Goldman Sachs Says IT Spending Will Soften a Bit in 2007

Published: April 11, 2007

by Timothy Prickett Morgan

The analysts at Wall Street brokerage house Goldman Sachs take the pulse on IT spending from time to time, and according to a report published last week, the consensus of the analysts sifting through the survey data that Goldman Sachs puts together remains what it was late last year: IT spending will see a modest deceleration in 2007.

Ironically, in the latest survey, the two vendors who are seeing market share slippages on some fronts in the data center--IBM and Dell--are cited as being projected to get a larger slice of the pie by the IT shops that Goldman Sachs surveyed. And Sun Microsystems and Hewlett-Packard, which have been gaining actual market share in servers, were expected to see their proportion of the 2007 IT budget at those surveyed go down. IBM and EMC are, on average, expected to see an increase in storage spending among the IT shops surveyed, while Sun, HP, and Dell are expected to lose some ground and Network Appliances was just holding ground.

The Goldman Sachs IT spending index hit 73.7 in the latest survey, down from the 75 level in a December 2006 survey looking ahead into 2007 and down from 77 in the spring survey a year ago looking ahead into 2006. The brokerage house does not divulge the mathematics behind the index, but at an index of 50, spending is totally flat and below that, IT spending is in contraction. The index fell through 2001, and then went into shock in the wake of the 9/11 terrorist attacks, dipping under 50 in October 2002 and falling nearly to 40 in April 2003. It took until December 2004 for the IT spending index to climb back to the muted levels Goldman Sachs is seeing now, and it kissed 80 in the December 2005 survey, the highest point in the past five years. Since that time, the index has dropped to between 70 and 75 and stayed there, bounding around a bit.

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