Feeds

Forrester crystal ball conjures 2009 IT spending shrinkage

A mere $1.66 trillion

Eight steps to building an HP BladeSystem

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. ®

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.