Manufacturing and Banking Industries to Lead U.S. IT Spending in 2004, IDC Report Reveals

FRAMINGHAM, MA – FEBRUARY 12, 2004 – According to a new report from IDC that details IT spending by vertical markets, technology purchases made by the manufacturing and banking industries will account for nearly one third of the $391 billion in IT spending in the United States this year. While IT spending will begin to increase as corporate profits improve, IDC believes growth will continue to be mixed by industry.

“We remain optimistic about the opportunities for IT vendors,” said Anne Lu, senior analyst for IDC’s Worldwide Vertical Markets research program. “The past several years have witnessed severely constrained IT spending as companies sought to maintain profitability by carefully managing expenditures. As the global economy improves and buyers return their focus to increasing profits through revenue growth, big-ticket IT purchases will gradually start to reappear.”

Among the key findings presented in IDC’s study are the following:

• The largest vertical market opportunities for IT spending over the next several years will continue to be in manufacturing and banking, while the strongest growth will appear in the financial services and consumer markets.

• The momentum of government IT spending will continue, fueled mainly by federal government expenditures. A major area of government investment will be in communications networks for high-priority egovernment and homeland security initiatives.

• Compliance with new regulatory requirements, such as the Sarbanes-Oxley Act in accounting, HIPAA in healthcare, the USA PATRIOT Act, and Basel II in banking, will continue to drive IT spending.

• Retail is moving toward just-in-time retailing, and radio frequency identification (RFID) is expected to change the relationship among retail, manufacturing, and consumers. The usage and deployment of this technology will have a big impact on retailers' mid- to long-term IT spending strategies.

“Vendors can succeed in this market by offering product bundling and selling solutions which can help industries solve their business challenges,” Lu added. “In addition, vendors need to create efficient vertical market strategies to tackle the different pain points of different industries.”

The IDC study, U.S. IT Spending Forecast Update by Vertical Market, 2003-2007 (IDC #30726) presents an updated five-year forecast (2003–2007) for U.S. information technology spending within 17 vertical markets. Based on the 3Q 2003 IDC Black Book, the report examines where the best IT opportunities among vertical markets will be in 2004, as well as which vertical markets will provide the best IT opportunities over the next five years. In addition, the document offers recommendations to IT vendors on how to capitalize on vertical market opportunities.

For additional information about IDC’s Vertical Market Research, please contact Virginia Lehr at 508-935-4188 or vlehr@idc.com.To purchase this document, call IDC's sales hotline at 508-988 7988 or email sales@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. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 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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