Doom & Gloom from Gartner: global IT spend to drop 3.8 percent in 2009

Stuart Corner
Saturday, 04 April 2009 14:17

IT Industry - Strategy

Gartner is forecasting worldwide IT spending in 2009 to be down 3.8 percent from the 2008 total of nearly $US3.4 trillion as a result of the "unprecedented decline" of the global economy, an outcome that it says will be considerable worse than the 2.1 percent drop in 2001 after the Internet investment bubble burst.

"IT organisations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending," said Richard Gordon, research vice president, and head of global forecasting at Gartner.

Gartner has revised down its forecasts for all four of the key market sectors of hardware, software, IT services and telecommunications. Hardware will be worst hit with a forecast 14.9 percent drop to $US324.3 billion. The PC market will bear the brunt of this with shipments forecast to decline 9.2 percent and revenue 20.1 percent.

Only software spending growth will remain positive, albeit marginally with a forecast 0.3 percent growth to $222.6 billion. However this represents a dramatic turnaround: 2008 spending was up 10.3 percent on 2007. Gartner says that "vendors with a SaaS, virtualisation capabilities and a good open source strategy will see opportunities."

Telecommunications with 2009 forecast revenues of $US1,891 billion accounts for almost 50 percent of the total spend, and the 2009 forecast represents a 2.9 percent decline on 2008. This will be the result of a 6.5 percent forecast decline in equipment spending and 2.1 percent in services
 
Gartner says that, although government stimulus packages will likely be important in the long term, they will not be able to offset this bleak near-term outlook. "Until global financial markets stabilise, global GDP growth, including IT spending, is unlikely to strengthen. As a result:

Gordon says that IT vendors should plan for business and consumer spending to be curtailed during 2009 and for a slow, prolonged recovery during 2010. "At the same time, they should be alert to opportunities to help buyers with cutting costs, complying with new government regulations and taking best advantage of government rescue plans."

Vendors might also look to Asia, where, Gartner says: "real GDP growth will be positive but register its lowest [growth] rate since the 1997-98 Asian financial crisis." This, relative, good news does not apply to Japan which will "experience its worst economic slowdown since the 1970s."