Cisco Systems Inc Chief Executive Officer John Chambers said, on Wednesday, that CEOs in the United States and Europe were being more cautious than he has seen in many years.

Better bets

Analysts say business software makers look better placed to ride out a recession as they help boost companies’ efficiency, but prospects are dimmer for hardware manufacturers like Dell Inc and Hewlett-Packard Co and chip makers Intel Corp and Advanced Micro Devices Inc. Tech research firm Gartner forecasts global spending on business software to grow 8.2 per cent this year to $191 billion, which is more than twice as fast as estimated hardware sales growth of 3.4 per cent to $394 billion. Analysts cite business management software makers SAP and Oracle Corp among better bets.

Maintenance deal

They sell programmes that companies use to boost productivity, cut costs and comply with regulations. About half their revenue comes from high-profit-margin service maintenance contracts. Software makers who host products at their own data centres and deliver it to customers via Web browsers may also perform well, as initial costs are minimal, analysts said. Besides computer hardware, some consumer electronics are also forecast to hurt from a recession. In some cases, a breed of computer programme known as virtualisation software can boost the efficiency of existing equipment. VMware Inc, for example, sells products that allow one server computer to do the work of 10 or more machines. Citrix Systems Inc offers similar products.

Data storage equipment makers EMC Corp, HP and Sun Microsystems Inc are vulnerable because of excess capacity among many corporations, observed an analyst. HP and Sun also sell servers and software. Cost-conscious companies are now willing to use hardware, such as Cisco routers, until it breaks, said another analyst.