Feeds

Forrester crystal ball conjures 2009 IT spending shrinkage

A mere $1.66 trillion

Top 5 reasons to deploy VMware with Tegile

The prognosticators at IT consultancy Forrester Research have polished up their crystal balls and cranked up their spreadsheets, announcing some some bad - but not unexpected - news for the tech sector. As far as Forrester can tell, global IT revenues across hardware, software, and services will fall by 3 per cent, to $1.66 trillion, this year.

Forrester estimates that global IT sales rose by 8 per cent in 2008, to $1.71 trillion, and it reminded everyone that the decline projected for 2009 is the first annual decline for IT revenues since 2002. In both 2001 and 2002, IT sales fell by 6 per cent as the dot-com bubble burst and the major global economies were pushed into recession.

IT spending projections are based on many assumptions, and Forrester certainly made some big ones to come up with that 3 per cent spending decline in IT for 2009. "Our forecast for 2009 rests on the assumptions that the economic recession in the US and other major economies will start to end in the second half of 2009," explained Andrew Bartels, a vice president and the principal analyst at Forrester who puts together the spending forecasts as well as its companion report, Global IT Market Outlook: 2009.

The report provides spending projections on a global basis as well as for the 15 countries that represent the biggest chunk of IT sales. "For IT vendor strategists, the global IT market will be a gloomy one in 2009, with prospects of improvement in 2010. Unlike in past years, there are no significant growth markets to offset the weak ones."

The strengthening dollar is one of the dampening effects on IT sales going forward, but it's a relatively minor effect compared to the weakened or weakening economies around the globe. We can argue about whether or not global IT sales should be measured in U.S. dollars, which is not the strongest of currencies, despite a recent up-tick. Given that a large portion of the IT vendor community has a U.S. address where they pay their income taxes - not necessarily where their employees received their paychecks - then measuring in dollars seems reasonable. (But maybe IT should be priced in euros. Oil should be).

Anyway, the good news is that if you take out the effect of currency translation into dollars and measure sales in local currencies, IT spending is projected to grow by 2.5 per cent globally. Spending is even expected to rise by 1.6 per cent in the United States as measured in dollars, and Western Europe will see IT spending in local currencies (the euro, the pound, and a few others) rise by 1.3 per cent. IT sales this year in Eastern Europe as well as the Middle East and Africa are slated for 5 per cent growth each in local currencies, and Asia/Pacific is expected to have 3 per cent growth in local currencies.

"The fact that 2009 IT purchases growth is so much weaker in U.S. dollars than in local currencies means U.S. vendors with significant overseas business will feel a double dose of pain, as both the economic environment and currency market will work against them for much of 2009," said Bartels in a statement.

No kidding. IBM has always reported figures in U.S. dollars and in constant currency, and you bet that more IT vendors (especially those who have substantial business outside of the States) will start doing this now to make their numbers more palatable as they report financial results for 2009.

Forrester reckons that spending on software will be flat at $388bn. Sales of computer equipment - PCs, servers, storage, and such - is expected to come in at $434bn, down 4 per cent from the $450bn level set in 2008 around the globe. Spending on IT services is expected by Forrester to be the big ticket item in 2009, at $484bn, but will nonetheless decline by 3 per cent when measured in U.S. dollars. Forrester expects that, given the weakness of many economies, IT outsourcing services are going to hold up better than consulting and systems integration. You don't integrate the hardware and software you don't buy, after all. Networking and communications gear comprise $353bn in revenues in 2009, according to Forrester's estimates, a mirrored 3 per cent decline from the $364bn revenues for such gear in 2008. ®

Beginner's guide to SSL certificates

More from The Register

next story
The 'fun-nification' of computer education – good idea?
Compulsory code schools, luvvies love it, but what about Maths and Physics?
Facebook, Apple: LADIES! Why not FREEZE your EGGS? It's on the company!
No biological clockwatching when you work in Silicon Valley
Lords take revenge on REVENGE PORN publishers
Jilted Johns and Jennies with busy fingers face two years inside
Happiness economics is bollocks. Oh, UK.gov just adopted it? Er ...
Opportunity doesn't knock; it costs us instead
Ex-US Navy fighter pilot MIT prof: Drones beat humans - I should know
'Missy' Cummings on UAVs, smartcars and dying from boredom
Yes, yes, Steve Jobs. Look what I'VE done for you lately – Tim Cook
New iPhone biz baron points to Apple's (his) greatest successes
Sysadmin with EBOLA? Gartner's issued advice to debug your biz
Start hoarding cleaning supplies, analyst firm says, and assume your team will scatter
Edward who? GCHQ boss dodges Snowden topic during last speech
UK spies would rather 'walk' than do 'mass surveillance'
prev story

Whitepapers

Forging a new future with identity relationship management
Learn about ForgeRock's next generation IRM platform and how it is designed to empower CEOS's and enterprises to engage with consumers.
Why and how to choose the right cloud vendor
The benefits of cloud-based storage in your processes. Eliminate onsite, disk-based backup and archiving in favor of cloud-based data protection.
Three 1TB solid state scorchers up for grabs
Big SSDs can be expensive but think big and think free because you could be the lucky winner of one of three 1TB Samsung SSD 840 EVO drives that we’re giving away worth over £300 apiece.
Reg Reader Research: SaaS based Email and Office Productivity Tools
Read this Reg reader report which provides advice and guidance for SMBs towards the use of SaaS based email and Office productivity tools.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.