Researcher Cuts Worldwide 2010 IT Spending Forecast

Gartner expects 3.9 percent global IT spending growth, down from earlier 5.3 percent prediction. Blames slide in euro value.

Gartner Inc. pared its prediction for worldwide IT spending in 2010, now expecting it to total some $3.35 trillion for the year, a 3.9 percent increase over the $3.225 trillion recorded last year but noticeably weaker than the $3.4 trillion the researcher initially forecast two months ago.

In April, Gartner predicted a 5.3 percent uptick in worldwide IT spending to $3.4 trillion in 2010, and an ensuing 4.2 increase to more than $3.5 trillion in 2011.

At the time, the researcher said that the market was ripe for increased IT spending, following strong fourth quarter sales, a solid supply chain for the first quarter of 2010 and an improving global economy.

Gartner blamed the declining value of the euro against the U.S. dollar since the beginning of the year for the revised forecast.

"The European sovereign debt crisis is having an impact on the outlook for IT spending," said Richard Gordon, Gartner research vice president.

"The U.S. dollar has strengthened against the euro during the second quarter of 2010, and this trend will likely continue in the second half of 2010, which will put downward pressure on U.S.-dollar-denominated IT spending growth," he said.

"Longer-term, public-sector spending will be curtailed in Europe as governments struggle to bring budget deficits under control during the next five years and to reduce debt during the next 10 years," Gordon said.

Global hardware spending expected to jump 9.1 percent

Gartner said that spending worldwide for hardware products will reach $365 billion in 2010, up 9.1 percent from the $334 billion spent last year.

"The computing hardware sector continues to benefit from a healthy PC sector, which accounts for two-thirds of total spending in this area, and we expect PC shipments to remain robust throughout 2010 and 2011," Gordon said.

He said that mobile PCs will power consumer hardware spending while Windows 7 migration and an expected replacement cycle will drive business sales.

Global spending on software should climb some 3.1 percent to $229 billion from last year’s total of $222 billion, Gartner said.

IT services spending is expected to rise to $786 billion, a 2.9 percent uptick over the $763 billion recorded in 2009.

Telecom, the largest segment of IT spending, is forecast to account for $1.9 trillion, a 3.4 percent boost over last year’s total of $1.9 billion spent.

"Our latest IT spending forecast reflects the fact that the global economic outlook is stable but vulnerable to shocks in key regions and industries, which means that IT spending decisions are still scrutinized for value," Gordon said.

"CEOs are targeting 2010 as a 'return to growth' year, and to enable growth strategies, CFOs expect increased IT spending,” he said.

“However, CIOs are seeing only marginal increases in budgets and are constrained to essential enterprise IT spending with discretionary spending still on hold,” Gordon said. “In the consumer sector, confidence is improving, although consumers are still wary of the threat of unemployment."

In revising its worldwide IT spending forecast for 2010, Gartner did not indicate that it expects to alter its related prediction for this year’s worldwide enterprise IT spending, which, in May, it pegged at $2.4 trillion, a 4.1 percent jump from last year.

TAGS: software,IT,hardware,Enterprise,Gartner

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