What do January Results Suggest for the Software Economy?

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I get asked the question a lot about my expectations for the software economy. It was strong in the 4th quarter, but will it continue to be strong? My sense from talking to a number of people is that January 2010 was better than January 2009, but January is not indicating an extremely strong software economy that everyone would like to see.

Of course, January is a tough month from which to make any projections, so we will see how the quarter shapes up over the next couple of months (Q1 should be a good indicator of business budgets for the year, which should have an effect on both business technology markets and business advertising that supports much of the consumer technology market).

My view at this point is that management teams of expansion stage companies should prepare for a stronger year than 2009 from an economic perspective, but also be prepared to grow the company at a higher rate if Q1 comes in strong (this is timeless advice, btw). There is also still a chance of another downturn, so having a contingency plan for another downturn in addition to the above is not a bad idea, as there is still a lot of uncertainty in the economy going forward.