Gartner: 2009 IT Spending as Bad as Dot.com Bust

Gartner says it expects IT spending to drop nearly four percent in 2009 over the previous year as the current recession will see more losses than the dot-com bust in 2001. Nothing in particular about the study jumps out, as I think the industry in general obviously expected such results.

But one statistic did catch my attention:

Hardware in particular will see a nearly 15 percent decline as fewer companies invest in 2009 and are expected to spend $324.3 billion, compared with $381 billion spent on hardware in 2008.

I think that speaks to two trends in particular. While the economy is clearly resulting in cut budgets and less money on hardware, SaaS and cloud computing are leading to the virtualization of the datacenter. Businesses realize they no longer have to cradle the huge upfront costs that burdened the industry nearly a decade ago.

My second point speaks back to the first. Cloud computing, SaaS and open source is driving innovation in a much different fashion than in 2001, and leaving the market in a much more favorable position to recover as a result. I remember hearing Jonathan Schwartz comment that “Innovation loves a crisis, and thank God there’s a crisis.”

In software, look for that next step in innovation to be cloud computing. Similar to open source with source code, cloud computing has democratized data centers and applications alike. Computing is entering a new area in which flexibility and scalability are becoming ubiquitous, and that only bodes well for both vendors and customers alike as businesses look to cut their IT budgets for years to come.

One thought on “Gartner: 2009 IT Spending as Bad as Dot.com Bust

  1. Businesses cutting back is a bad thing? Businesses need to respect the consumer’s desire to save and payoff their existing debt, otherwise we’ll never pull out of this recession and it will only worsen. Don’t let the fed and government push you (businesses) into risky lending with their artificial interest rate manipulation – They’ll destroy our economy further if they continue that. Interest rates are/were too low, causing an unsustainable period of growth (Not enough ACTUAL demand to justify the business spending and risk taking) that exploded and now they are trying to re inflate the bubble. It’s a road to disaster. Right now, the market is begging for higher interest rates and tighter lending standards. The natural market is begging for the prices to come down. However the fed and our leaders will never let that happen. They will stop at nothing, to re-inflate the bubble. To continue manipulating the market so as to get businesses to take risks as though the economy were good again. This time though, I don’t think they’ll succeed. Hopefully we’ll all wake up and get rid of the Fed and it’s manipulation before we are no longer the reserve currency of the world and have a dollar that is nearing hyperinflation. I pray we see that solution.

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