Forrester Research (Nasdaq: FORR) projected in October 2001 that an overall economic recovery would spur a rebound for the IT sector in the second half of 2002. Fueled by an unexpectedly rapid economic recovery in the US over Q4 2001, Forrester expects the technology sector to turn around faster than previously predicted, according to a new Forrester brief, “Tech Recovery Update: Coming Off The Bottom.”

Key findings

  • Given a number of positive economic indicators, driving factors for a speedier recovery include:
    • A growing economic stability fueled by consumer spending.
    • An increased consumer broadband adoption and penetration of digital products like PDAs, DVDs, and digital cameras.
    • A rise in business and consumer Internet adoption.
  • In the most likely scenario (Forrester¿s model* has three scenarios), the tech sector:
    • Grows a modest 3.9 percent in 2002 — up from 2.2 percent in Forrester¿s October forecast.
    • Regains double-digit growth in 2003, expanding by 10.4 percent — up from 9.7 percent.
    • Grows 12.5 percent in 2004 — up from 11.8 percent.
  • Innovation will drive the recovery. In particular:
    • Web services will redefine integration. New standards like XML and SOAP will lower the costs of system-to-system connectivity dramatically.
    • Broadband will reinvent consumer electronics delivering new digital experiences.
    • Wireless sensors will reconnect everything. Ever-cheaper integrated circuits will drive Internet connections into everyday devices by 2005.

For a copy of Forrester’s “Tech Recovery Update: Coming Off The Bottom” brief, or to schedule an interview with Forrester Principal Analyst Bruce D. Temkin, please contact Tina Murphy.

* Forrester¿s model of the IT sector is driven by three key factors: Overall economic recovery that assumes normal levels of demand won¿t occur until nominal GDP grows by at least 6 percent; baseline technology demand growth that approximates the linear growth seen during the period between 1992 and 1998; and tech- spending estimates that take overspending into account.