Make Way for Increased IT Spending in the Peach, Lone Star, and Sunshine States, Says IDC

FRAMINGHAM, MA – December 13, 2005 – A recent IDC study examines the top ten states for business IT spending from 2005-2009. Of the top ten, Georgia, Texas, and Florida are expected to have the fastest growth rates over the course of the five-year period. Not surprisingly, as three of the largest states in the country, California, New York, and Texas topped the charts as the biggest spenders on business IT in 2004. These three states alone accounted for 30% of total spending on business IT within the U.S. last year, with the top ten states as a whole accounting for 56% of the total spend.

Generally speaking, the healthcare, life sciences, high tech, banking, financial markets, and communications industries will all be key contributors to the future health of IT spending in these states. In terms of technological focus, refreshing the infrastructure and expanding the network of connectivity will continue to be the focal point in many companies, with the fastest acceleration to be enjoyed by vendors of smart handheld devices, volume servers, systems infrastructure software, and services spending on operations and maintenance support.

Aside from these common threads, which shed light on the general direction of business IT spending within the United States, Jessica Goepfert, program director for U.S. Verticals Research at IDC, explains that future IT spending within these states really hinges on their individual climates and that, "although the ten states profiled are similar in terms of their overall average growth, each state has its own story and key vertical industries on which it is banking."

For example, while the economic climate in Texas has historically been linked to the health of the energy industry, job creation has been relatively robust in recent months not only within the natural resources sector, but in a range of other sectors as well, such as financial services, healthcare, education, construction, and leisure. And while discrete manufacturing will continue to represent the largest share of overall IT spending within the Lone Star state over the next five years, IT spending within financial services (excluding banking) firms is expected to be a close second, exceeding $1 billion by 2009.

In turn, Georgia has benefited from relatively robust economic momentum in Atlanta, especially given the emergence of biotech as a key growth industry. An additional boost to the state's manufacturing sector came with the announcement that Honda plans to build a new transmission facility at Tallapoosa. However, the outlook for Georgia could drastically change, based on the future performance of the state's largest private employer, Delta Airlines.

Finally, although Florida is positioned for business IT spending growth, a shift in foreign exchange rates could inhibit the Sunshine state's staple tourism and trade sectors. "Any large-scale event with the potential to negatively disrupt the tourism industry is a major wild card for Florida, as experienced with the 2004/2005 hurricanes and the September 11 terrorism attacks in 2001," noted Stephen Minton, vice president of Worldwide IT Markets research at IDC "As these events are impossible to predict, more important to the current climate for business investment is the perception of risk and its impact on business confidence and, in turn, business spending on technology."

Finally, there is the question of government incentives and packages, which are important to creating a favorable business environment and to stimulating expansion in any area. However, how long will such incentives last? What if the state government shifts its focus and industries of choice? These are all questions to be addressed by the individual state governments, and the answers will inevitably affect how expenditure on business IT unfolds through 2009.

IDC's U.S. Business IT Spending 2005-2009 Forecast: The Top 10 States (IDC #34400) profiles the top 10 states for business IT spending, providing state-level forecasts by 14 industries and three technology segments, including hardware, software, and IT services. Additionally, a discussion of the drivers, spending priorities, and inhibitors in key industries is included. Information contained within the forecast document is culled from IDC's U.S. Black Book: State IT Spending by Vertical Market.

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