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Global IT spending seen weathering U.S. downturn

InfoWorld

(IDG) -- Although the ongoing slump in the U.S. economy is already having a negative impact on the growth of global IT spending, worldwide spending on technology will not be hurt drastically by of the downturn in the United States, according to market analyst firm IDC.

IDC, in Framingham, Mass., is predicting growth in U.S. IT spending this year will be 7 percent, down from 11 percent in 2000. However, worldwide IT spending will stay healthy, growing by 9 percent this year, IDC predicted.

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The market researcher has yet to see any solid indications that the U.S. slump in IT spending occasioned by the economic downturn will spread to Europe, according to Stephen Minton, manager of IDC's worldwide IT markets and strategies research. Although the picture could change, "in Europe, IT spending forecasts are still relatively strong," he said. Attractive technologies for European nations to invest in are Internet-related infrastructure, front-end applications, and services.

Asia-Pacific presents a more mixed picture, with Japanese IT spending predicted to fall, while other countries' technology expenditure is set to soar. "Japan is still having a rough time; its IT spending forecasts are lower than the rest," Minton said. Overall IT spending in Japan is due to rise by only 6.5 percent this year, compared with 7.5 percent in 2000. That compares poorly with Australia, where IDC expects IT spending to grow more than 10 percent in 2001.

The countries likely to exhibit stellar IT spending growth levels are India and China and other emerging nations in Asia, Latin America, the Middle East, Africa, and Eastern Europe, where the current technology market is comparatively small but is expected to explode. India's overall technology expenditure will grow by about 28.5 percent this year, according to Minton, while China's total IT spending will rise by approximately 30 percent. In India this year, IDC predicted hardware spending will rise by 29 percent, software spending by 30 percent, and services spending by 28 percent.

"The overall trend in just about every country is moving to spend more on software and services and away from hardware," Minton said. "In emerging markets, hardware still accounts for by far the largest slice of the IT pie." For instance, hardware sales in China last year were equivalent to about 90 percent of the country's total IT expenditure, although that percentage should fall over the next three years to 80 percent, according to Minton.

In the United States last year, hardware accounted for 40 percent of IT spending, compared with 21 percent for software and 39 percent for services. This year, IDC is anticipating hardware to be 37 percent of the total technology expenditure, while software is 22.5 percent and services are 40.5 percent, Minton said.



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