The Economic Wolf Knocks

Analysts start playing in a minor key about IT spending

February 12, 2008

2 Min Read
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This earnings season, nearly every storage vendor has downplayed the potential for a U.S. recession. Today, though, news from market research firms IDC and Forrester hint that the seals between storage and the worsening economy may be leaking.

"While it is by no means certain that the U.S. economy will in fact experience a recession, the risks of one are high enough to justify a more conservative outlook for the IT market," said Forrester VP Andrew Bartels, in a prepared statement.

"The government stimulus package will not have a dramatic influence on IT investments this year, and we are still awaiting the impact of more subprime mortgages resetting at higher interest rates in the next six months," said IDC analyst Anna Toncheva in a similar prepared statement.

Forrester now says that instead of growing 9 percent in 2008, revenues from IT goods and services will grow 6 percent to $1.7 trillion. And in the U.S., they'll fall from a previously projected 4.6 percent to 2.8 percent.

Storage will take a hit: According to Forrester, workstations, servers, peripherals and storage will be down from 12 percent growth in 2007 to 4 percent growth this year. The firm projects a similar decline in communications equipment. Software, though, will continue to grow nicely at 8 percent -- though that will be less than the originally forecast 11 percent.Citing "macroeconomic indicators," IDC revised its prediction for worldwide IT market growth from 6 percent to 5 percent. The firm's forecast for total IT spending this year is now $1.38 trillion.

But IDC thinks U.S. IT growth will be down to 4 percent from 6 percent in 2007. And the firm thinks storage will suffer, along with software, services, servers, and network equipment.

And don't look East for hope. IDC predicts that IT sales in China will be down from 17 percent in 2007 to 12 percent in 2008. Forrester thinks the Asia-Pacific region in general will grow 9 percent this year, down from 15 percent last year.

On the upside, lots of markets live in hope of much more modest growth than 4 percent or 5 percent on a normal year. (Have you checked mainframes lately?) The storage sector has clearly gotten spoiled. And IDC analysts hope any recession will be short-lived, while Forrester says a potential recession could be mild.

These last thoughts will be my personal mantra. How about you?Have a comment on this story? Please click "Discuss" below. If you'd like to contact Byte and Switch's editors directly, send us a message.

  • IDC

  • Forrester Research Inc.

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