Hardware Vendors Will Feel the Pinch in 2009

By CIO Update Staff

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Outside of the West, IT spending will be in single digits; not nearly as anemic as in the US, UK, and Europe. The continued erosion of the global economy, including the prospect of negative GDP growth in many major countries, has led IDC to update its forecast for worldwide IT spending in 2009. The IDC Black Book now forecasts worldwide IT spending will grow by just 0.5% year-over-year in 2009 in constant currency. This is down from a November 2008 forecast of 2.6% growth. If recent exchange rate trends continue, this will translate into a significant decline in revenues for U.S.-based IT suppliers.

The greatest impact will be felt in global hardware markets, where overall spending growth will be –3.6% this year, led by a steep decline in outlays for servers, PCs, and printers/MFPs. In contrast, worldwide spending on software and IT services are each expected to grow 3.4% in 2009, down from 4.6% and 3.7% growth respectively in the previous forecast. Worldwide IT spending in 2009 will be $1.44 trillion.

In the United States, IDC is now forecasting year-over-year growth of 0.1% in overall IT spending, down from the November forecast of 0.9% growth. Paralleling the worldwide market, hardware will experience a sharp decline in spending with 16% growth while software and IT services spending will grow by 4% and 3% respectively. U.S. IT spending will total nearly $491 billion in 2009.

"Fourth quarter data from a number of key markets and geographies clearly shows that companies have been very quick to pull back their spending," said John Gantz, chief research officer at IDC, in a press release. "The data also provides a clearer picture of how companies are curbing their expenditures. Investments in software and services are being maintained in pursuit of productivity and efficiency gains while hardware spending is being slashed in an attempt to stretch refresh cycles and squeeze more out of existing assets."

Other highlights from the new IDC Black Book include the following:

"The revised forecast is very close to the downside scenario we developed in November, which was based on the lowest worldwide GDP growth since World War II," noted Stephen Minton, VP of Worldwide Markets and Strategies at IDC, in a press release. "While the outlook for 2009 is now worse than we thought just three months ago, we still expect IT spending to recover somewhat in 2010 and gain momentum through the rest of the forecast period."

The IDC report, Economic Crisis Response: Worldwide IT Spending 2008–2012 Forecast Update — February 2009 Revision (IDC #216909) provides a top-line summary of IDC's latest forecast for IT spending, which has been revised to reflect the ongoing impact the financial crisis that first hit in September 2008. The forecast utilizes economic forecast data from the International Monetary Fund, a set of baseline macro-economic assumptions developed by IDC, and market specific inputs regarding vendor product cycles, supply availability, and technology adoption patterns. The report presents all data in constant, annual exchange rates (currently based on an average of calendar year 2007).