How bad off is tech? Depends who you ask

Gartner says 2009 will be worse than the dot-com bust, but Forrester and IDC are not as gloomy

Until this week, the major analyst houses have said the current recession is not as bad as what the tech sector suffered though in 2001 and 2002 after the dotcom bubble popped. Forrester, IDC, and Gartner still all agree that IT spending is down, but whether this recession is worse than the dotcom fallout is now a matter of debate.

The fact that analysts were maintaining that IT is not in as much trouble today as it was during the last recession has served as something of a beacon of hope for tech workers.

[ Learn more about how the financial crisis is affecting IT and the high-tech industry, plus what IT can do to help, in InfoWorld's special report. ]

But that changed earlier in the week when Gartner issued a report saying that 2009 will be worse than 2001. The analyst house projected global IT spending would decline by nearly 4 percent this year over last, citing a "general slowdown in demand for products and services across the board," to which IT is not immune.

While Forrester and IDC also see spending in a downward spiral, the firms do not exactly concur with Gartner.

Forrester this week circulated its "U.S. IT Market Outlook for Q1 2009," a rather bleak document that begins with the words, "The U.S. market keeps getting worse than we and many economists had expected."

But Andrew Bartels, Forrester principal analyst and vice president, insists the tech sector is not in as bad a shape as it was after the dotcom bust. Bartels was careful to not comment specifically on Gartner's findings, but explained that in 2001 Forrester saw a 6 percent decline in spending, followed by 11 percent in 2002, whereas when Forrester published numbers for 2009 this week, it projected a 3.1 percent decrease in IT goods and services purchased by business and government, rather than its original estimation of a 1.6 percent increase.

[ Related: Forrester's Bartels first predicted we wouldn't see a repeat of the 2001-2002 bust in InfoWorld's "Is tech in more trouble than we think?" ]

"IT is down, just not to the same degree. We see 2009 as worse than we thought it would be in December, but we don't see it getting worse than we're predicting now," Bartels said. "The difference is that the decline today is for two or three quarters, not the two to three years we saw in 2001 and 2002."

IDC, for its part, has re-forecast its spending projections down twice since July 2008, according to IDC Research Director Robert Mahowald, who also would not comment directly on Gartner's numbers or methodology.

Mahowald pointed out, however, that IDC re-examined 93 markets and found all those were headed downward in 2009 except three: managed telepresence, consumer broadband, and SaaS.

Which brings us to two things all the analyst firms agree on: First, as CFOs and CIOs look for ways to shift IT dollars from capital expenditures to operational efficiencies, enterprises will tap SaaS and cloud-based resources more. Even Gartner projects that cloud computing spending will soar in 2009.

Second, the current economic downturn -- regardless of whether it proves to be worse than the dotcom wake -- will not last forever. Gartner referred to the current economic turbulence as a "bleak outlook near-term."

Forrester's Bartels said demand for IT products and services is not cancelled, merely delayed, which actually creates pent-up demand. As such, he is already hoping that indications of recovery will emerge this year.

"In Q4 2009 we might see some early signs of recovery," Bartels said. "Certainly by 2010 we'll start to see some better numbers."

From CIO: 8 Free Online Courses to Grow Your Tech Skills
Join the discussion
Be the first to comment on this article. Our Commenting Policies