Analysts Top Off IT Spending Tank, Pump Up Earlier Expectations
April 19, 2010 Dan Burger
Here we grow again. IT spending in 2010 was already projected to increase according to the analytical minds at research organizations Gartner and Forrester, but these post-doldrum days are calling for a little revision work–all for the better.
Over in the Gartner stable, they’re pitching a growth spurt of 5.3 percent, which would take IT spending to $3.9 trillion. It’s nice to see the economic wheels gaining some traction after slipping, sliding, and spinning for a painfully long two-plus years. At the start of 2010, the IT spending machine was predicted to churn out a 4.6 increase, which was welcomed news at that time but apparently underestimated the recovery.
Certainly the falling value of the U.S. dollar is helping as well, because much of the economic growth is coming from overseas. Cheaper dollars means goods and services from this country are a better bargain in other locales. That’s helping in 2010, and will likely be a stimulus through 2011 as Gartner expects IT spending to move ahead at a 4.2 percent increase, reaching $3.5 trillion next year.
Richard Gordon, research vice president at Gartner, explained the forecasts by saying, “Following strong fourth quarter sales, an unseasonably robust hardware supply chain in the first quarter of 2010, combined with continued improvement in the global economy, sets up 2010 for solid IT spending growth. However, it’s important to note that nearly 4 percentage points of this growth will be the result of a projected decline in the value of the dollar relative to last year. IT spending in exchange-rate-adjusted dollars will still grow 1.6 percent this year, after declining 1.4 percent in 2009.” His comments were part of the news media report Gartner released last week.
Adding perspective to its forecasts for 2010 and 2011 were Gartner’s IT spending estimates for 2009. Spending on computer hardware last year was off 12.5 percent, which totals $333 billion. Things were expected to be worse, however, a fourth quarter recovery in servers, PCs, and storage softened the blow. Software spending slipped 2.1 per cent to $221 billion and IT services dipped 4 percent to $777 billion. The telecoms were a major economic driver. They pumped $1.9 billion into IT spending, but that was 3.4 percent less than the year before.
Gartner pegged overall IT spending for 2009 at $3.22 trillion, which comes in at 4.5 per cent short of 2008.
The good news for the computer hardware business in 2010 is Gartner setting the bar at $353 billion, which is a 5.7 percent increase. Only three months ago, this forecast stood at 1.6 percent growth.
The projections for software spending in 2010 call for a 5.1 percent increase, which is slightly better than the view dating back to January. IT services are still a big ticket item, with a Gartner forecast of $821 billion, although surprisingly that reflects a downward revision from January.
On the Forrester side of the fence, the analysts see grass that is almost as green. Projections for the U.S. market made in January are being upgraded in April. So what was an 8.1 percent increase in IT spending in the United States is now predicted to be 8.4 percent, taking the overall spend to $578 billion. The global picture is painted with a 7.7 percent increase in global IT spending, which is slightly less green than the 8 percent increase predicted one quarter earlier.
Computer equipment and software will be the strongest product categories, with PCs, peripherals, and storage equipment leading the computer category and operating system software and applications setting the pace for software, according to analyst Andrew Bartels.