IDC’s FutureScan: The Oil Shock Dissipates in IT Spending Expectations

FRAMINGHAM, MA – DECEMBER 1, 2005 – This month's IDC FutureScan indicates that memories of Hurricanes Katrina and Rita are fading, the prospect of permanently higher oil prices has been internalized, and the decent outlook for next year's economy is having a positive effect on buyers.

Buyer expectations for IT spending over the next twelve months jumped from 2.8% last month to 7.2% this month. Macroeconomic indicators stayed flat, the rise in the stock market balanced by a cooler forecast for profits next year.

"It looks like the two-month outage in our indicator of buyer intent has been repaired," quipped John Gantz, IDC's Chief Research Officer. "Buyers have realized that the economy is still trundling right along, and that for companies to take advantage of this economic growth they will need to invest in IT to grow the business."

Despite a profit picture for the next 12 months that is considerably lower – under 10% growth – than this year, the macroeconomic indicators stayed level. Vendor revenue forecasts are still above 5% and the stock market is up almost 6% from where it was six months ago.

"Our forecast for IT spending in the U.S. over the next 12 months is right at 5%, which means it is now below both indicators," noted Gantz. "It would be nice to think we are being too cautious, but history has shown that our forecast – based on a slew of inputs in addition to measures like these – is more likely to be right than a series of one-time snapshots."

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 December, Buyer Intent, which reflects market demand for IT products and services over the next 12 months, rose to 1072 from 1028 in November. The Market Indicators number, which combines input from economic and IT industry revenue forecasts, stayed level at 1057.

FutureScan results for December and prior months can be viewed at http://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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