Gartner expects global tech spending to decline

/ Source: The Associated Press

Dragged down by the weak economy, global spending on technology products and services will likely decline nearly 4 percent this year, research firm Gartner Inc. said Tuesday.

Gartner expects a broad-based slowdown, leading to a 3.8 percent decline from 2008, to $3.2 trillion. Hardware will see the sharpest drop, nearly 15 percent compared with a 2.8 percent increase last year. Spending on software, which can help companies save money, is expected to stay nearly flat, rising less than half of 1 percent.

The latest forecast would be worse than the 2.1 percent decline in spending that the tech industry saw in 2001, after the dot-com bust.

Worldwide, companies are trimming their budgets, waiting longer to upgrade to newer computers, for example. And consumers squeezed by the recession are slashing their discretionary spending.

Gartner called its forecast bleak, and said government stimulus packages won't be enough to offset things soon. The research firm expects a "slow, prolonged recovery during 2010," said Richard Gordon, research vice president, and head of global forecasting at Gartner.

Also on Tuesday, Forrester Research Inc. lowered its forecast for U.S. tech spending because of the worsening economy. The research firm now expects U.S. business and government spending on technology products and services to fall by 3.1 percent this year, compared with its earlier forecast of 1.6 percent growth.

Forrester Analyst Andrew Bartels said that in some ways the credit crunch has hurt technology spending more than the recession.

"Companies are so afraid they won't be able to borrow if they need to (that) they are going through extreme lengths to preserve cash," he said.

Forrester expects growth in tech spending to resume in the fourth quarter of this year, and "gather strength" in 2010. Bartels said there is pent-up demand from companies that need to spend money on new technologies.

"Once the recession bottoms out, once the financial markets start to function more normally, that pent-up demand will start to resurface," he said.