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Forrester Boosts Tech Spending Forecast

The analyst firm said U.S. IT spending would grow by 8.4% in 2010 because of higher gains in sales of communications equipment.
Forrester Research has raised its 2010 IT-spending forecast for the United States because of better-than-expected sales in communications equipment.

The analyst firm on Thursday said U.S. spending on information technology would grow by 8.4% from last year, instead of the 6.6% increase predicted in January. At the same time, Forrester lowered its forecast for the global IT market to 7.7% from 8.1%.

As a whole, the market trends Forrester used to make its earlier predictions have not changed much. "Since IT market trends are playing out as I expected, I have made only modest changes to my 2010 IT market forecasts," Forrester analyst Andrew Bartels said in his blog.

The lowering of the global forecast was due to the unexpected strength in the U.S. dollar, caused by the weakening of the Euro after the debt crisis of European Union member Greece.

As previously predicted, Forrester still sees computer equipment and software as the strongest product categories this year. PCs, peripherals, and storage are expected to lead the computer equipment category, while operating system software and business applications lead the charge in software.

Communications equipment buying has been higher than expected, particularly among large corporations and small and medium-sized businesses. IT services is the one category expected to lag a bit, as companies place systems integration projects on hold until after software purchases are made.

Forrester also confirmed its previous predictions on U.S. spending by industry. The professional services industry is expected to be the largest at $103 billion, followed by financial services, $81 billion, and government, $71 billion. In terms of growth in 2010, the strong rise in spending will be seen among manufacturers, financial services firms, utilities, and healthcare.

Forrester in January declared the technology downturn of 2008 and 2009 "unofficially over." The researcher at the time said total IT spending in the U.S. would reach $568 billion, while worldwide spending would top $1.6 trillion. The increases in spending followed year-over-year declines of 8.2% in the U.S. and 8.9% globally in 2009.