IDC warns 2002 'worst yet' for IT

This year may end up being the worst so far for high technology according to research firm IDC.

Research from IDC shows the worldwide IT industry will suffer its largest decline ever in 2002, shrinking by 2.3 per cent. The company released the numbers yesterday as part of its Worldwide Information Technology and Communications Spending Forecast.

The report comes the same day as an aide to US President George W Bush told Comdex attendees that the tech sector won't recover as quickly as the overall economy (see http://www.silicon.com/a56484 for more).

The worldwide storage market is expected to be hardest hit this year, according to IDC, with spending declining by 10.6 per cent in 2002. The market consisting of PCs, servers and workstations will likely shrink by 9.3 per cent, and the network equipment market is expected to contract by 7.6 per cent.

John Gantz, chief research officer for IDC, said in a statement that the declines are "in sharp contrast to the average annual growth rate of 12 per cent enjoyed by the industry over the past 20 years."

However, an IDC representative said this year could mark the end of the high-tech hangover.

Analysts expect 2003 to bring a 5.8 per cent growth rate worldwide. Spending on storage and software is expected to pick up by 2005, while PC revenues are expected to improve slightly in the coming year and then dip again in 2004.

The numbers cited by IDC assume a relatively stable economic outlook. But for the first time, the company is also issuing what it calls a "downside" forecast, or a growth prediction based on significant economic or political changes. Researchers said a prolonged war in Iraq or another stock market plunge could reel in the growth rate to just two per cent worldwide and three per cent in the United States for 2003.

Lisa M Bowman writes for News.com