US Corporate IT Spending Takes Nosedive in Q4 and Beyond

November 25, 2008

This article is included in these additional categories:

Analytics, Automated & MarTech | Financial Services | Local & Directories / Small Biz | Telecom

An accelerating collapse in US business spending has now reached historic proportions – causing record pullbacks in corporate IT spending in both the current 4th quarter 2009 and going forward into next year, according to a survey from ChangeWave Research.

In one of the survey’s few upbeat findings, however, the corporate smart phone market continues to show growth, with Research In Motion’s (RIM) Blackberry maintaining a huge lead within large companies, and the Apple iPhone continuing to make inroads in small to medium-sized businesses.

IT Spending Breaks Down

Nearly half (45%) of respondents say their company’s IT spending will decrease (or there will be no spending at all) in Q1 2009. This number is 16 percentage points worse than Changewave’s previous survey in August, and the worst ever for the ChangeWave survey, which dates back to 2001.

In contrast, only 10% of respondents say spending will increase – a 3-point drop from previous results.
“The IT purse strings are almost completely on lockdown,” said Tobin Smith, founder of ChangeWave Research. “At the very least, these results do not bode well for a 1st half 2009 economic upturn.”

Changewave said the plunging results are even worse because the downturn is happening during a time of year when there are normally seasonal increases.

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The survey also asked respondents if their IT spending was on track thus far in the fourth quarter. By a wide margin, these results are also the worst on record – with 39% of respondents saying they’ve spent less than planned so far this quarter, 9 points lower than in the previous survey. Just 8% have spent more than planned, a 4-point drop from previously.

Moreover, in the aftermath of the US presidential election, respondents do not see any immediate improvement occurring in their company’s IT spending. Nearly half (48%) now believe IT spending won’t pick up for their company until Q3 2009 or later – a two-fold increase since August.

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“The current survey findings virtually guarantee that the technology sector will get hammered with pre-announcements on earnings misses before the January reporting season gets under way,” said Smith.

Corporate Smart Phones

The survey also looked at the corporate smart-phone market, and found it is actually showing growth, with 35% of respondents reporting their company plans to buy smart phones next quarter, up 1 point from August.

Research In Motion (78%; down 1 point) continues to garner the dominant share of planned corporate smart phone buying with its Blackberry models, but the Apple iPhone (22%; up 5-points) shows considerable momentum going forward.

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According to Changewave, RIM’s corporate share is heavily concentrated among larger companies with more than 1,000 employees, while three-quarters of Apple’s share is among small-to-medium sized companies with less than 1,000
employees.

To further confirm that the 3G iPhone is having a positive impact on the corporate market, nearly one-in-five respondents (18%) say the release of the 3G has made their company more likely to purchase Apple products in the future, ChangeWave said.

About the survey: A total of 1,926 respondents involved with IT spending in their organization participated in the survey, conducted November 6-12, 2008.

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