Tech spending may fall more in 2009 than post-dotcom

SAN FRANCISCO/LONDON Wed Apr 1, 2009 11:05am EDT

1 of 2. A shop attendant sits in front of a shelf of laptops at a computer store in Taipei January 12, 2009. The global PC industry stood tall for most of last year as other technology sectors foundered, but it too has caught the bug of a deepening economic downturn that has hit demand from both consumers and corporate buyers.

Credit: Reuters/Pichi Chuang

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SAN FRANCISCO/LONDON (Reuters) - Global information technology spending will fare worse in 2009 than during the dotcom bubble collapse of 2001, industry researchers Gartner Inc (IT.N) said on Tuesday in cutting earlier projections.

Gartner expects spending on hardware, software, services and telecommunications to slip 3.8 percent to $3.2 trillion this year, lower than it forecast just three months ago and reversing a solid pace of growth for 2008.

A worsening global recession is discouraging corporations and consumers from shelling out for the latest in technology, eroding revenue for corporations from chip maker Intel Corp (INTC.O) to computer vendor Dell Inc DELL.O. Many analysts say they do not expect a turnaround till late 2009 or 2010.

But the group, whose forecasts are monitored closely by the global technology sector, said software services remained resilient and will chalk up tepid spending growth in 2009.

"Such has been the speed and the severity of the response to dire economic circumstances by business and consumers alike, that the IT market slowdown in 2009 will be worse than in 2001," said Gartner research vice president Richard Gordon on a conference call. Global IT spending fell 2.1 percent in 2001.

"What we're seeing now is a general slowdown in demand for products and services across the board."

The U.S. stimulus package is unlikely to impact growth or employment before 2010, Gartner said. Hence, IT spending is expected to rebound modestly in 2010, rising more than 2 percent, but accelerate to 5 percent growth in 2011.

The research house in December forecast 2.2 percent growth for 2009, after IT spending had risen 6.1 percent in 2008.

Computer hardware spending is expected to be worst-hit in the economic downturn, with spending off 15 percent to $324.3 billion for 2009. Global PC shipments are forecast to fall 9.2 percent on a unit basis.

Telecommunications spending is seen dipping 2.9 percent to $1.89 trillion, while IT services spending is expected to drop 1.7 percent to $796.1 billion.

Software is the only sector forecast to see any growth, with a small 0.3 percent rise to $222.6 billion expected.

(Reporting by Gabriel Madway and Paul Sandle; Editing by Edwin Chan)

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