribed to this tracking. Subscribers do not have any influence over the methodology nor results.

About Techtel Corporation

Techtel Corporation, in Emeryville, Calif., tracks market demand for IT solutions in 40 categories and nearly 100 companies. Techtel has been conducting the demand growth study every quarter since 1984. Techtel also measures advertising effectiveness, brand equity and customer loyalty. Leading technology companies rely on Techtel's research information to measure the effectiveness of their marketing/sales and service efforts, and advice on how to capture more demand. Wall Street firms such as Merrill Lynch and Fidelity Investments have relied on Techtel's research in predicting movements in stock prices. For more information about Techtel, please call 510-655-9414 x 201 or visit them on the web at http://www.techtel.com.

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