Crystal ball gazing on IT spend for 2003
Crystal ball gazing on IT spend for 2003
The local technology market is in for a rocky ride and more uncertainty if conflicting reports about IT spending in 2003 are to be heeded.
Whilst some analysts predict an upbeat outlook for a near-term recovery for the Asia Pacific region in the battered tech sector, others warn that the US market faces a decline. Local technology companies are not out of the woods yet.
A Goldman Sachs survey of US chief information officers at the end of 2002 showed technology buyers were more penny-pinching than they had been earlier in the year. Goldman Sachs expects a decline in tech spending of 2 per cent or 3 per cent.
In the survey of 100 IT executives from Fortune 1000 companies, two-thirds of the respondents expected budget tightening, with 43 per cent of technology managers not expecting any increase in spending until 2004 or later.
Conversely, a report from US-based Aberdeen Group was more upbeat. The report, called World IT Spending 2003-2006: Measuring the Incremental Recovery, found IT spending worldwide would grow about 4 per cent in 2003, up from less than 1 per cent growth in 2002.
The Asian Pacific Rim region will see growth from $US257 billion ($458 billion) in 2002 to $US330 billion in 2006, while IT spending in Australia is expected to grow 7.1 per cent over the next three years, according to the report.
China and India will lead the region's growth, where IT spending would grow at a compound annual growth rate of 14.6 per cent and 10.9 per cent, respectively, according to the market research group. Korea's IT spending was expected to increase 10.8 per cent, followed by Australia.
Aberdeen surveyed an IT user panel and suppliers' financial results to conclude 2003 to be a "modest growth year" for the IT industry, unlike the halcyon days of double-digit annual growth rates witnessed in the late 1990s and in early 2000 or the several quarters of negative growth in 2002.
"We simply do not see the compelling reasons for user organisations to spend heavily on technology - whether on new hardware or software or on upgrades to existing technology - that had existed during the years of hyper growth. Moreover, IT spending at 3.5 per cent to 4.25 per cent of a developed nation's economy can no longer outstrip the growth rate of the economy itself over the long term," reads the report.
Hardware would dominate IT spending in the Asia Pacific, Aberdeen Group found, increasing from US$124 billion in 2002 to US$155 billion in 2006. Software would grow from US$47 billion to US$66 billion. Significantly, services would grow to a US$109 billion market in 2006.
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