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Obama Public Works Plan Could Bring Relief to Tech Sector

By Jeff Meisner
Dec 8, 2008 3:30 PM PT

Part of President-elect Barack Obama's plan to stimulate the economy through a massive public works program will touch upon the technology sector, which has seen its share of woes in recent months.

Obama Public Works Plan Could Bring Relief to Tech Sector

Through the proposed economic stimulus package, Obama hopes to expand access to broadband Internet, make government buildings more energy-efficient, improve IT systems at healthcare facilities and upgrade computers in schools.

The proposal comes at a time when many companies in technology are struggling. Such tech and telecom stalwarts as AT&T, Sun Microsystems, Intel, HP and Yahoo have slashed their workforces.

Meanwhile, corporate spending on software and hardware is expected to dip well into 2009. At the same time, consumers are spending much less on consumer electronics, which is hurting sales at companies that make laptops, desktops, digital music players and mobile phones.

Obama's New Deal

Obama's proposal is comparable to nationwide public works programs put in place generations ago, said Roger Kay, president of Endpoint Technologies Associates.

"[Obama is] now looking at general stimulus in a similar way to what Roosevelt did with the New Deal," he told the E-Commerce Times. "How he finances that is to be determined, but technology spending for public infrastructure is a good idea."

The federal government has helped stimulate innovation in the technology sector in the past, Kay noted. "The [Defense Advanced Research Projects Agency] created the infrastructure for the Internet, which turned out to be a pretty big growth engine for the economy. The question is, will it work again? Certainly, it won't hurt. The industry will be happy to have any aid at all."

Increased Broadband Access

One of the components to Obama's proposed stimulus package is the expansion of access to high-speed Internet connections.

Expansion of broadband was supposed to take place during the Clinton administration, Denis Pombriant, managing principal of the Beagle Research Group, told the E-Commerce Times.

"Clinton gave the vendors a US$25 billion tax cut to support the effort, but they never did anything," he said. "Broadband will make it possible to do more business better, faster and more securely than we can now."

However, there are several different broadband technologies out there, noted Endpoint's Kay.

"I think my issue there is what standard do you back?" he asked. "WiMax? Do you light up metro areas as opposed to local areas? The problem is in calling the winner. In the current market, all the technologies vie with each other, and it's not clear which one will win."

Energy Efficiency

Since the start of his presidential campaign two years ago, Obama has spoken often of boosting the amount of investment the U.S. government makes in energy-efficient and so-called green technologies.

Now, he is calling for the government to invest in technologies that will make federal buildings more energy-efficient.

"Power generation and clean power are areas that the administration is likely to invest in," Kay said. "Think about different kinds of materials that are used to make buildings more energy-efficient. There are also companies that have invested in energy-efficient management technologies that are run by computers. They have sensors and activators that open shutters and things like that."

Government buildings waste a great deal of energy, remarked Beagle Research's Pombriant.

"There is also a lot of waste in lighting -- incandescents versus fluorescents -- and waste in things like elevators and escalators," he said. "There are more efficient queuing algorithms that can be employed to stage elevators, and if you've been to Europe you know that many escalators don't run if there is no one on them. There are also ways to add energy capture from thin-film photovoltaics on windows to solar panels on roofs."

Healthcare Facilities

Obama's proposal also calls for improved IT infrastructure at hospitals and doctors' offices -- areas notoriously behind the times when it comes to implementing modern software, hardware and medical imaging applications.

"A lot of clinical software has been starved for decades, and hospitals are running ancient applications for labs and other back-office medical areas," Pombriant said. "Medical records are still managed by paper, which is a tremendous waste."

More can be done through imaging to save money and energy, he said.

"Imagine building a computer system instead of a building to house paper records, which in many cases, need to be saved for 30 years," Pombriant said. "There are lots of economies to be made here."

Pombriant also proposes moving away from a pure desktop PC and server environment to a Web-hosted application environment.

"I worked with a regional clinical lab earlier this year that was installing a new state of the art lab-management system," he said. "The application was pure client-server! You save a lot in heat, light and cost by going to the Web."

Will Obama's Plan Work?

Obama's proposal now faces two open questions: Will he be able to get Congress to sign off on it? And will it work the way his administration hopes it will?

"I would say the government's record of success is mixed," said Endpoint's Kay, "but the current administration has been fairly backward -- especially in terms of energy policy. It's protected its friends. Its policies weren't guided by principles of what would work best, but by who would most benefit."

Pombriant is more optimistic.

"[A stimulus package] creates demand, which has a ripple-through effect on the economy," he said. "Right now, the economy needs all kinds of demand-generation, because the economic meltdown is destroying it. Government-sponsored demand will do the pump priming needed to put momentum back into the economy."

However, the stimulus package must be accompanied by an oversight mechanism of some kind, he said.

"The one thing we don't talk about is the need for additional regulation," Pombriant said. "It does no good for the government to buy windmills, for example, unless it also mandates electric generation by the same. Hopefully, the government order drives economy of scale, so that when the private sector buys, they get product at lower cost."


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