IDC Predicts Slower IT Spending Will Accelerate Adoption of Disruptive Technologies and Business Models

FRAMINGHAM, MA – DECEMBER 4, 2008 – To no one's surprise, the global recession will be a major factor behind every trend and development in the information technology (IT) and telecommunications markets in 2009. However, IDC predicts that the financial pressures felt by IT vendors and their customers will actually accelerate the industry transformation that has been underway over the last several years.

"A slow global economy will act like a pressure cooker on the IT market, speeding the development and adoption of new technologies and business models," said Frank Gens, senior vice president and chief analyst at IDC. "The reason why this will happen is simple: the benefits offered by these disruptive offerings and models will be magnified. Suppliers and customers will migrate toward new solutions not because they are about the future, but because they offer practical benefits today."

A deep global recession and a radical industry transformation are at the core of IDC's predictions for the IT industry in 2009. With economists forecasting dramatically slowing global GDP growth, IDC predicts that global IT spending growth will slow by half or more, effectively stripping more than $35 billion of potential revenue out of the market. To survive, it will be critically important for vendors to reorient their businesses and offerings toward market segments with above average growth. The latter will continue to include emerging markets, such as the BRIC countries (Brazil, Russia, India, and China), as well as the small and medium-sized business (SMB) sector. Although spending will slow significantly in these markets, it will outperform the overall market. In addition, government initiatives to spur economic growth and financial stability will include outlays for new technology, making this an important market sector for the first time in many years.

At the leading edge of the ongoing industry transformation, IDC predicts that the expansion to "cloud computing" will accelerate as budget pressures drive users to the cloud's low costs. While spending growth will slow for various cloud services, such as software-as-a-service and cloud storage, it will outperform more traditional IT alternatives. Vendors and service provides will scramble to announce cloud-related offerings, acquisitions, and partnerships to capture new customer spending. Similarly, Green IT will have a good year, benefiting from its ability to deliver near-term cost savings, although capital-intensive green investments will move down on many budget agendas. The slowdown in spending will impact the telecommunications industry as well, cutting revenues in half, leading to global consolidation among the leading players, and sparking an aggressive expansion into cloud services.

Other IDC predictions for 2009 include:

* The online economy will benefit as ever more shoppers turn to the Internet in search of better prices and products that have become harder to find in the struggling offline economy.

* It will be a grim year for mobile gadgets as consumer spending shrinks and vendors cut prices (and margins) to capture or maintain market share.

* The "business/personal" divide will crumble further as the increased use of mobile technologies and Web 2.0 tools erode the distinctions between work and personal environments.

* 2009 will be a breakthrough year for information access and analysis as the next generation of "Eureka 2.0" tools come to market and a new leadership battle unfolds over this last – and most strategic – patch of IT market real estate.

"Although one would expect to see businesses and consumers to 'hunker down' and put IT spending on hold, it is more likely that technology spending will continue in areas where the benefits are clear," added Gens. "While all sectors of the market will experience slower growth in 2009, the disruptive offerings and models that are transforming the industry will take less of a beating than traditional IT areas and will actually gain share faster in the down economy."

IDC's predictions for 2009 are presented in full detail in the report, IDC Predictions 2009: An Economic Pressure Cooker Will Accelerate the IT Industry Transformation (Doc #215519). In addition, Frank Gens will lead a group discussion of this year's predictions in an IDC Telebriefing scheduled for December 4 at 12:00 pm U.S. Eastern time. To register for this event, please go to http://www.idc.com/getdoc.jsp?containerId=IDC_P18759.

About IDC

IDC is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 44 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.

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