Skip to main content

IT Spending Decline in U.S. Hits Hardware

Worldwide spending on information technology (IT) products and services will slow significantly in 2009 as a direct result of the global financial crisis that began in September 2008.

According to a revised forecast from IDC, worldwide IT spending will grow 2.6 percent year over year in 2009 -- down from IDC's last forecast of 5.9 percent growth. In the United States, IT spending growth is expected to be 0.9 percent in 2009, much lower than the 4.2 percent growth forecast in August.

"Although all the economic forecasts went from up slightly to down drastically in a matter of days, the good news is that IT is in a better position than ever to resist the downward pull of a slowing economy," said John Gantz, chief research officer at IDC.

Technology is already deeply embedded in many mission-critical operations and remains critical to achieving further efficiency and productivity gains. As a result, IDC expects worldwide IT spending will continue to grow in 2009, albeit at a slower pace.

On a regional basis, spending growth in Japan, Western Europe, and the United States will hover around 1 percent in 2009. In contrast, the emerging economies of Central and Eastern Europe, the Middle East and Africa, and Latin America will continue to experience healthy growth, but at levels notably lower than the double-digit gains previously forecast.

On a sector basis, software and services will enjoy solid growth while hardware spending, with the exception of storage, is expected to decline in 2009.

Looking beyond 2009, IDC expects IT spending to make a full recovery by the end of the forecast period with growth rates approaching 6.0 percent in 2012. Despite these gains, IDC estimates that more than $300 billion in industry revenues will have been lost due to slower spending over the next four years.

In light of the uncertainties associated with the ongoing financial crisis, IDC also developed a downside scenario to help executives plan for a situation where the impact of the crisis is more pronounced.

In this scenario, IDC lowered the forecast for worldwide GDP growth in 2009 to 0.3 percent, which is 1.5 percent lower than the current forecast. This produced a forecast of 0.1 percent growth in worldwide IT spending in 2009 with negative growth in the United States, Western Europe, and Japan.

"Although the revised forecast and the downside scenario both reflect a grim outlook for global economic growth over the next several years, IT spending actually fares well when compared to the previous downturn after the events of September 11, 2001," said Stephen Minton, vice president, Worldwide IT Markets and Strategies at IDC.

Companies currently don't have the asset and spending overhang that enabled them to put off purchases after Y2K and the dot-com bubble. As a result, there will be greater pressure for them to continue making IT investments in order to stay competitive.

Popular posts from this blog

The Billions Bet on Tentative AI Demand

Gartner's latest worldwide IT spending forecast exposes a trend every CIO has already felt in budget negotiations. Total spending will climb 14.2 percent in 2026, reaching $6.37 trillion. It seems that the IT infrastructure market is simply having a strong year. However, the more useful insight is how unevenly that growth is distributed. The Headline Number vs. The Real Story Data center systems and infrastructure as a service (IaaS) are absorbing capital at a pace several multiples faster than devices, communications services, and traditional IT services. This is not incremental growth spread across a healthy portfolio. It is a wholesale reallocation of enterprise technology budgets toward AI infrastructure, made on the expectation that demand for AI workloads will justify the outlay before that demand has been fully proven. Where the Money is Going Data center systems are forecast to grow 62.5 percent in 2026, that's up from 51.6 percent growth in 2025, reaching $822 billion....