08:28 AM

US IT Market Decline Much Worse Than Expected

Forrester, the US market research firm, says that the decline in US IT markets will be much worse than it predicted just three months ago.

In June, Forrester estimated US tech markets to drop by 5.1 per cent in 2009. In the latest forecast released today, the decline is expected to be 9.3 per cent.

Forrester analyst Andrew Bartels says this is due to two reasons:

First, cutbacks in capital investment, which had earlier been confined to computer and communications equipment, spread in the first half of 2009 to licensed software, causing big declines in this category of tech purchases. Second, upward revisions to US IT investment data in 2007 and 2008 by the US Department of Commerce raised the base periods for measuring 2009 growth, making the 2009 declines even greater than before.

The good news is that the worst of the decline is likely over, and fourth quarter demand should be positive. And US tech companies will report decent financial results in the third quarter because of the decline in the value of the US dollar.

Forrester says that 2010 should be a strong year for US tech markets.