IT Spending: Boy, Wait Until Next Year

By Brian Morrissey

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IT spending, which has suffered from the double whammy of an uncertain economy and corporate belt-tightening, is poised for a slight uptick in 2003, according to a survey released Thursday by investment bank SG Cowen.

In a survey of 700 companies and government agencies in North America, SG Cowen found the organization planned of bumping up their expenditures on technology in 2003, but not nearly enough to match the levels of growth the industry previously enjoyed.

"The overall pace of IT spending remains quite modest and still below 2001 levels," Drew Brosseau, SG Cowen's managing director and head of technology research, said in a statement. "But we're encouraged to see a slight acceleration in planned spending growth from less than 2 percent this year to over 3 percent next year."

With most research forecasting tech spending will remain stagnant for the rest of the year, SG Cowen's survey is faint encouragement.

Interestingly, SG Cowen found larger enterprises more skittish about bumping up their IT budgets for the second half of the year and 2003. In fact, the survey found big companies are scaling back their spending plans.

The PC industry is one notable area that SG Cowen's research shows little sign of hope for a strong rebound. The investment bank reported finding "no evidence of pent-up demand for corporate PC upgrades and replacement for 2003."

This finding is confirmed by other research that companies are making do without buying new computers. According to a recent research report by Deutsche Bank analysts George Elling and Steven Grossblatt, PC sales are unlikely to increase greatly in the second half of the year.

Although PC sales showed signs of life in the first quarter, when Gartner Group research found sales finally stabilizing after consecutive quarters of negative growth, they quickly fell back to stagnation in the second quarter.

Respondents confirmed that Dell remains a hot company, showing momentum in the marketplace. In the second quarter, Dell's market share climbed to 14.9 percent from 13.1 percent over the same period.

SG Cowen also found respondents backing offering by traditional IT stalwart IBM, Microsoft and Oracle.