IDC Predicts IT Spending Recovery by Q4 2002 and $1 Trillion Market in 2003

FRAMINGHAM, MA – JULY 24, 2002 – IDC today released its new forecasts for IT spending in 2002 and 2003. Based on current economic expectations, worldwide IT spending this year will reach $981 billion, an increase of 3.7% over 2001. While spending on IT hardware will show a full year-on-year decrease of 4% this year, growth of spending on software and services will result in positive growth for the total IT market.

 

"The uptick will become more evident in Q4," said Stephen Minton, Program Director of Worldwide IT Markets research at IDC. "The bottom has already been reached, the green shoots of recovery will begin to emerge gradually during Q3, and Q4 will show strong year-on-year comparisons with 2001."

Q4 of 2001 was severely impacted by the September 11 terrorist attacks in the United States, which came at the mid-point of the economic recession, and in the immediate aftermath of the telecom and dot.com meltdowns. Based on a return to normal seasonality in Q4 2002, with the fourth quarter typicallyrepresenting the biggest quarter for IT spending, IDC expects to see strong growth comparisons over Q4 2001.

"New projects are likely to remain on hold until 2003," Minton said. "The limited budget burn-off in Q4 will be concentrated on replacing products which have had extended lifecycles during the previous six quarters. This means that the recovery will be uneven at first, not favoring all IT vendors and market sectors at the same pace."In 2003, with gradual economic recovery translating into improved business profits, worldwide IT spending will see growth of 9% to exceed

$1 trillion for the first time in the industry's history, a larger total market size than at the height of the dot.com boom in 2000. Spending on hardware products will see a recovery to positive growth of 5%.

"Business confidence is the killer app," Minton continued. "The recent accounting scandals in the United States have cast a shadow over businessconfidence, but there is no evidence that this will have a long-term impact. If business profits continue to improve during Q3 and Q4, in line with the gradual economic recovery, we expect this to produce gradual increases in IT spending."

IT spending in the United States will reach $436 billion this year, an increase of 3% over 2001, with growth accelerating to 9% in 2003. In Western Europe, growth will be 4% this year and 6% in 2003. Japan will experience flat growth levels this year, but will return to positive market growth of 7% next year. Hot growth opportunities in 2003 include China, India, Korea, Russia, the Philippines, South Africa and Poland.IDC's research document, Worldwide Black Book 2002 (IDC #27616), analyzes the growth of IT spending on a worldwide basis. For more information or to purchase this document, call Amie White at 508-935-4653 or at awhite@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in-depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the

world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

 

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