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An unprecedented decline in the global economy is now expected to take a bigger chunk out of IT spending in 2009 than was experienced following the bursting of the dot com bubble in 2001, Gartner predicts.
The Stamford, Conn. research firm said this week that there has been a sharp slowdown across all four key segments of IT spending, hardware, software, IT services and telecommunications. As a result, Gartner predicts worldwide IT spending will dip to $3.2 trillion in 2009, a 3.8% decline from 2008 revenue of $3.4 trillion.
"IT organizations worldwide are being asked to trim budgets, and consumers are cutting back on discretionary spending," says Richard Gordon, research vice president and head of global forecasting at Gartner.
"The speed and severity of the response by businesses and consumers alike to these economic circumstances will result in an IT market slowdown in 2009 that will be worse than the 2.1% decline in IT spending in 2001 when the Internet investment bubble burst."
Although government stimulus packages will likely be important in the long term, they will not be able to offset this bleak near-term outlook, Gartner said. Until global financial markets stabilize, global GDP growth, including IT spending, is unlikely to strengthen.
As a result, the research firm predicts:
- The slowdown in IT spending will reduce new market penetration and will slow replacement activity.
- The impact of reduced new sales will be more strongly felt in emerging markets, while the impact of reduced replacement activity will be more strongly felt in mature markets.
- Consumers and businesses will continue switching to lower-cost products, extending the life of existing devices and extending their current contracts and purchasing agreements.
- However, IT is essential to running most businesses. Supporting current complex IT installations is both necessary for continued operations and a strategy for slowing down technology refresh cycles.
"IT vendors should plan for business and consumer spending to be curtailed during 2009 and for a slow, prolonged recovery during 2010," said Mr Gordon. "At the same time, they should be alert to opportunities to help buyers with cutting costs, complying with new government regulations and taking best advantage of government rescue plans."
Next: Gartner Spending Predictions By Category
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