"Vicious Circle" Is Impacting the U.S. Economy and IT Spending, IDC Says, But End Is in Sight

Slowdown Won't Last for Long



Apr 30, 2001, 01:00 ET from IDC

    FRAMINGHAM, Mass., April 30 /PRNewswire/ -- According to IDC, the United
 States has been engulfed in a vicious circle that has caused the economy and
 technology spending to stumble. However, the global market intelligence and
 advisory firm is confident that things will not spiral out of control and
 instead predicts conditions will improve within a year.
     "The tumbling NASDAQ triggered a vicious circle in which lower stock
 values dampened IT spending and contributed to a broader economic downturn
 that, in turn, has put further pressure on technology spending and share
 prices," said Kevin White, a senior analyst with IDC's Global IT Economic
 Outlook research program. "However, the fundamentals underpinning IT
 investment remain strong, and this factor, along with a rebound in the
 economy, will restore IT spending in 2002 and beyond."
     In the meantime, IDC expects U.S. IT spending growth to slow to 7% in
 2001, down from 11% last year, and says it could fall as low as 5% if the
 economy continues to deteriorate. Hardware will bear the brunt of the
 downfall. Its spending growth will free-fall from 9.6% in 2000 to -1% in 2001.
     "Evidence suggests that software and services are more resistant to a
 downturn in the economy than hardware," White said. "Hardware may be more
 vulnerable because of the cyclical nature of business investment and household
 spending on consumer durables."
     According to IDC, two main factors will help curb the IT spending
 slowdown: the Internet and productivity building. "The long-term trends in
 ecommerce and Internet usage are strong," White said. "The expansion of their
 use will benefit not only Internet companies and retailers but also hardware
 and software vendors whose products power the Internet."
     Additionally, businesses continually look to technology to improve their
 productivity, and this will not change. "Most businesses realize that
 investments in technology pay for themselves by improving internal efficiency
 and expanding external opportunity," White said.
     IDC recently published three bulletins and a report that discuss the U.S.
 economy's impact on worldwide IT spending:
 
     -- U.S. Technology Slowdown: When Will the Slide End? (IDC #B24413) looks
        at what a continuing downward slide of the U.S. economy would mean for
        the IT market and discusses when the slide will end.
 
     -- Will a U.S. Recession Spell the End of the IT Boom? (IDC #B24315)
        analyzes the impact of past economic slowdowns on IT spending and
        discusses how and to what extent economic disturbances affect different
        IT market segments.
 
     -- After the Crash: Where Do We Go from Here? (IDC #B24521) looks at what
        caused the slowdown in U.S. technology spending and the prospects for
        recovery.
 
     -- Global IT Economic Outlook, 2001 (IDC #B24190) provides detailed
        insight into the economic and business conditions affecting technology
        spending in 52 countries around the world. The report discusses current
        market conditions and technology spending trends.
 
     To purchase any of these documents, contact Cheryl Toffel at 1-800-343-
 4952, extension 4389, or at ctoffel@idc.com.
 
     About IDC
     IDC is the foremost global market intelligence and advisory firm helping
 clients gain insight into technology and ebusiness trends to develop sound
 business strategies. Using a combination of rigorous primary research, in-
 depth analysis, and client interaction, IDC forecasts worldwide markets and
 trends to deliver dependable service and client advice. More than 700 analysts
 in 43 countries provide global research with local content. IDC's customers
 comprise the world's leading IT suppliers, IT organizations, ebusiness
 companies and the financial community. Additional information can be found at
 www.idc.com.
     IDC is a division of IDG, the world's leading IT media, research and
 exposition company.
 
     All product and company names may be trademarks or registered trademarks
 of their respective holders.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X16353513
 
 

SOURCE IDC
    FRAMINGHAM, Mass., April 30 /PRNewswire/ -- According to IDC, the United
 States has been engulfed in a vicious circle that has caused the economy and
 technology spending to stumble. However, the global market intelligence and
 advisory firm is confident that things will not spiral out of control and
 instead predicts conditions will improve within a year.
     "The tumbling NASDAQ triggered a vicious circle in which lower stock
 values dampened IT spending and contributed to a broader economic downturn
 that, in turn, has put further pressure on technology spending and share
 prices," said Kevin White, a senior analyst with IDC's Global IT Economic
 Outlook research program. "However, the fundamentals underpinning IT
 investment remain strong, and this factor, along with a rebound in the
 economy, will restore IT spending in 2002 and beyond."
     In the meantime, IDC expects U.S. IT spending growth to slow to 7% in
 2001, down from 11% last year, and says it could fall as low as 5% if the
 economy continues to deteriorate. Hardware will bear the brunt of the
 downfall. Its spending growth will free-fall from 9.6% in 2000 to -1% in 2001.
     "Evidence suggests that software and services are more resistant to a
 downturn in the economy than hardware," White said. "Hardware may be more
 vulnerable because of the cyclical nature of business investment and household
 spending on consumer durables."
     According to IDC, two main factors will help curb the IT spending
 slowdown: the Internet and productivity building. "The long-term trends in
 ecommerce and Internet usage are strong," White said. "The expansion of their
 use will benefit not only Internet companies and retailers but also hardware
 and software vendors whose products power the Internet."
     Additionally, businesses continually look to technology to improve their
 productivity, and this will not change. "Most businesses realize that
 investments in technology pay for themselves by improving internal efficiency
 and expanding external opportunity," White said.
     IDC recently published three bulletins and a report that discuss the U.S.
 economy's impact on worldwide IT spending:
 
     -- U.S. Technology Slowdown: When Will the Slide End? (IDC #B24413) looks
        at what a continuing downward slide of the U.S. economy would mean for
        the IT market and discusses when the slide will end.
 
     -- Will a U.S. Recession Spell the End of the IT Boom? (IDC #B24315)
        analyzes the impact of past economic slowdowns on IT spending and
        discusses how and to what extent economic disturbances affect different
        IT market segments.
 
     -- After the Crash: Where Do We Go from Here? (IDC #B24521) looks at what
        caused the slowdown in U.S. technology spending and the prospects for
        recovery.
 
     -- Global IT Economic Outlook, 2001 (IDC #B24190) provides detailed
        insight into the economic and business conditions affecting technology
        spending in 52 countries around the world. The report discusses current
        market conditions and technology spending trends.
 
     To purchase any of these documents, contact Cheryl Toffel at 1-800-343-
 4952, extension 4389, or at ctoffel@idc.com.
 
     About IDC
     IDC is the foremost global market intelligence and advisory firm helping
 clients gain insight into technology and ebusiness trends to develop sound
 business strategies. Using a combination of rigorous primary research, in-
 depth analysis, and client interaction, IDC forecasts worldwide markets and
 trends to deliver dependable service and client advice. More than 700 analysts
 in 43 countries provide global research with local content. IDC's customers
 comprise the world's leading IT suppliers, IT organizations, ebusiness
 companies and the financial community. Additional information can be found at
 www.idc.com.
     IDC is a division of IDG, the world's leading IT media, research and
 exposition company.
 
     All product and company names may be trademarks or registered trademarks
 of their respective holders.
 
                      MAKE YOUR OPINION COUNT - Click Here
                http://tbutton.prnewswire.com/prn/11690X16353513
 
 SOURCE  IDC

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