IT spending: What the analysts think

• Tags:
• It Spending,
• Gartner,
• Analysts

Jim Zimmermann

Published: 06 Oct 2003 15:00 BST

• 
• 
• 
• 
• 

One of the favourite activities of leading IT analyst firms is to research and prognosticate on IT spending. Lately, the topic has been, "Has the industry bottomed out, or are more dark days ahead?"
 
Let's take a look at what they've been saying.

Aberdeen: Recovery in IT spending
Aberdeen Group tracks the financial performance of the 20 largest publicly traded IT vendors. In its Q2 2003 analysis, it found that:

Sequential quarterly revenues increased 3.6 percent over Q1 2002.

Year-over-year quarterly revenues increased a nominal 6.1 percent.

According to Aberdeen, "The market has not seen such a positive revenue performance since Q1 2001. Year-over-year revenues have steadily gained ground since Q3 2001." It also provided a glimpse of the revenue leaders and losers:

IBM: up 10.1 percent

Dell: up 15.6 percent

Microsoft: up 11.2 percent

Sun Microsystems: down 12.8 percent

Siebel Systems: down 17.8 percent

As a group however, it reported that profits rose an impressive 36.5 percent.

Aberdeen also speculates that "long-term IT spending will increase at an annual rate of between 4 and 6 percent."

Aberdeen identifies the application software market as the poorest-performing segment, with a Q2 2003 revenue increase of 1 percent. (This growth compares with a 1.1 percent growth in the previous quarter, so the hard times are not over for these vendors.) Its research also found a 4.8 percent increase in service revenues from these vendors coupled with an 8.3 percent drop in application licence revenues. As a group, software licences accounted for only 23.7 percent of total revenues. According to Aberdeen, this decline is due in part to three major factors:

Businesses have reduced spending on application packages during the recent IT contraction. Software suppliers "plugged the revenue gap" by pushing professional services.

There has been a shift toward purchasing hosted applications on a subscription basis. This subscription-based revenue is usually counted as service revenue rather than licence revenue.

The total installed base of application software is still increasing (albeit slowly) and the installed base continues to purchase maintenance contracts and services.

All in all, Aberdeen sees the recovery continuing at a modest pace, but doesn't expect a return to the double-digit growth that the industry enjoyed in happier times.

• 
• 
• 
• 

• Share this article:
• Digg
• Slashdot
• Del.ici.ous
• Stumble
• Reddit

• Most Recent
• Most Popular
• Most Discussed

• Most Recent
• Most Popular