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IT Spending Expected To Decline In 2009

January 13, 2009

Global IT firms face several pitfalls in 2009, according to a new report from Forrester Research released on Tuesday.

Spending on IT goods and services will hit about $1.66 trillion ““ a 3 percent decline which follows an 8 percent increase during 2008, Forrester vice President Andrew Bartels said.

The 3 percent drop marks the first percentage decrease among IT firms since 2002, when spending decreased by 6 percent.

Bartels said IT firms should bounce back in 2010, with the possibility of a 9 percent increase.

A weakened US dollar contributed to the increased growth rates in 2008, but a stronger dollar will hurt growth measured in dollars in 2009, the Forrester report said.

The report also noted that “Western and Central Europe and Canada and Latin America will have the weakest growth, at 1.3% and 1.2%, respectively, in local currencies.”

“Asia Pacific and the oil-exporting area of Eastern Europe, the Middle East, and Africa will do the best, but growth there will still be weak, at 3.1% and 5.4%, respectively.”

It expects a “short-lived” boost for some companies from the weaker euro in early 2009, including vendors such as Alcatel-Lucent, Ericsson, SAP and Nokia Siemens, a venture of Nokia and Siemens.

“Software purchases will do a bit better than other categories, but all vendors will face a tough time until late 2009 or early 2010,” according to the report.

The communications equipment market will fall 3 percent to $353 billion in 2009. Meanwhile, software spending will remain unchanged from 2008 at $388 billion and the computer market will fall 4 percent to $434 billion.

Bartels said that virtualization technology is reducing the need for physical servers.

Industry-specific computing devices, such as next-generation RFID (radio frequency identification) systems, are seeing growth, Bartels said.

Also, many companies appear to be putting more trust into smartphones and scaled down netbooks instead of high-end laptops for employees.

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