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US woes to slow tech market, analysts say

"I'm not really concerned. Even if growth in IT spending slows, it's always a question of where people are going to put their money."

Henning Kagermann, CEO of software maker SAP AG

Weakness in the US economy is expected to take a bite out of the technology sector's growth next year, when analysts expect tech spending to slow around the world.

The picture is not exactly dire: A forecast released yesterday by analyst firm IDC calls for the worldwide information-technology market to grow 5.5 percent to 6 percent next year, the lower end of what has become a usual range. In the US, the market is expected to expand 3 percent to 4 percent.

The growth rates are softer than this year's 6.9 percent worldwide expansion and 6.6 percent growth in the US, IDC said.

Just a few months ago, IDC was expecting the US tech market to grow 5.5 percent next year.

The company pushed its estimate down to 3 percent to 4 percent as the mortgage crisis heightened and soaring oil prices enhanced the prospect of a recession next year, IDC senior researcher Frank Gens said.

"Those are all forces working against good growth," Gens said.

Other analyst firms differ on the precise numbers, but also see a slowdown coming. Gartner Inc's most recent figures, compiled in October, predict US technology spending will increase 5.7 percent, down from 6.1 percent this year. Gartner pegs worldwide growth at 5.5 percent, down from 8 percent this year.

Forrester Research Inc is still finalizing its worldwide forecast, but research analyst Andrew Bartels expects the US market to grow 4.6 percent, down from 5.4 percent this year.

Bartels said that presumes an economic slowdown in the US that stops short of becoming a recession.

Even with tech spending totaling US$3 trillion worldwide, modest dips in its growth don't often cause economic swings. Tech investment tends to reflect macroeconomic conditions, instead.

"There's no question the economy is weak," Bartels said.

Many big IT providers already have been planning for overall market growth of uninspiring, mid-single digit percentages.

IDC's Gens expects to see tech companies respond next year by increasing investments in markets that are relatively hotter, including mobile Internet devices and technology for small and medium-sized businesses.

"I'm not really concerned," Henning Kagermann, CEO of business-software maker SAP AG, said in an interview this week. "Even if growth in IT spending slows, it's always a question of where people are going to put their money."
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