IDC forecasts IT spending slowdown in '08

IDC forecasts slower growth in IT spending globally and particularly in the US, where economic uncertainty will take its toll.

IT spending will grow more slowly in 2008 than this year, with economic uncertainties taking a toll in the US in particular, market researcher IDC predicts.

Worldwide spending growth will be moderate, at 5.5 percent to 6 percent in the new year, down from 6.9 percent growth in 2007, IDC said this week as it released its annual set of predictions for the coming year.

"There will still be positive growth, but the industry will definitely be pinched a little in the coming year," said Frank Gens, IDC's senior vice president for research. He called the drop in growth "significant" during a teleconference detailing the IDC's predictions.

The drop in spending growth. US IT spending could be especially hard hit, dropping from 6.6 percent this year to 3 percent to 4 percent in 2008, Gens said. The first effect of the slowdown will be felt in hardware, with software lagging a quarter or two behind, followed by a more gradual effect on services, he said.

IDC expects IT vendors to increase their investments in emerging markets, particularly Mexico, Poland and Turkey, followed by Argentina, Columbia, Saudi Arabia, Thailand, the United Arab Emirates and Vietnam. Investments in those countries will collectively increase by 16 percent, he said.

In its look ahead at 2008, the market researcher predicts that Web gadgets will proliferate, extending the reach of the mobile Internet and filling the gap between notebook PCs and smartphones, Gens said.

The devices IDC envisions will be palm-sized or slightly larger, connect to the Web and "be good at one or two things." Amazon's Kindle e-reader is a prime example of what to expect. "We predict that dozens of these devices will be introduced in 2008" from a range of vendors, he said. Intel will make a big push into this terrain as well, he said.

"Virtually all" mobile network operators will open their networks, "albeit slowly and begrudgingly following Verizon Wireless," Gens said. These moves are a replay of the "AOL versus the Web" scenario that played out in the 1990s. AOL had its "walled garden," which required membership to connect to the Internet and other services through the AOL portal. But mobile network operators will find the same situation as AOL -- "walled gardens imprison the gardener."

IDC also expects the dramatic increase in unstructured data on the Web -- with social networks and user-generated content responsible for much of that growth -- to drive the use of text analytics, sentiment extraction and semantic search to make sense of it.

Additionally, the lines between the business and consumer markets will continue to blur "with small and medium business as ground zero," Gens said. Enterprise software will continue to be influenced by consumer software, notably social-networking applications, as vendors find it increasingly difficult to be successful if they ignore the consumer space.

Likely acquisition targets in 2008 include Intuit, TeleNav, and Networks in Motion, along with software analytics and e-discovery companies such as Attenex and Attensity. IDC is sticking with its 2007 prediction that Salesforce.com will be acquired. Even though this year isn't over yet, Gens pushed that prediction into 2008.

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Nancy Weil

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