Software & Technology

Computer equipment market: witnessing the biggest drop in IT spending

Although the debilitating impact of the recession was felt by all the segments of the U.S. IT industry, the depth of the crisis differed across various product and service segments. The computer equipment segment experienced the highest fall in IT spending during the period from Q3 2008 to Q2 2009, with a quarterly decline of 17.5% in spending. The software segment, on the other hand, was the least affected with a negative growth of only 11% from Q1 2009 to Q2 2009. In fact, this segment has experienced negative growth only in the first two quarters of 2009, and is expected to see a faster recovery as well. Despite the crisis, customers across industry verticals have been maintaining relatively better spending on software, particularly the software related to resource optimization that helps in reducing operating costs.

Except for IT outsourcing, IT purchases for all budget categories of U.S. businesses are expected to fall in 2009, with computer equipment witnessing the biggest annual decrease of 15.5%, and IT consulting witnessing the smallest decrease of 6.2%. The overall IT purchase is expected to fall 9.3% annually in 2009, and recover in 2010, with a growth of 7.7%. Although the IT market is expected to recover from Q4 2009, the strength of recovery would largely depend on how consumer and business spending picks up. Consumer spending recovery would be the key to fast recovery of the software market, as general business productivity and home-use applications software command a high market share of 24% in the U.S. software sector.

The U.S. computer equipment segment spending is expected to witness the biggest annual decrease of 15.5% in 2009.