Industry analysts say the technology sector needs to brace for a tough quarter and year. There’s no longer any doubt about the U.S. being in a recession. The questions at this point are how deep it will be and how long it will last.
As consumers tighten their wallets, so will businesses tighten IT budgets. Computer sales are falling and sales of other products such as communications equipment and software are expected to slow, according to a report released Tuesday by Forrester Research.
Analysts at the research company expect the recession will last into the middle of next year. Economists expect the gross domestic product will fall 2.6 percent to 3.5 percent in the fourth quarter. Such a decline will pull down growth in U.S. business and government purchases of information technology to 1.6 percent in 2009 from 4.1 percent in 2008, according to Andrew Bartels, lead author of the report.
It was only a matter of time before the recession hit the technology sector hard. October and November brought a mortgage crisis and the ripple effect led to credit freezes. Those freezes not only hurt cash-strapped consumers, but technology companies supplying equipment to banks, auto companies, and financial-services firms.
Computer equipment purchases are already spiraling downward and growth is slowing for network equipment, software purchases, and IT consulting and outsourcing. The fourth quarter and the first half of 2009 don’t look any better as software growth is expected to slow to two percent.
Computer manufacturers such as Dell, IBM and HP saw global server sales drop 5.4 percent to $12.7 billion in the quarter, according to Gartner. IBM lost 4.2 percent in server revenue, HP 3.9 percent, and Dell 5.2 percent.
Companies may be cleaning house by cutting costs, cutting back on investments, and only spending on critical technology. Some are…