Gartner Says IT Spending Worse Than After Dot-Com Bust
Companies worldwide will spend 3.8% less on IT in 2009, significantly lower than the analyst firm's "worst-case" October forecast of a 2.3% increase.
With the global economy tanking, IT spending this year will drop to a level much worse than what was seen following the dot-com bust in 2001, a market research firm said Tuesday.
Companies worldwide will spend 3.8% less on IT than in 2008, or $3.2 trillion compared with nearly $3.4 trillion, Gartner said. When the Internet investment bubble burst eight years ago, IT spending fell by 2.1%.
Gartner has been lowering its IT spending estimates for months. Last October, the research firm said its "worst-case scenario" called for a 2.3% increase in IT spending for 2009. By February, Gartner had lowered its prediction to an increase of 0.5%.
The latest numbers reflect another dramatic across-the-board lowering of Gartner's forecast for the four IT segments: computing hardware, software, IT services, and telecommunications. A major contributor to the decline is the drop in the global gross domestic product, or GDP, which is expected to fall by 1.2% this year after expanding by 2.3% last year.
With the exception of software, which will be nearly flat, all the other segments will see declines, led by computing hardware, which will fall 14.9% to $324.3 billion, Gartner said.
The drop in computer spending is caused by a slowdown in new sales in emerging markets and replacement sales in mature markets among businesses and consumers. In addition, virtualization, which enables companies to consolidate more business applications on a single server, also is expected to contribute to the sales drop.
As a result, virtualization software sales are expected to be a bright spot in the gloomy forecast. At $4 billion in annual sales, the virtualization market is a sliver of overall IT spending. Nevertheless, companies are expected to spend 33% more on the technology than last year. Sales through 2013 are expected to increase at a compound annual growth rate of about 30%, Gartner said.
"People want to optimize their cost and virtualization is a great way to squeeze out more value in what you already have in house," Garner analyst Fabrizio Biscotti said during a Web briefing for clients and media.
IT Service Management Must EvolveThe idea of technology being delivered as a service appeals to the 409 IT pros responding to our Service-Oriented IT Survey. But cloud providers are competing for that work, and CIOs are being selective.
Join InformationWeek’s Lorna Garey and Mike Healey, president of Yeoman Technology Group, an engineering and research firm focused on maximizing technology investments, to discuss the right way to go digital.