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The IT market will get worse before it gets better with little prospect of recovery in spending until 2004.

That's one of the main predictions made by influential analyst Martin Butler during a session of crystal ball gazing with IT hacks in London this afternoon.

Butler, president of founder of the Butler Group, was upbeat about the prospect of Web services transforming the IT industry and a return to spending in the medium term, adding that this will be accompanied by IT jobs moving from end-user organisations to grid services suppliers.

In the long term (and Butler is talking ten years or more here) the greater economies of scale which Web services harness might result in 30 per cent of those working in IT having to look for work elsewhere, or becoming "dispossessed", as he put it. Chief Information Officers will increasingly find themselves managing external resources rather than internal staff, he predicts.

According to Butler, Microsoft and IBM are the best-positioned IT giants to take advantage of the growth of the Web services market. IBM is successfully transforming itself from a technology to a services company. Meanwhile Butler reckons Microsoft .Net strategy will capture user imaginations and gain market share from J2EE, which will still remain important (particularly in application servers).

Butler has much less kind things to say about other major vendors.

Sun Microsystems strategy of becoming a 'pure technology play' company is unlikely to win allies among executives at the head of large corporates, he reckons. Meanwhile Oracle will have to modify its approach to end users of preaching the 'one true way' because of tough economic conditions.

Butler, however, reserves his worse criticism for the new HP, describing the merger between HP and Compaq as a "marriage made in hell". HP has lost its focus and its strategy of making short-term improvements through cost cutting will fail in the longer term, he claims.

Oher changes in the market predicted by Butler include the increased importance in the small business sector in IT spending and a shakeout in the Enterprise Application Integration and integration tools (portal and content management) segments of the market.

Disappointingly he had little to say about changes in the hardware market, but then again this is not really Butler Group's focus. In their own way, companies like Intel and Cisco are every bit as influential in shaping the IT market as the Big Five of IBM, HP, Microsoft, Oracle and Sun - and even that's discounting the influence of telecoms companies or suppliers.

Butler's vision of Web Services, backed by a sustained marketing push from Microsoft and IBM, dominating IT for the foreseeable future seems to discount the rapidly changing nature of the IT market. The possible effect of breakthrough changes in technology or the world economy were also largely downplayed, possibly wrongly we suspect. ®

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