Gartner Says 2009 Global IT Spending Decline Worst Ever
October 19 2009 - 10:23AM
Dow Jones News
This year marks the worst ever decline in global IT spending,
although technology companies can at least look to a rebound from
this point, according to Peter Sondergaard, an analyst for research
firm Gartner.
Global IT spending is expected to fall 5.2% from a year ago to
$3.3 trillion. Because of the size of the market, the decrease in
spending has been felt heavily in the tech industry.
"It's such a profound element of the economy," Sondergaard told
Dow Jones Newswires on Monday.
Gartner released its IT spending projections as part of its IT
conference in Orlando, which began on Sunday.
Last year, Garnter had anticipated a 4% decline, but things
quickly appeared to get worse faster. But IT spending is past the
bottom, Sondergaard said, primarily as a result of the infusion of
stimulus money around the world.
As a result, Gartner expects healthcare, utilities and
government IT spending to drive the recovery. While spending growth
is expected next year, spending won't return to 2008 levels until
2012, he said.
It's not just happening in the U.S., either. IT is recovering
rapidly in China thanks to its own stimulus program, Sondergaard
said. Spending in emerging markets is also expected to prop the
industry next year.
Heading into next year, there continue to be laggards. The
manufacturing, transportation, retail and telecom industries aren't
expected to see a significant rebound next year, he said. The
financial services industry is expected to return to spending
toward the end of the first half.
Within individual businesses, companies are spending in areas
such as software as a service, or applications delivered over the
Internet, as well as business analytics and other information
services. Salesforce.com Inc. (CRM) is expected to be a
beneficiary.
There continues to be a pullback in hardware spending, as well
as for consulting services, as illustrated by International
Business Machines Corp.'s (IBM) recent third-quarter report.
Business software makers such as SAP AG (SAP) and Oracle Corp.
(ORCL) are also likely to see slower spending, as companies ease
off on upgrading existing programs, he said.
On the consumer side, hardware sales could see a pick up thanks
to the launch of Microsoft Corp.'s (MSFT) Windows 7 operating
system, expected on Thursday. But companies will be slower to adopt
the operating system, and corporate upgrades aren't expected to
begin until the end of the second quarter, Sondergaard said.
Also on the equipment side, the lack of spending on servers may
end up biting the tech industry down the line. Sondergaard said
that by 2011, 10% of the servers in use will be well past their
replacement date, which could lead to network problems.
"It's slow to impact, but it's also slow to fix," he said.
-By Roger Cheng, Dow Jones Newswires; 212-416-2153;
roger.cheng@dowjones.com