Hardware to drive IT spending growth in 2010

Computer equipment and software will drive solid IT spending growth according to Forrester Research and Gartner reports

Industry watchers forecast an increase in computer hardware and equipment purchases, followed by investments in software, which both will contribute to a strong economic environment in 2010.

Investments in computer hardware will bolster a tech recovery in 2010 as corporate IT buyers look to buy mobile PCs, desktops, servers, storage and network devices in the coming months, according to industry watchers.

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Forrester Research and Gartner separately released IT spending forecasts for the coming year, and both research firms point to positive growth in hardware and software spending, developments that will contribute to a tech recovery in 2010.

"As I predicted in January 2010, a tech recovery has started in the U.S. and around the world," writes Andrew Bartels, vice president and principal analyst at Forrester Research in a recent blog post. "I now expect the U.S. IT market to grow by 8.4%, a bit higher than my earlier forecast, because of better-than-expected performance in communications equipment."

According to Forrester's research for Q1 2010, U.S. spending on information and communications technology products and services will reach $741 billion 2010. Software and telecommunications services will represent the biggest part of the total, at $194 billion and $191 billion respectively, while computer equipment spending will represent about $83 billion. Forrester points out that in the U.S. computer equipment spending is set to increase by more than 11%, mainly due to "replacement of old PCs, servers and storage equipment." The research firms says software spend will grow by 10.5% while communications equipment spending will increase 7.2% to $108 billion in IT spend for 2010, "based on better-than-expected results from network equipment vendors in Q4 2009," the Forrester report reads.  

"For software, growth will result from a mixture of the revival of deferred license software purchases following the 2009 capital freeze, ongoing growth in SaaS software and continued strong growth in Smart Computing platform technologies like service-oriented architecture (SOA) infrastructure, virtualization software and analytics," Forrester states.

IT outsourcing, set to increase by 3.8% to $79 billion, will be the "laggard," according to Forrester, which says IT consulting services will lag slightly behind the software growth at an expected 7% increase, or $86 billion, most of which is expected in the second half of 2010.

Separately, Gartner forecasts worldwide IT spending to reach $3.4 trillion in 2010, representing a 5.3% increase from IT spending of $3.2 trillion in 2009. The research firm also points to hardware as a key driver to IT spending. For instance, worldwide computing hardware spending it forecast to reach $353 billion in 2010, a 5.7% increase from 2009.

"Computing hardware suffered the steepest spending decline of the four major IT spending category segments in 2009. However, it is now forecast to enjoy the joint strongest rebound in 2010," said George Shiffler, research director at Gartner, in a statement. "Consumer PC spending will contribute nearly 4 percentage points of hardware spending growth in 2010, powered by strong consumer spending on mobile PCs. Additionally, professional PC spending will contribute just over 1 percentage point of spending growth in 2010 as organizations begin their migration to Windows 7 toward the end of the year."

Gartner also notes a more than 5% increase in worldwide software spending, totaling $232 billion in 2010. While the impact of the recession on software markets was not as dramatic as it was on other markets, Gartner expects the majority of software markets to see positive growth.

"Vendors offering [SaaS], IT asset management, virtualization capabilities and that have a good open source strategy will continue to benefit. We also see mobile device support or applications, as well as cloud services driving new opportunities," said Joanne Correia, managing vice president at Gartner, in a statement.

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