IT Spending: Boy, Wait Until Next Year

IT spending, which has suffered from the double whammy of an uncertain
economy and corporate belt-tightening, is poised for a slight uptick in
2003, according to a survey released Thursday by investment bank SG Cowen.

In a survey of 700 companies and government agencies in North America, SG
Cowen found the organization planned of bumping up their expenditures on
technology in 2003, but not nearly enough to match the levels of growth the
industry previously enjoyed.

“The overall pace of IT spending remains quite modest and still below 2001
levels,” Drew Brosseau, SG Cowen’s managing director and head of technology
research, said in a statement. “But we’re encouraged to see a slight
acceleration in planned spending growth from less than 2 percent this year
to over 3 percent next year.”

With most research forecasting tech spending will remain stagnant for the
rest of the year, SG Cowen’s survey is faint encouragement.

Interestingly, SG Cowen found larger enterprises more skittish about bumping
up their IT budgets for the second half of the year and 2003. In fact, the
survey found big companies are scaling back their spending plans.

The PC industry is one notable area that SG Cowen’s research shows little
sign of hope for a strong rebound. The investment bank reported finding “no
evidence of pent-up demand for corporate PC upgrades and replacement for
2003.”

This finding is confirmed by other research that companies are making do
without buying new computers. According to a recent research report by
Deutsche Bank analysts George Elling and Steven Grossblatt, PC sales are
unlikely to increase greatly in the second half of the year.

Although PC sales showed signs of life in the first quarter, when Gartner
Group research found sales finally stabilizing after consecutive quarters of
negative growth, they quickly fell back to stagnation in the second quarter.

Respondents confirmed that Dell remains a hot company, showing momentum in
the marketplace. In the second quarter, Dell’s market share climbed to 14.9
percent from 13.1 percent over the same period.

SG Cowen also found respondents backing offering by traditional IT stalwart
IBM, Microsoft and Oracle.

Overall, the survey results track similar reports
and forecasts issued recently
, finding a slight rebound in tech spending
is likely to materialize in 2003. However, the IT industry cannot expect
growth rates anywhere near those enjoyed in the late 1999 and 2000, analysts
warn.

News Around the Web