Why Tech May Rebound in 2010

“It doesn’t feel like a recession here.” Over the past few months, I’ve heard several people who either visited or moved to the San Francisco Bay Area make that comment. The effects of the Great Recession are still painful in many regions of the country, but the relative health of the tech industry has left many in Silicon Valley and San Francisco feeling they dodged a deadly bullet.

While the economy’s longer-term health remains as uncertain as ever, the outlook for tech is — for the next several months, at least — getting brighter. The biggest reason is that companies feel more comfortable spending on new technology, as well as on online ads. But consumers not left jobless by the recession are also spending more when they see bargains.

Take Amazon (s amzn). Before the holiday season, most analysts expected the discount-happy retailer to enjoy robust growth. But they underestimated how robust. ChannelAdvisor puts the rise in Amazon’s same-store sales in January December at a whopping 74 percent. Amazon, which doesn’t share much data on holiday sales, did note that peak day orders increased 51 percent over the same month in 2008.

Online retail sales in November and December increased by 4 percent year-over-year, and some analysts are looking for a growth rate above 10 percent for all of 2010. Amazon will continue to be a prime beneficiary of that growth. In the past months, nine analysts have upgraded their estimates for Amazon’s full-year 2009 earnings and 11 have increased their 2010 outlook.

Online advertising is also rebounding after being flat or down for most of last year. According to Kaufman Brothers, about 25 percent of media consumption is on the web, vs. 10 percent of advertising spending. That gap will close over time, helped in part by the lure of more targeted advertising. But as with e-commerce, the growth in online ads will favor leaders such as Google (s goog) and Yahoo (s yhoo).

Google’s ad revenue will get a boost as mobile advertising increases. Its purchase of AdMob gives it more than 20 percent of the mobile ad market. But there’s also growth expected in display ads as well. J.P. Morgan said display ad spending will rise 11 percent in 2010 after falling 5 percent last year, a trend that will help Yahoo in particular. Carol Bartz had the thankless task of reviving Yahoo (she gives herself a B- so far), and the fruits of her work will be more apparent this year.

As for Microsoft (s msft), it’s releasing new enterprise-focused products just as companies are starting to feel more comfortable spending on technology again. Revenue for Windows 7 should remain strong, while new versions of Windows Server and the Office Suite are coming. Microsoft is pushing these under the motto of “the new efficiency” – intended to resonate with cost-cutting companies.

The drive for efficiency is central to the tech industry beyond this summer, when the outlook again becomes murky. Job cuts coupled with new technology is pushing the productivity rate back up to levels not seen since the previous recession. Optimists argue that higher productivity will lead companies to hire more workers, spurring a strong recovery in the U.S. economy.

But it’s also possible that other factors could draw the economy back into recession. The housing market is still ailing, and corporate spending may slow now that inventories are being restocked. The risk of being in a relatively healthy sector like technology is it can bring complacency. The companies that are enjoying a rebound today may be caught of guard if the economy stalls again later in 2010.

Image courtesy of Wikimedia Commons; thumbnail image courtesy of Flickr user aoyan.