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Gartner Sees Revival of Tech Spending in 2004

October 21, 2003|From Reuters

Technology spending is poised to return to solid growth in 2004 and beyond as companies shift from cost cutting to focus on innovation that drives sales, a computer consulting group said Monday.

At its annual conference this week in Orlando, Fla., Gartner Inc. is advising its base of 10,000 corporate and government clients to spend more in 2004 on wireless networks, Web services and technologies that help businesses grow, not just save costs.

After a three-year downturn, Gartner now expects to see the first annual pickup in purchasing of computer services and wireless telecommunications this year. It expects solid growth in hardware and software to return in 2004.

Overall, Gartner forecasts that global technology spending will grow 5.4% to $2.40 trillion in 2004 from the $2.27 trillion expected to be spent in 2003.

It forecasts yearly growth of about 5% in each subsequent year through 2007 to $2.77 trillion.

The biggest gains are expected in computer hardware, which should grow 4.4% to $355 billion in 2004 from flat growth in 2003 and contraction of 2.2% in 2002. Software is expected to jump to 7% from 2.2% growth this year and to average 8% growth through 2007.

Gartner says the vast bulk of corporate and government spending will remain focused on keeping core technology systems up and running or figuring out how to shave costs.

It expects new technology purchases over the next two to three years to center on four themes:

* Many organizations will shift rapidly to secure, high-speed wireless networks.

* The move to a more mobile workforce will increase as buying switches to notebook PCs from desktop computers and more employers adopt wireless e-mail and other ways for employees to stay connected while traveling.

* As more workers begin to enjoy constant network connections, demand for real-time access to company information in the form of Web-delivered services will increase.

* That will require growing numbers of computer servers to capture all the new data created on these networks.

Gartner's message is based on a reading of macroeconomic tea leaves that suggests a broad U.S. economic recovery is taking shape and steady corporate profit growth has returned.

But some technology vendors at the Gartner conference expressed reservations, saying that though spending patterns had stabilized over the last year or two, there had yet to be signs of a rise in computer budgets.

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