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Gartner revises 2010 IT spending upwards

Crashing dollar cranks up optimism

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Last week it was the prognosticators at Forrester Research who upped their projections for IT spending a teensy bit, calling the end of the tech downturn and the beginning of a tech recovery. This week, the wizards at Gartner are peering into their crystal balls and see a slightly brighter IT picture for this year, too.

Gartner's latest projections call for global IT spending, including a vast amount of telecom services, to grow by 5.3 per cent to $3.39 trillion. Gartner was feeling so confident about the improving global economy - and the crashing US dollar that makes a lot of hard and soft wares less expensive overseas, where the real growth is - than they might otherwise be, that it even went so far as to say that IT spending globally would grow by another 4.2 per cent in 2011, to hit $3.5 trillion.

Only three months ago, Gartner was estimating that 2010 IT sales would rise by 4.6 per cent to $3.36 trillion.

Booking IT sales overseas and then bringing them back home in dollars means that a little growth at home in America plus a little growth overseas can add up to what feels like a better number. But Gartner nonetheless threw a little cold water on its own enthusiasm by reminding everyone of the currency effects in its forecasts.

"Following strong fourth quarter sales, an unseasonably robust hardware supply chain in the first quarter of 2010, combined with continued improvement in the global economy, sets up 2010 for solid IT spending growth," explained Richard Gordon, research vice president at Gartner, in a statement accompanying the projections. "However, it's important to note that nearly 4 percentage points of this growth will be the result of a projected decline in the value of the dollar relative to last year. IT spending in exchange-rate-adjusted dollars will still grow 1.6 per cent this year, after declining 1.4 per cent in 2009."

Along with the revision for expected IT spending in 2010, Gartner also tweaked its spending estimates for 2009. The company believes that spending on computer hardware fell by 12.5 per cent, to $333bn - not as bad as previously thought, thanks to a good final quarter for servers, PCs and storage. Software spending fell by 2.1 per cent to $221bn, and IT services fell by four per cent to $777bn. Telecom services and products accounted for $1.9 trillion, down 3.4 per cent last year, leaving overall IT spending for 2009 at $3.22 trillion, down 4.5 per cent.

Looking ahead to 2010, Gartner believes that spending on computer hardware will rise by 5.7 per cent, to $353bn, considerably better than the 1.6 per cent growth it was predicting back in January for this year. Software spending is expected to increase by 5.1 per cent, just a smidgen better than the January prediction, to $232bn, while IT services is forecast to hit $821bn, a little less than the January estimates for 2010 spending but up right along with hardware at 5.7 per cent growth. Telecom spending will go up by 5.1 per cent, to just under $2 trillion in 2010.

Gartner says that customers still have a "recession hangover," and are looking for small, quick deals they can do to cut overall costs, whether the deal involves hardware, software, or services - or a mix of all three. ®

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