March 31, 2009 / 5:54 PM / 11 years ago

Tech spending may fall more in '09 than post-dotcom

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

People use computers in California, September 23, 2005. REUTERS/Kimberly White

Gartner expects spending on hardware, software, services and telecommunications to fall 3.8 percent to $3.2 trillion this year, compared with forecasts of an increase just three months ago and reversing a solid pace of growth for 2008. The anticipated decline would also be worse than the 2.1 percent drop in 2001.

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

But the group, whose forecasts are monitored closely by the global technology sector, said software services remained resilient and would 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,” Gartner Research Vice President Richard Gordon said on a conference call.

“What we’re seeing now is a general slowdown in demand for products and services across the board,” Gordon added.

The U.S. stimulus package is unlikely to affect growth or employment before 2010, Gartner said. Hence, it expects IT spending to rebound modestly in 2010, rising more than 2 percent, but to 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 the worst-hit IT category, with spending off 15 percent to $324.3 billion for 2009. Gartner expects global PC shipments to fall 9.2 percent on a unit basis.

Telecommunications spending is seen dipping 2.9 percent to $1.89 trillion, with IT services expenditures down 1.7 percent to $796.1 billion.

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

Reporting by Gabriel Madway and Paul Sandle; Editing by Edwin Chan and Lisa Von Ahn

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