Software is a bright spot

Forecasters aren't predicting the steep declines in technology spending that occurred in the wake of the dot-com meltdown, but the outlook is nonetheless glum.

Earlier this month, Forrester Research slashed its projections for growth in U.S. spending on information technology for next year -- which it previously forecast at 6.1 percent -- to a paltry 1.6 percent.
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Fitch Ratings expects worldwide technology spending to fall 2 percent to 3 percent in 2009, with U.S. spending lower still.

"The technology industry's revenue base is clearly correlated to general economic conditions, although some sectors will suffer more than others," Fitch cautions.

Technology spending next year won't hit the double-digit declines triggered by the dot-com collapse in part because IT department spending has been "lean and mean" in recent years, said John Gantz, chief research officer at IDC.

But many technology companies are bracing for tough times ahead, a trend that could hurt a sector that has become increasingly important in this region.

Triangle technology companies that have laid off, or have disclosed plans to lay off, employees in recent months include Alcatel-Lucent, Allscripts Misys Healthcare Solutions, Amkor Technology, ChannelAdvisor, Hatteras Networks, IBM, Lenovo, Lulu.com, Nortel Networks, Qimonda and Sony Ericsson.

On the plus side for consumers and corporate customers, the price of PCs should decline more than usual in 2009 thanks to a variety of factors, Gantz said. They include price wars among rivals, lower component costs and the increasing competition from limited-function netbooks that cost a few hundred dollars.

Software and IT services companies, which typically have long-term contracts that supply recurring revenue streams, should see spending growth of 1 percent to 3 percent, Fitch projects.

That's relatively good news for services giant IBM and for Linux software supplier Red Hat. Raleigh-based Red Hat could also benefit from companies seeking to cut costs, since its software is cheaper than proprietary products from competitors such as Microsoft and Sun Microsystems.

Computer hardware isn't expected to fare as well, which doesn't augur well for PC companies such as Lenovo, the Chinese PC maker that has a headquarters in Morrisville, and Dell, which has a plant in Winston-Salem.

"Computer equipment purchases are already in decline," Forrester notes.

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BY David Ranii - Staff Writer
Source：The News & Observer