Blogging CeBIT: It's The Economy, Smarty

"A crisis is a terrible thing to waste," said the software giant's COO during his keynote Tuesday at CeBIT in Hannover, Germany. The economic crisis is naturally the dominant theme at the biggest IT trade show in the world. Turner's message that businesses can thrive even as global markets crumble was no more confusing than anybody else's—and nowhere near as jarring as Arnold Schwarzenegger's earlier command that any "losers" worried about the economy better stop "whining."

Turner described a three-legged stool of recent economic growth, proclaiming two of the legs—technology innovation and the globalization of markets—to be just fine. It's the consumer debt leg that's wobbly, he contended.

"Private debt-based economic growth is not sustainable, unlike that based on innovation and technology," he said. The wisdom of leveraging said debt to the moon might have also deserved a mention, but as Turner said at the beginning of his talk, "I don't claim to be an economist."

Nevertheless, Turner and his colleagues in Redmond are positively giddy about "the most challenging macroeconomic environment we've ever seen," one the COO thinks will continue through at least the end of 2009.

"We believe at Microsoft that this may be a once-in-a-lifetime economic event, but we believe it is also a once-in-a-lifetime opportunity," Turner proclaimed.

Or so he says. Microsoft can't be too happy that it's preparing to launch its new operating system in a market where the Dow Jones closed Monday with its first digit smaller than the one in Windows 7.

And where do all these opportunities lie? Green IT, health care, education, "tackling pressing social problems"—the usual suspects, and if everybody's on the same page there, it must be true. After all, it's not like we've ever collectively chosen a path that leads us straight off a cliff.

Oh, wait.

The fact is, the sheer scope of the economic disaster we've wrought is weighing heavily on everybody here at CeBIT, where exhibitor numbers are down between 20 percent and 30 percent from 2008. The thought leaders up on stage seem no more knowledgeable about what's going to happen next as the woman emptying trash cans in the CeBIT press center.

Of course, she's still got a job, which is more than several thousand Microsoft employees are going to be able to say in the coming months. The software maker plans to lay off 5,000 people this year, though Turner said as many as 2,000 may simply be moved to new positions.

On the other hand, Microsoft aims to spend $9 billion on R&D in 2009, up from $8 billion last year, Turner said. At least companies like Microsoft and Intel, which has pledged to spend $7 billion this year to upgrade its U.S.-based factories, are putting their money where their mouths are when it comes to "innovating your way out of the recession," a phrase heard early and often at CeBIT. "Innovate or die" was a popular catch phrase during the recent boom years—one would hate to think the new reality has amended it to "innovate and die."

Craig Barrett followed Turner at Tuesday's CeBIT Global Conference with a talk of his own. The outgoing Intel chairman reiterated many of the points he'd made the night before at the show's opening ceremony. Education and health care are Barrett's main concerns these days— the Silicon Valley elder statesman now spends much of his time working on such global issues as a member of several international relief organizations.

Less interested in talking about the current economic situation, Barrett nevertheless is eternally worried about the long-term effects of a declining emphasis on science education and research spending in the U.S. and other wealthy nations. Part of the solution, but not the only part, is to get more computers into more people's hands. But what Barrett really wants is a major-league attitude adjustment on the part of governments, educators and young people. The world's already got enough interpretive dancers, thank you very much—what it needs is more engineers.

Interestingly, our German hosts don't seem as worried about the tumbling economy as some of the rest of us. Their GDP has only shrunk 2 percent in recent months, compared to 4 percent for the U.S., and everybody from Chancellor Angela Merkel to European Parliament President Hans-Gert Pottering seems to think that just getting more broadband Internet service to more people should solve most of Germany's woes.