Forrester: Global Tech Spending to Rebound

The global technology industry will enjoy an 8.1 percent increase in spending this year with software and computer hardware leading the way, the research group predicts.
Posted January 12, 2010
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- Reuters



NEW YORK (Reuters) - After a tough 2009, the global technology industry will see an 8.1 percent increase in spending this year with software and computer hardware leading the charge, according to a report from Forrester Research.

The estimated market growth this year, to $1.6 trillion, compares with an 8.9 percent decline in global spending in 2009.

While the strongest growth is expected in Europe when measured in dollars, the Cambridge, Massachusetts-based research firm said information technology spending will be one of the brightest spots in the United States.

Measured by local currency, the United States will be the strongest tech growth region, according to Forrester, with an expected increase of 6.6 percent to $568 billion after a decline of 8.2 percent in 2009.

The researcher sees European technology spending rising by 11.2 percent when measured in U.S. dollars, as countries in western and central Europe get a boost from the U.S. dollar's decline against the euro.

Forrester sees global spending on software up 9.7 percent this year and said purchases of computer equipment would rise 8.2 percent, while communications equipment will see a spending increase of about 7.6 percent.

"The technology downturn of 2008 and 2009 is unofficially over," Forrester analyst Andrew Bartels said. "All the pieces are in place for a 2010 tech spending rebound."

Bartels said the tech recovery is expected to be "much stronger than the overall economic recovery" in the United States this year, with technology spending growing at more than twice the rate of gross domestic product (GDP).

Investors will likely be hoping that upcoming quarterly earnings reports show some signs that back up these predictions. One of the first closely watched reports will come from chip giant Intel Corp later this week.

Other anxiously awaited technology company reports will come from firms including Cisco Systems Inc in the communications gear market and Microsoft Corp in the software segment.

Bartels said he sees 2010 as the start of a longer growth cycle especially for technologies involving server and storage virtualization, cloud computing and unified communications.

"We are entering a new 6- to 7-year cycle of IT growth and innovation that Forrester calls Smart Computing," said Bartels.

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