About Nortec

The All Things Nortec Blog

Tech Spending to Decline in ‘09

So this is an article form earleir in the year projecting 3% decline in technology spending and the last article I posted from last Tuesday said 9% so I guess a good guess is 6%…..

Note the turn in 2010 – spending is projected to be up 9%!

Digits Technology News and Insights
January 13, 2009

By Ben Worthen

Finally, the prognosticators are proclaiming the bad news is official: The recession will extend to the tech sector in 2009.

Tracy O via Flickr
Spending on information-technology goods and services this year will contract 3% compared with 2008 to $1.66 trillion, according to Forrester Research. Many researchers have predicted a slowdown in spending growth, but Forrester is among the first to predict an overall decline. While the economic downturn sweeping the globe is the biggest contributor to the drop, there’s another culprit as well: a stronger dollar.

For the last several years, many tech companies have benefited from a weak dollar that boosted the value of overseas sales. Now these same companies will be hurt by a dollar that has gained on many foreign currencies. The impact of currency conversion is already being felt in Silicon Valley. For example, Oracle in December reported its first year-on-year decline in profits in three years, but said profits would have jumped 10% at constant currency levels. To illustrate the impact of currency on the industry, Forrester predicts that IT spending will grow 6% worldwide in 2009 when measured in euros, and grow 3% when measured in local currencies.

Computers and related equipment will take the biggest hit in 2009, falling 4% year-on-year, according to Forrester. Spending on telecommunications equipment and on IT services will each fall 3%. Software spending will hold steady at $388 billion.

Forrester also forecasts that the recession will be short lived, as the company’s model shows spending on technology to grow 9% in 2010. Software sales will also lead the 2010 recovery, growing 10% from 2009. Services will grow 9%; telecommunications 8%; and computer equipment 7%, according to the forecast.