In our latest US and Global IT market forecast (http://www.forrester.com/go?docid=53305), Forrester stays steady with our June 2009 projections that the US tech market will start to recover from the downturn in Q4 2009, with the global tech market improving in 2010. However, the 2009 growth rate now shows a bigger decline than our earlier forecasts, for two reasons. First, cutbacks in capital investment, which had earlier been confined to computer and communications equipment, spread in the first half of 2009 to licensed software, causing big declines in this category of tech purchases. Second, upward revisions to US IT investment data in 2007 and 2008 by the US Department of Commerce raised the base periods for measuring 2009 growth, making the 2009 declines even greater than before. Thus, we now project a -9.3% decline in US tech purchases in 2009, compared to a 5.1% decline in our June forecast. But those revisions confirmed our position that a tech boom was starting to take shape in 2008, before being rudely interrupted by the September financial. The weak results in early 2009 also mean that the market will hit bottom sooner, setting a low base for year-over-year growth starting in Q4 2009 and into 2010.
The story is the same for the global outlook. 2009 now looks worse than our previous forecasts, but 2010 still looks like a year of solid recovery. One factor that will help reported vendor results (especially for US vendors) is the decline in the value of the US dollar against major currencies since March of 2009. The value of the dollar is now about where it was a year ago, so vendors will be able to report Q4 2009 revenues in US dollars that will be better than their currency-adjusted numbers.
As vendors start to report their calendar Q3 2009 revenues in coming weeks, revenue growth will still be negative in most cases. But the declines will be smaller than in Q1 and Q2 2009. And calendar Q4 2009 revenues should be close to even with year-earlier levels, and in many cases will be positive, especially for US vendors reporting dollar revenues. So, with calendar QQ3 just one day from being over, it is safe to say that the worst of the tech decline is over, with prospects for 2010 looking positive. Vendors need to look beyond the downturn and get prepared for a strong tech recovery in and 2010.