Report: Worldwide IT spending to drop 3.8% in 2009
The declining global economy is impacting the IT industry, according to a forecast from market research firm Gartner, worldwide IT spending will total $3.2 trillion in 2009, a 3.8 percent decline from 2008 revenue of nearly $3.4 trillion.
"IT organizations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending," said Richard Gordon, research vice president and head of global forecasting at Gartner. "The speed and severity of the response by businesses and consumers alike to these economic circumstances will result in an IT market slowdown in 2009 that will be worse than the 2.1 percent decline in IT spending in 2001 when the internet investment bubble burst."
In a broad-based slowdown, the forecasts for all four of the key market sectors of hardware, software, IT services and telecommunications have been revised downward, with only software spending growth remaining positive (Table 1).
"Although government stimulus packages will likely be important in the long term, they will not be able to offset this bleak near-term outlook," according to the report. Until global financial markets stabilize, global GDP growth, including IT spending, is unlikely to strengthen.
As a result:
"IT vendors should plan for business and consumer spending to be curtailed during 2009 and for a slow, prolonged recovery during 2010," Gordon said. "At the same time, they should be alert to opportunities to help buyers with cutting costs, complying with new government regulations and taking best advantage of government rescue plans."
"IT organizations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending," said Richard Gordon, research vice president and head of global forecasting at Gartner. "The speed and severity of the response by businesses and consumers alike to these economic circumstances will result in an IT market slowdown in 2009 that will be worse than the 2.1 percent decline in IT spending in 2001 when the internet investment bubble burst."
In a broad-based slowdown, the forecasts for all four of the key market sectors of hardware, software, IT services and telecommunications have been revised downward, with only software spending growth remaining positive (Table 1).
"Although government stimulus packages will likely be important in the long term, they will not be able to offset this bleak near-term outlook," according to the report. Until global financial markets stabilize, global GDP growth, including IT spending, is unlikely to strengthen.
As a result:
- The slowdown in IT spending will reduce new market penetration and will slow replacement activity;
- The impact of reduced new sales will be more strongly felt in emerging markets, while the impact of reduced replacement activity will be more strongly felt in mature markets;
- Consumers and businesses will continue switching to lower-cost products, extending the life of existing devices and extending their current contracts and purchasing agreements; and
- However, IT is essential to running most businesses. Supporting current complex IT installations is both necessary for continued operations and a strategy for slowing down technology refresh cycles.
"IT vendors should plan for business and consumer spending to be curtailed during 2009 and for a slow, prolonged recovery during 2010," Gordon said. "At the same time, they should be alert to opportunities to help buyers with cutting costs, complying with new government regulations and taking best advantage of government rescue plans."
| Table 1 | ||||
| Worldwide IT Spending Forecast (Billions of US Dollars) | ||||
| 2008 Spending | 2008 Growth (%) | 2009 Spending | 2009 Growth (%) | |
| Computing Hardware | 381.0 | 2.8 | 324.3 | -14.9 |
| Software | 221.9 | 10.3 | 222.6 | 0.3 |
| IT Services | 809.5 | 7.6 | 796.1 | -1.7 |
| Telecom | 1,948.0 | 5.6 | 1,891.2 | -2.9 |
| All IT | 3,360.3 | 6.1 | 3,234.0 | -3.8 |
| Source: Gartner (March 2009) |