June 29, 2009

US And Global IT Market Outlook: Q2 2009

More Weakness Ahead, But The Worst Declines Are In The Past

by Andrew Bartels

with Ellen Daley, Madiha Ashour

Executive Summary (This is a document excerpt)

To paraphrase the title of Richard Fariña's 1960s novel, "been down so far it looks like up to me" is an apt description of the US and global IT markets at mid-year 2009. While the Q1 2009 tech market indicator data ranged from bad to ghastly, we think that the US tech market is more than halfway through the downturn, and the global IT market is not far behind. The very weak Q1 results in both the US and the global market, and likely similarly poor results in Q2, mean that our 2009 growth forecasts are lower than before, with the US IT market now expected to shrink by 5% in 2009 and the global IT market to drop by 11% in US dollars. Computer and network equipment vendors have been especially hard hit, with licensed software revenues and IT outsourcing also weak. However, the weak results in the first half of 2009 also mean that the market will hit bottom sooner, setting a low base from which positive year-over-year growth will start to occur in Q4 2009 and into 2010. Vendors can start to look beyond the downturn and get prepared for a strong tech recovery in late 2009 and 2010.

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