Gartner trims 2010 IT spending forecast

Worldwide IT spending will to rise only 3.9 percent this year, forecasts Gartner, which lowered its forecast from 5.3 percent due mainly to the European debt crisis.

Lance Whitney Contributing Writer
Lance Whitney is a freelance technology writer and trainer and a former IT professional. He's written for Time, CNET, PCMag, and several other publications. He's the author of two tech books--one on Windows and another on LinkedIn.
Lance Whitney
2 min read

IT spending is still expected to rise this year over 2009, but Gartner believes that European debt problems may put a damper on its previous expectations for growth.

The market researcher said Thursday it has trimmed its estimate for IT spending for 2010 to $3.35 trillion, a gain of 3.9 percent over last year's $3.23 trillion. That marks a lower forecast than the 5.3 percent rise Gartner projected in the first quarter. The company attributed the new outlook to the effects of the devaluation of the euro versus the U.S. dollar.

"The European sovereign debt crisis is having an impact on the outlook for IT spending," Richard Gordon, research vice president at Gartner, said in a statement. "The U.S. dollar has strengthened against the euro during the second quarter of 2010, and this trend will likely continue in the second half of 2010, which will put downward pressure on U.S.-dollar-denominated IT spending growth."

Growth in software, IT services, and telecommunications will almost certainly be more limited as a result of the appreciation of the dollar, forecasts Gartner. But the hardware sector will see a 9.1 percent rise in spending to $365 billion this year, thanks to ongoing demand for PCs.

"The computing hardware sector continues to benefit from a healthy PC sector, which accounts for two-thirds of total spending in this area, and we expect PC shipments to remain robust throughout 2010 and 2011," Gordon said. "Consumer shipments will continue to be powered by strong mobile PC uptake, while professional shipments will be buoyed by a new replacement cycle and migration to Windows 7."

Gartner said the global economy has stabilized but is still susceptible to shocks in key regions and industries. As a result, technology spending will be kept in check by businesses that are reviewing every purchasing decision.

"CEOs are targeting 2010 as a 'return to growth' year, and to enable growth strategies, CFOs expect increased IT spending," said Gordon. "However, CIOs are seeing only marginal increases in budgets and are constrained to essential enterprise IT spending with discretionary spending still on hold. In the consumer sector, confidence is improving, although consumers are still wary of the threat of unemployment."

Over the next five years, spending will be curtailed in Europe as governments try to control their budget deficits and reduce debt, Gartner predicts. A ripple effect could put a crimp on private sector spending as well. Gartner asserts that an effective policy response in Europe will be needed to stimulate spending in general and in the IT sector specifically.