IDC’s FutureScan: Katrina Hits IT Spending Expectations

FRAMINGHAM, MA – OCTOBER 4, 2005 – The alignment IDC reported in the September release of IDC FutureScan fell apart this month in the wake of Hurricane Katrina and the prospect of permanently higher oil prices. In fact, the IT and line-of-business expectations for IT spending over the next twelve months fell to 2.9% from last month's 6.1%, the lowest the buyer intent indicator has been since IDC started FutureScan in the beginning of 2004.

"This looks like a visceral reaction to Katrina from our survey population of executives," said John Gantz, IDC's Chief Research Officer. "Most of the economic forecasts around the impact of Katrina seem to indicate a short-term hit to the U.S. economy in 2005, followed by a rebuilding rebound in 2006. As this news gets absorbed by IT and business executives, we expect their IT spending expectations to recover."

Gantz pointed out that the macroeconomic indicators fell as well, but more as a function of lower GDP and profit forecasts for 2006 over 2005 than any short term reaction to Katrina. IDC's own forecast for U.S. IT spending over the next twelve months is just under 5%.

"We do believe the situation is more volatile than it has been in months past," noted Gantz, "specifically around the potential for oil and gas prices to rise. For our own forecasting purposes, we are assuming that the price of gasoline in the U.S. will stay under $3.00, but we are IT market analysts, not oil and gas, or weather analysts. If prices go much higher than that, or high natural gas and home heating oil prices collide with a cold winter, then we might see a cascade effect as consumer spending and confidence falls, affecting business results and affecting IT spending."

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 October, Buyer Intent, which reflects market demand for IT products and services over the next 12 months, fell to 1029, down from 1061 in September. Meanwhile, the Market Indicators number, which combines input from economic and IT industry revenue forecasts, dropped to 1058 from 1064.

FutureScan results for October 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 provider of market intelligence, advisory services, and events for the information technology and telecommunications industries. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. Over 775 IDC analysts in 50 countries provide global, regional, and local expertise on technology and industry opportunities and trends. For more than 40 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting http://www.idc.com .

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