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UBS says IT spending in Europe, US to drop 2 per cent in 2009

That sure beats a 10 per cent drop, right?

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The analysts at investment bank UBS who case the IT market say the United States and Europe can each expect to see about a 2 per cent decline in IT spending in 2009.

This projection may be more indicative of the spending patterns among relatively large enterprises, given the sample that UBS used in doing its forecasting. According to a report in Reuters, the UBS survey of 100 chief information officers at companies with $2bn to $10bn in sales showed IT spending to be flat in 2008 in both regions.

On the server front, UBS reckons that Windows will stay ahead of Linux in terms of growth, with Windows server sales to rise by 2 per cent next year (after a 3 per cent rise in 2008), with Linux server spending to rise by only 1 per cent in 2009 (which only grew at 1 per cent in 2008 as well), according to the Reuters report.

On the software front, the CIOs polled were looking to renegotiate maintenance contracts (some 70 per cent said they needed to do this), and they expected to use more automated systems management tools to cut administrators from their budgets. In aggregate, those companies surveyed expected only a tiny 1 per cent increase in spending on such tools. And virtualization software, which aims to make servers not only more efficient but also easier to manage, is taking a hit, too, with growth in spending in 2009 projected to rise by only 6 per cent after growing by 10 per cent this year.

"This may suggest that while virtualisation is a trend that is no doubt here to stay, it still does not have the collective mindshare as many might think," UBS said in its report.

In mid-November, the analysts at IDC said they expected worldwide IT spending to grow only 2.6 per cent in 2009, down from the 5.9 per cent estimate the same analysts made before the economic meltdown in October. IDC said spending in the US would drop by 0.9 per cent, down from a 4.2 per cent increase the company had projected for US spending before the meltdown.

IT spending growth in Western Europe and Japan will hover around 1 per cent as well, and hardware spending will decline except for storage. In October, Gartner cut its projections for global IT growth for 2009 from 5.8 per cent to 2.3 per cent, and said that hardware sales would fall globally by 4 per cent. ®

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