Cisco, others, face much lower 2009 spending

Cisco and its partners and competitors are in for a rough year, if two market forecasts on IT spending hold true. Gartner expects global IT spending to drop by nearly 4% this year, according to colleague Denise Dubie's report.

Meanwhile, Forrester Research has revised its US IT spending forecast sharply lower. The firm had previously projected a 1.6% increase for 2009. But Forrester now expects US business and government purchases of IT goods and services to decrease by 3.1% in 2009.

This will undoubtedly hit Cisco and the rest of the industry where it hurts: in the top and bottom line. Analysts are already projecting rival Juniper to have a very soft Q1, with some expecting the company to miss its previously stated guidance of at least $800 million in revenue.  

Forrester says computer equipment purchases will continue to bear the brunt of cutbacks in tech investment, but purchases of network equipment, software licenses, and IT consulting services will also drop. But as the US economy starts to recover in late 2009, IT purchases will revive strongly, Forrester says, with "strong" growth projected for 2010.

Gartner says IT spending this year is worse than after the dot.com bust of the early 2000s because the softness is broader than just tech. Global IT spending will reach about $3.2 trillion in 2009, a 3.8% decline in growth from the $3.3 trillion spent in 2008 -- which marked a 6.1% growth over 2007, according to Dubie's report.

IT spending in 2001 saw a 2.1% decline as a result of the dot.com bust, according to Gartner.

Gartner's revised projections for 2009 are also a sharp reversal of the outlook it provided in Q4 of 2008, when it said reduced IT spending would not rival the recession of the dot.com implosion. At that time, Gartner expected global IT spending to increase by 2.3% in 2009.

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