Gartner Predicts Upturn in Software Sales

Despite economic and political turmoil, a major analyst firm is predicting that software

spending will end its decline and stabilize this year.

Gartner Dataquest predicts, in a report released today, that the software industry will

return to positive, stabilized growth in 2003. The stabilization is based on expectations

that end-user spending will grow 3.5 percent over 2002 numbers, putting that part of the

market at $76.1 billion.

Industry watchers will breath a sign of relief if Gartner’s predictions come to light. The

software industry, much like the high-tech industry as a whole, saw its numbers slide in

2002. Worldwide software revenue dropped slightly less than 1 percent. Hardware was down as

well. Actually, a few months ago, analyst firm IDC reported that 2002 was the worst year in

history for high-tech. Showing its largest decline ever, it showed a negative growth rate of

2.3 percent.

News of Gartner’s favorable predictions for this year’s software market, comes on the heels

of a similar prediction for PC unit sales. Last week, Gartner analysts said they were taming

earlier expectations and settling on a slight growth for 2003. They noted that current

economic and worldwide instability were stunting the PC market.

The stabilization of various markets is based on expectations that despite the tumultuous

headlines, IT spending levels will level off or even increase this year. A recent IDC study

showed that 85 percent of U.S. IT leaders expect their budgets to stabilize, if not grow in

2003. But those same leaders also said spending would directly hinge on worldwide economic

and political volatility.

”Uncertainty is riding high with a very restrained economic outlook, so it can only be

sensible to advise continued caution for the near future,” says Thomas Topolinski, vice

president for Gartner Dataquest’s Software Industry Research group. ”While some sectors are

seeing increased demand, other sectors are losing their share. The most prudent planning

assumption is that, at least for the next 12 months, overall global demand for software

licenses will remain as static as it is today.”

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