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Tech downturn is history, says Forrester

No more Dumb Computing

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The economists and box counters at IT market-watcher Forrester Research have called an unofficial end to the IT recession, saying that tech spending will hit $568bn in the United States in 2010, up 6.6 per cent compared to last year, and will rise above $1.6 trillion globally, up a smart 8.1 per cent.

While this is good news, one must remember that IT spending fell by 8.2 percent last year in the States and by 8.9 per cent globally. (Some of that global decline was due to the strengthening of the US dollar.) We are still not back to where we were in 2008. But, it's a new year and everybody wants good news.

"The technology downturn of 2008 and 2009 is unofficially over," said Andrew Bartels, Forrester's vice president and principal analyst, who calls the turns of the economy and IT spending for the consultancy. "All the pieces are in place for a 2010 tech spending rebound. In the US, the tech recovery will be much stronger than the overall economic recovery, with technology spending growing at more than twice the rate of gross domestic product (GDP) this year."

That probably says more about the relative weakness of the US economy than it does about the strength of IT spending.

Forrester was optimistic about an uptick in computer equipment, and that optimism stands in stark contrast to what Bartels was saying when Forrester kept revising downward its IT spending projections for 2009 as that year unfolded. In June 2009, Forrester was projecting that computer equipment spending in 2009 would fall by 13.5 per cent, to $389bn globally, with communications equipment spending falling by 12.4 per cent to $319bn.

But looking ahead in 2010 after the economic meltdown has chilled out (apparently, if you believe a few economic indicators), Forrester is projecting that computer equipment spending worldwide will rise by 8.2 per cent, followed by a 7.6 per cent rise in communications equipment spending, a 9.7 per cent boost in software spending, a 6.8 per cent increase in consulting and systems integration spending, and a 7.1 per cent hike in outsourcing services spending.

US-based multinational IT vendors are just going to love Western and Central Europe this year, with the decline of the euro against the dollar helping to contribute an 11.2 per cent increase in overall tech spending in the region. Ditto for Canada and its looney-greenback ratio, which will help IT spending in America's northern neighbor rise by 9.9 per cent. Spending for tech in the Asia/Pacific region (which includes China and India) will rise by 7.8 per cent, and Latin America will see a 7.7 per cent boost. Eastern Europe, the Middle East, and Africa will show a relatively anemic 2.4 per cent growth in IT spending this year, says Forrester. If you take away currency effects and just measure sales in regions in their local currencies, IT spending growth will be higher in the US than in any other region in 2010.

Forrester didn't just put out new projections for tech spending in 2010. It also tried to hang a brand on it, as all consultancies try to do. "We are entering a new six- to seven-year cycle of IT growth and innovation that Forrester calls Smart Computing," explained Bartels in a statement accompanying the figures. "New technologies of awareness married to advanced business intelligence analytics make computing smart. Smart Computing rests on new foundation technologies such as service-oriented architecture, server and storage virtualization, cloud computing, and unified communications. 2010 marks the beginning of this next phase of technology advancement."

I guess what we have been doing up until now has been Dumb Computing. That explains much. ®

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