Worldwide IT spending will continue to grow through the end of the
year, but not at the pace initially expected, according to analysts at
market research firm Gartner.
Overall, IT spending will hit more than $2.4 trillion
in 2010, up from the $2.3 trillion in 2009, when the global recession
was in full swing, Gartner said in a report Aug. 10.
However, the growth appears to be slowing. Earlier this year, Gartner analysts had predicted a 4.1 percent growth for the year.
Gartner’s revised numbers fall in line with what
economists say is a slowing economic recovery in the United States and
abroad, and dovetail with what other analysts firms and IT vendors are
seeing.
A week before Gartner released its report, IDC
analysts said the global IT market beat expectations in the first half
of the year, convincing them to offer their spending projections of
$1.51 trillion for all of 2010, a 6 percent jump over last year.
IDC analyst Stephen Minton said the first half growth
numbers were the result of both the fact that 2009 was such a difficult
year and that businesses and consumers are looking for new technologies.
Still, Minton said, IT vendors needed to be cautious.
"Amidst the general sense of optimism that has
accompanied results from the first half of this year, there are also
reasons to be wary of excessive exuberance," Minton said in a
statement. "Our surveys indicate that businesses are still cautious
about committing to new, long-term IT projects, and are still anxious
about the possibility of a double-dip recession. Decision-making cycles
remain long, and many enterprises have contingency plans in place for
the next 12 months which could see more projects suspended."
Gartner analyst Kenneth Brant had a similar view.
While tech vendors should make their plans for 2011 with the idea of
about 3.5 percent growth, they also should make alternate provisions.
“They should act now to develop contingencies to
mitigate the risk of zero growth in 2011, a scenario that carries a
lower probability but a much-higher potential impact," Brant said in a
statement. "The bottom line is that technology providers need to be
prepared for the worst case, where commercial IT markets stagnate and
governments transition to fiscal austerity programs."
IT vendors also are feeling the effects of a slowing
economy. During Cisco Systems’ fiscal fourth-quarter earnings call Aug.
11, CEO John Chambers talked about a climate of “unusual uncertainty”
in the economy that is weighing on the mind of customers. The result
during the quarter was a rollercoaster ride for Cisco, where the first
five or six weeks of strong sales gave way to another five weeks of
declines from mid-June to mid-July. However, the last two weeks of July
were particularly strong, he said.
“The economy continues to be the wild card in many of
our customers’ minds,” Chambers said during a conference call with
analysts and journalists.
Chip makers Intel and Advanced Micro Devices also saw
their stock prices take a hit after reports from several analyst firms
warned of possible slowdowns in corporate and consumer IT spending in
the second half of 2010.
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