IT Industry Headed for Gradual Recovery in 2002, Led by Software and Services

FRAMINGHAM, MA – NOVEMBER 14, 2001 – The impact of the terrorist attacks of September 11, the slowing global economy, and the telecommunications supply-demand mismatch have come together in a "perfect storm" to create the worst year ever for the computer industry around the world, according to IDC.

 

In new data and forecasts that take into account the impact of September 11 on the computer industry worldwide, IDC predicts total Worldwide IT spending will increase by only 1% this year, compared with 12% growth in 2000. In 2002, growth will recover slowly to 5.5% by year-end.

Worldwide hardware spending will decline by 9% this year, and a further decline of 1% will follow in 2002. Software and services spending growth will recover, to some extent, in 2002, with an upturn in the second half of the year expected to produce 2002 worldwide growth rates of 11% for software and 9% for services.

"The 'perfect storm' of 2001 has caused an unprecedented decline in IT spending around the world, particularly in the US," said John Gantz, IDC Chief Research Officer. "Hardware shipments have suffered most dramatically, as is always the case in an economic slowdown. This year, due to other factors, things have been even worse than anyone predicted."

The US slowdown has clearly spread to other regions, most notably Western Europe. Hardware spending in Europe will show a decline of 4% this year and will decline by a further 2% in 2002. In Japan, PC spending is declining by 16% this year.

"This is no longer just a US story," Gantz said. "This is a worldwide slowdown, impacting vendors in every region."

While 2001 will go down as the worst year on record for the computer hardware industry, there are reasons for optimism. Software spending will recover to the strong growth rates of previous years, driven by investment in ebusiness and other leading solution areas. IT Services remains the bastion of the IT industry, recording 9% growth worldwide this year despite the industry slowdown.

"You can't pretend that this year has been anything but awful," Gantz said. "But there is light at the end of the tunnel. Technology is the best way for companies to increase the value they provide to their customers, to increase their own profits, and to increase their productivity. That’s why companies will continue to increase their spending on technology in the months and years ahead."

IDC launched an industry-leading study "Operation Beacon" to quantify the impact of the September 11 terrorist attacks, along with other economic factors, on the state of the worldwide IT market. Involving more than 100 analysts in over 50 countries, the project delivers growth rates for 25 IT market segments in 54 countries.

For more information regarding this study, contact Amie White at 508-935-4653 or awhite@idc.com. To purchase IDC's report Operation Beacon: Worldwide IT Spending After September 11 (IDC #26010), contact volume sales at 508-988-7988.

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.

###