The industry shrank about 3% in the past two years, compared with an average annual growth rate of 12% for the past 20 years, IDC says. But it predicts the growth rate next year to be 5.8%.
Significant changes in the economic or geopolitical environment, such as prolonged war in Iraq or a stock market plunge, could result in lower growth rates for IT spending, leading IDC to produce an alternate, more pessimistic forecast of 2% growth in IT spending next year, the analysts say.
Under more favorable assumptions, IT spending in the United States would grow 4.4% next year, led by renewed demand for servers, security, and network equipment, IDC says.
The worldwide systems market, including PCs, servers, and workstations, declined 9.3% this year, the analysts say. Storage shrank by 10.6% and is not expected to recover to its 2001 size until after 2006. The network equipment market experienced a 7.6% decline, driven by sales to telecom service providers.