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Gartner snips 2012 IT spending forecast – again

A little more off the top, and some off the bottom

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The prognosticators at market research firm Gartner are polishing their crystal balls again and have gazed into 2012 to see what the IT spending picture looks like, and it's a bit worse than they expected only a few months ago. And thus they have taken a little more off the top of their IT spending projections for the current year, after doing so a bunch of times already.

IT spending worldwide grew by 6.8 per cent last year, to $3,661bn, across five different sectors, which includes computing hardware, enterprise software, IT services, telecom equipment, and telecom services. As recently as January it was going to rise by 3.7 per cent to $3,798bn. But Gartner now reckons IT spending was higher in 2010 and 2011 that it had been calculating.

It now believes companies spent $17bn more in 2011 than the $3,644bn it calculated before, so that accounts for some of the diminished growth expectations. But Gartner is also cutting the aggregate amount of spending it forecasts for 2012 as well, to $3,751bn, which is down by $47bn from the $3,798bn it expected in its January forecast. And that only represents 2.5 per cent growth over last year's revised figure.

Gartner now figures that spending on computer hardware, which includes PCs, servers, storage, networking, and other gear wrapped in metal or plastic, will rise by 4.3 per cent in 2012, to $421bn. And thanks to the ongoing build out of every-faster wireless and broadband networks, telecom equipment spending will grow by an even larger 6.9 per cent, to $472bn.

Worldwide budgets for enterprise software will rise twice as fast as IT spend grows overall, up 5 per cent to $280bn. IT services is going to see yet more slowing, rising only 1.3 per cent to $856bn, and telecom services, which includes the flitting around of all those exabytes of voice and data by corporations around the world, will increase by only 1 point to $1,721bn.

Obviously, it is much easier to figure out how the year went after the spring of the following year, which is when all of the IT giants have reported their financial results; it is less easy – and less accurate – in the latter weeks of the year to do so. The strengthening of the US dollar is also contributing to the shrinkage a bit, too, since Gartner reckons IT spending in greenbacks.

If you look at IT spending projections in 2012 at constant US dollars, then spending is actually going to be up 5.2 per cent instead of the 4.2 per cent in the January projection. But, again, the money comes home to US IT giants in current US dollars, so there will ultimately be less money for them to book unless the US dollar takes a dive.

You can argue endlessly about the relevancy of the IT spending projections that Gartner, IDC, and Forrester Research do, particularly with the forecasts changing all the time. But the fact remains that many CIOs and CFOs gauge what they will spend against these projections and other economic data, as well as the needs they have for their businesses.

The expectations can cultivate the market conditions predicted, just like the expectation of a recession can cause a recession. It is human nature to predict and project and to react and sometimes overreact to these forecasts.

At the moment, Gartner is concerned about the ongoing economic uncertainty in the Eurozone and is now raising an eyebrow over the higher oil prices and real estate prices in China, which all feed back into the global economy and therefore IT spending. But the company put a chipper spin on it, just the same.

"Despite ongoing concerns about the global economic recovery – most notably around the resolution of eurozone sovereign-debt problems, worries about the potential for China's real estate 'bubble' to spillover and affect the rest of the economy, and rising oil prices – early signs in 2012 suggest that the global economic outlook has brightened a little," said Richard Gordon, a research vice president at Gartner, in a statement. Meanwhile austerity measures in Europe and the United States will crimp government spending on IT this year and force it contract next year. ®

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