IT Spending and the Coming Recession
IDC is a global provider of market intelligence and advisory services to the High-Tech marketplace and assists CIO’s and others to make informed decisions on technology purchases and business strategy. You can learn more about IDC by visiting their homepage. IDC held their annual Direction’s conference this week in San Jose, California and their main topic for discussion was the affect the economic slowdown, real or perceived, will have on this year’s IT budgets.
The conference compared this year’s downturn to the last major downturn faced by the industry in 2001 – 2002 and found significant differences. Where the last major economic mess was mainly a business-led crisis due to the over valuation of many dot.com start-ups exacerbated by the terrorist attacks of 9-11, this new economic down turned is basically due to overzealous consumers saddling themselves with mortgages they couldn't afford and affects one sector, the financial services industry.
The collapse of the housing market spread over several geographical areas should not have a direct impact on global enterprises decisions to proceed with their planned purchases of IT. With this in mind, the growth in IT spending for the US and Western Europe will probably be reigned in to 4% growth, half of the 8% growth in IT budgets for 2007, while the BRIC countries should continue in their IT spending unabated with a 10% to 20% growth rate over last year.
Andy Patrizio reports from the conference in his article Which IT Sectors Will Weather a Financial Storm? He includes in his article the following observation:
The hardware most likely to be affected by a reduction in spending, not surprisingly, is PCs, followed by mobile devices -- smart phones in particular. Storage is least likely to be cut, followed by networking hardware.
Software reductions are also anticipated, but at a much slower rate than hardware. Office and operating systems are most likely to get the chop (bad news for Microsoft), while security and compliance software is least likely to be cut.
The conference compared this year’s downturn to the last major downturn faced by the industry in 2001 – 2002 and found significant differences. Where the last major economic mess was mainly a business-led crisis due to the over valuation of many dot.com start-ups exacerbated by the terrorist attacks of 9-11, this new economic down turned is basically due to overzealous consumers saddling themselves with mortgages they couldn't afford and affects one sector, the financial services industry.
The collapse of the housing market spread over several geographical areas should not have a direct impact on global enterprises decisions to proceed with their planned purchases of IT. With this in mind, the growth in IT spending for the US and Western Europe will probably be reigned in to 4% growth, half of the 8% growth in IT budgets for 2007, while the BRIC countries should continue in their IT spending unabated with a 10% to 20% growth rate over last year.
Andy Patrizio reports from the conference in his article Which IT Sectors Will Weather a Financial Storm? He includes in his article the following observation:
The hardware most likely to be affected by a reduction in spending, not surprisingly, is PCs, followed by mobile devices -- smart phones in particular. Storage is least likely to be cut, followed by networking hardware.
Software reductions are also anticipated, but at a much slower rate than hardware. Office and operating systems are most likely to get the chop (bad news for Microsoft), while security and compliance software is least likely to be cut.
