IDC’s FutureScan: Clear Sailing, But Light Wind Ahead

FRAMINGHAM, MA – APRIL 1, 2005 – IDC's latest FutureScan results, announced today, depict good if not spectacular IT spending growth for the next twelve months. The users polled expect their spending to grow by over 8% between now and April 2006.

That optimism is countered somewhat by macroeconomic indicators, which went up only by a point. A slight increase in expectations for vendor revenues helped counter rising interest rates and lower profit expectations for 2006. The languishing stock market – the S&P 500 has remained between 1100 and 1200 in 11 of the last 13 months – is also creating inertia in the market indicator figure.

"It's gratifying to have such positive expectations on the part of CIOs and business executives," said John Gantz, IDC's Chief Research Officer. "But we are waiting for the reality of the macroeconomic situation to sink in. Oil prices are expected to remain high, the deficit isn't getting any smaller, nor is the trade imbalance, and interest rates are going up. For multinationals, the European market is still weak. Nor does there seem to be much allowance for the unexpected. Sooner or later these factors will impact corporate willingness to spend."

On the other hand, noted Gantz, users who concentrated on cutting IT costs wherever they could during the high tech downturn have begun looking to IT to increase revenue, help develop new products, and increase productivity. High on the current business agenda is using IT to get more accurate real-time customer insight, support more rapid product development, and drive business analytics deeper into the organization.

"To use a sailing analogy, we seem to be on a good tack in favorable seas," added Gantz. "We could just use a little more wind."

FutureScan is a set of market metrics that measure supply and demand in the IT industry based on leading indicators and customer surveys. Values reflect expectations of future growth, with an index value of 1000 indicating zero growth and each additional 10 points representing roughly 1% of expected growth or contraction.

For April, Buyer Intent, which reflects market demand for IT products and services over the next 12 months, dropped slightly to 1082 from 1096 in March. In contrast, the Market Indicators number, which combines input from economic and IT industry revenue forecasts, rose slightly to 1070, up from 1058 in March.

FutureScan results for April and prior months can be viewed at www.idc.com/futurescan .

For more information about FutureScan, or any other products from IDC's Global Research Organization, please contact Amie White at 508-935-4653 or awhite@idc.com.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. More than 775 IDC analysts in 50 countries provide local expertise and insights on technology markets, and our management team is comprised of experienced and respected industry luminaries. Business executives and IT managers have relied for more than 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com .

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