A tough global economy combined with a strong U.S. dollar means that worldwide IT spending will decline about 3 percent in 2009, according to a new survey from Forrester Research. While businesses might spend money on storage, security and software licensing this year, Forrester believes that companies will purchase fewer server systems as well as desktops and notebooks in 2009. The latest news comes as Intel prepares to release its latest quarterly results later this week and as Nvidia announced that it had cut its sales forecast.
A slowing global economy along with a strengthening
U.S. dollar means that IT spending will decline about 3 percent in 2009, as companies
cut back on their purchases of desktops, notebooks, servers systems and other
according to a Jan. 13 report from Forrester Research.
While a weak U.S. dollar helped to boost IT spending
about 8 percent in 2008, the global economy combined with a resurgent U.S.
dollar means that IT spending will decline about 3 percent this year for a
worldwide total of $1.66 trillion, according to Forrester. (The report calculates
worldwide IT spending in U.S. dollars.)
The IT market does look to bounce back in 2010, when
IT spending increases about 9 percent in terms of U.S. dollars. In the
meantime, companies are planning to cut back on hardware purchases, such as
desktops, laptops and server systems, and larger business might delay
implementing large projects like ERP (enterprise resource planning) software.
On the other hand, Andrew Bartels, an analyst with
Forrester, believes that companies
will continue to spend on storage
as well as essential software for
security. Bartels also believes that companies will continue to spend money on
software licenses despite the tough global outlook.
"Storage has been one of those categories that has
been up and down, but sooner or later you're going to have to buy more storage
boxes," said Bartels.
"Storage is growing constantly, so we think it is
going to come back," Bartels added. "The one area that is going to be the
strongest is software. One reason for that is that there are chunks of revenues
such as maintenance and subscriptions that just keeps growing. There is also
some software that companies see as essential, such as security, or software
that is seen as a way to save money in the long term."
In 2009, businesses will spend about $388 billion on
software. However, enterprises will spend $353 billion or 3 percent less on
networking, routers, switches and other equipment in 2009. IT Spending on PCs
and servers will decline 4 percent to $434 billion while spending on IT
services will decline 3 percent.
with bleak outlook for 2009,
Bartels said IT spending will not fall as much
as it did in 2001 and 2002, after the tech bubble burst. In both of those
years, IT spending fell 6 percent.
The news from Forrester comes as Intel, a major
bellwether when it comes to IT spending, prepares to release its full fourth
quarter financial numbers Jan. 15. Earlier this month, Intel
announced a revenue forecast of $8.2 billion, which is down from the $9 billion
that the chip maker predicted in November. In October, Intel originally
predicted fourth-quarter revenues of between $10.1 and $10.9 billion.
In addition to the gloomy outlooks from Intel, Nvidia
announced Jan. 13 that its fourth-quarter revenues would be between 40 and 50
percent lower compared to the previous quarter.
Both Nvidia and Intel are each citing less demand
for desktops and notebooks and Bartels said both businesses and consumers are
buying fewer laptops. The demand for consumer laptops, combined with a weak
U.S. dollar, helped boost sales in 2008 as the
overseas growth helped PC vendors such as Hewlett-Packard along with Intel and
While the strong U.S. dollar will hurt the revenues
for Intel, HP, Dell and other vendors based in the United States, the weaker
Euro should help European-based vendors such as SAP, Ericsson and Nokia. This
situation is likely to change again if the Euro strengthens against the U.S.
dollar in the next several months.