For Vendor Strategy Professionals (Length: 7 pages)

Executive Summary (This is a document excerpt)

The health of the US tech sector was essentially unchanged in Q2 2006, posting a small gain of seven-tenths of a point compared with Q1. Still, this was an improvement after the Q1 decline and leaves the index close to its four-and-a-half-year high. The results were mixed, with six of the 11 underlying measures showing gain for the quarter. The strongest gains were in CIO confidence and Forrester's outlook for business investment in IT — two of our four leading indicators of sector health. The additional leading indicators — US technology imports and venture capital funding — were also up for the quarter. Losses were focused most heavily in the firm strength indices that measure vendor financials and technology prices. All four indicators in this category fell, with vendor profits posting the first consecutive-quarter declines since Forrester began tracking them in 2000. The future currently appears mixed: We are likely to see short-term growth in Q3, but longer-term indicators still point to a sector slowdown.

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