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  • Gartner, Forrester Chop IT Spending Forecasts Again

    July 13, 2009 Timothy Prickett Morgan

    This is starting to get ridiculous. And certainly frustrating. But absolutely understandable. The economists that work at IT market researchers and consultancies Gartner and Forrester Research have once again sliced their IT spending projections, and this time around you can’t blame the negative growth on the currency effects of translating sales of hardware, software, services, and sometimes telecom to U.S. dollars. This time, there is real decline, and it appears to be across the board.

    Gartner has shaken its crystal ball–maybe it was a snow globe, or a Magic 8 ball?–and says in its latest prognostications that global IT spending in 2009 will decline by 6 percent to $3.153 trillion. Gartner was projecting a 3.8 percent decline back in April, when it did another depressing forecast that is now, in retrospect, pretty rosy.

    The current Gartner forecast now has computing hardware spending (servers, storage, networking, PCs, and such) dropping by 16.3 percent, to $317.8 billion. For comparison’s sale, consider that hardware sales, despite the economic meltdown in the second half of last year, rose by 2.5 percent to $379.5 billion. Software sales this year are expected to fall by 1.6 percent to $218.3 billion; companies, governments, educational institutions, and consumers shelled out $221.9 billion for software in 2008. IT services is taking a decent sized hit now in 2009, according to Gartner, with sales expected to fall by 5.6 percent to $761 billion; services comprised $805.9 billion in sales in 2008, rising 8.2 percent from 2007’s levels. Telecom expenses are still the biggest ticket items in the IT sector, but are no more immune to the downturn than are hardware, software and services. Gartner says that telecom spending worldwide this year (related to IT, of course, not our home phone bills) will account for $1.86 trillion, down 4.6 percent from 2008’s sales. That’s 58.9 percent of all IT spending.

    “While the global economic downturn shows signs of easing, this year IT budgets are still being cut and consumers will need a lot more persuading before they can feel confident enough to loosen their purse strings,” explained Richard Gordon, a research vice president and the head of global forecasting at Gartner. (Not an easy job when the economy is going bonkers, but of course, the only time you really need to be accurate in forecasting is when it is least likely to be thanks to the chaotic nature of a recession.) “The forecast decline in spending growth for the hardware and software segments in 2009 has almost stabilized, and only minor downward revisions have been made to these forecasts this quarter. However, the full impact of the global recession on the IT services and telecommunications sectors is still emerging, and forecast growth in these areas has been further reduced significantly.”

    The dollar, Gordon added, could still wiggle and cause Gartner to make yet another projection change. And even if it doesn’t, the global economies (it really isn’t one so much as a cluster of many) are apt to change more this year. So expect another revision from Gartner is what I am saying. And not just for 2009, but possibly for 2010 and further out.

    Speaking of 2010, Gordon and Team Gartner say to expect global IT sales to rise by a modest 2.3 percent to $3.23 trillion, with hardware spending flat at $317.7 billion, software sales up 3.2 percent to $225.3 billion, services spending up 3 percent to $784 billion, and telecom spending up 2.3 percent to $1.9 trillion. That may be up compared to 2009, but that is still $126.8 billion–I said billion with a b–lower than 2008’s global IT spending levels, representing a 3.8 percent decline. Basically, 2010 is looking like 2009’s April projection. And that is not the smell of an IT recovery.

    It is also not the end of the world. People will be spending smarter, not stopping altogether.

    Over at Forrester, the latest revision is for U.S. and global tech spending. Forrester doesn’t talk about telecom expenditures relating to IT in its forecasts, as Gartner does, but does break out communications equipment separately from other hardware when it does its projections.

    Back in April, Forrester was expecting a 3 percent decline in global IT spending, to $1.66 trillion. But now, Andrew Bartels, Forrester’s vice president and principal analyst who gets stuck doing the economic modeling, is expecting a 10.6 percent decline in IT spending worldwide, to $1.52 trillion. Spending on computing hardware will decline by 13.5 percent to $389.3 billion, in Forrester’s latest look-ahead, with communications equipment sales falling 12.4 percent to $318.9 billion, software sales falling 8.2 percent to $357.1 billion, and services off 8.6 percent to $457.9 billion.

    “While Q1 2009 saw a scary drop in purchases in the U.S. tech market, ironically that is good news for the long run and we expect to see a stronger rebound sooner,” Bartels said in a statement accompanying his forecast. “The big drops are not precursors to further declines; rather, we think they are evidence of a temporary pause in U.S. tech purchases, which we expect to start recovering in Q4 as businesses realize that they overreacted in the first quarter. We also expect that tech markets in Europe and Asia will start to recover in the first half of 2010.”

    Bartels added that Forrester now expects overall IT spending to drop by 5.1 percent in the United States in 2009, which is a tad bit worse than the 3.1 percent decline it was expecting in the country back in April.

    RELATED STORIES

    IT Spending Forecasts Slashed by Gartner, Forrester

    Global IT Spending Barely Ahead of 2008; Some Regions Showing Strength

    Healthcare and Utilities Lead Vertical Markets in IT Spending

    Global 2009 IT Spending Will be Up, Down, Forrester Says

    Gartner, Forrester Cut 2009 IT Spending Growth Estimates

    Forrester Says IT Spending Is Choppy Across Industries and Geographies

    IDC Cautiously Reaffirms IT Spending Projections for 2008

    IT Managers Are Under Pressure to Cut Costs, Says IDC



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    Tags: Tags: mtfh_rc, Volume 18, Number 26 -- July 13, 2009

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    • IBM Touts Power Systems Prowess on SAP Tests
    • IBM Indeed Relaunches Tweaked Power Systems Deal
    • Focus on Data Management with App Modernization Projects
    • As I See It: The Green Gap
    • Gartner, Forrester Chop IT Spending Forecasts Again
    • 2008 Pretty Good for Application Software; 2009, Not So Much
    • EGL Free: More Data, Tool Expected This Summer
    • Lawson Boosts Profits Even as Economic Meltdown Bites
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    • COMMON 2010: Bring Your Own Booze (And I Will)

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