IT industry hits bottom in 2009 but upward route still unclear

08:55, December 24, 2009      

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It seems that some of the worst-case scenarios, predicted earlier in 2009 for the information technology (IT) industry, might have unexpected happy endings as the year draws to a close.

Research firm Gartner painted a gloomy picture in March, forecasting global personal computer (PC) shipments will plunge 11.9 percent in the year from 2008, a drop it said would be the sharpest for the industry in history and would dwarf the previous record decline reached in 2001 during the dot-com bust.

In the following months, Gartner made several adjustments to the predictions with optimism increasing each time.

In most recent updates issued in November, the firm said it now expect worldwide PC shipments to climb 2.8 percent year-on-year in2009 and will achieve double-digit growth in the coming year.

The increasing demand for PCs is seen as a key indicator that the overall IT market has bottomed out and may be embarking on the road to recovery.

Further proofs of a rebound came from the industry's heavyweight companies, as Silicon Valley big names including Intel, Google, Apple, Cisco and Hewlett-Packard all posted better-than-expected earnings in their most recent quarter.

Executives, relatively cautious while entering the year, were also starting to offer more upbeat rhetoric, fueling the hope that dark cloud of recession is dissipating.

"While there is a lot of uncertainty about the pace of economic recovery, we believe the worst of the recession is behind us and now feel confident about investing heavily in our future," Eric Schmidt, chief executive officer (CEO) of Google, said in October.

Schmidt's words were echoed by Cisco's CEO John Chambers, who in November declared that "economic recovery is well under way."

Gartner and others are projecting the IT industry will resume growth in 2010 though analysts differ on whether the recovery will follow V, U or other shape of trajectory.

In a report released in December, research firm IDC said the industry is expected to expand by more than 3 percent in the coming year after a painful market shrinkage of over 8 percent in 2009.

However, it also warned of the potential downside risks the IT industry may face on the path ahead.

"The main downside risk is from double-dip recession in mature economies where unemployment is high, consumer confidence is weak, business profits have been protected by cost reductions (including layoffs), and government stimulus will be temporary," IDC said.

As mature economies may remain weak and vulnerable to risk factors throughout much of 2010, emerging markets will be a major ensuring factor to the global IT market recovery, according to IDC.

The research firm predicted that more than half of the IT industry growth in 2010 will be fueled by emerging markets led by BRIC, short for Brazil, Russia, India and China.

IDC said the importance of emerging markets to global IT suppliers will accelerate with the BRIC markets alone expected to account for more than 10 percent of global IT spending by the end of 2010.

Peter Sondergaard, senior vice president of Gartner, expressed similar views in October at a Gartner symposium held in the U.S. state of Florida.

By 2012, the accelerated IT spending and culturally different approach to IT in the emerging economies will directly influence product features, service structures and the overall IT industry and "Silicon Valley will not be in the driver's seat anymore," he projected.

Source: Xinhua
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