Will IT Spending Rebound?

By Paul Carton and Jean Crumrine

The collapse in U.S. business spending we reported last quarter has extended into this year, although ChangeWave's latest corporate IT purchasing survey does show a slight leveling off in the rate of decline for the first half of 2009, and a glint of hope for the second half of the year.

The ChangeWave survey was conducted Feb. 9-17, and 1,939 respondents involved with IT spending in their organization participated.

Forty-one percent of respondents said their company's IT spending will decrease, or there will be no spending at all, for the second quarter, which is an extraordinarily high number. However, it is four points improved from our November survey results.



Only 10% said their IT spending will increase -- unchanged from previously.

Thus, while the decline in planned IT spending is the second worst on record for a ChangeWave survey dating back to 2001, it's not quite as bad as the huge nosedive we recorded last quarter. Statistically speaking, we are witnessing a slight leveling off in the rate of decline.

We also asked respondents if their IT spending was on track thus far in the first quarter, and the results are virtually a mirror image of our previous survey.



Thirty-eight percent of respondents said they've spent less than planned so far in the first quarter, while just 7% said they have spent more than planned.

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Regarding individual IT categories, servers (change in net difference core = -3) has registered the biggest slowdown since the previous quarter. Networking (-2), PCs (-1), and security (-1) also look weaker.

A Glint of Hope for the Second Half of 2009

When we asked respondents about the second half of 2009, we saw the first potential signs of improvement.

Twenty-eight percent of respondents said they think their company's IT budget will be less than the first half of the year, but that's a significant 20-point improvement from our previous survey.



And while only 14% said they think their second-half budget will be greater than the first half, that's a four-point improvement. Importantly, these survey results support the likelihood of a further leveling off in the rate of IT spending decline for the second half of 2009.

Slowdown for Corporate Smartphones

There's little in the way of good news for planned smartphone buying, which looks set to slow in the second quarter. This is the first time we've picked up a reduction in more than 18 months.



Just 33% of respondents reported that their company plans to buy smartphones next quarter -- a two-point decline from previously.

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In terms of manufacturers, Research In Motion (RIMM) -- down one point to 77% -- appears set to maintain its dominant share of corporate planned purchases going forward. Apple (AAPL) remains in second place with 22% -- unchanged from previously.



Bottom Line

Virtually all signs point to an extremely tough corporate spending environment going forward. The decline in planned IT spending is the second worst on record for a ChangeWave survey. But last quarter's results were the worst ever.

In what amounts to a tiny positive these days, our latest survey shows a slight leveling off in the rate of IT spending decline for first half 2009, and contains a glint of hope for the second half of the year.

Click here to check out more of the latest ChangeWave research findings.

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Paul Paul Carton is the Director of Research for the ChangeWave Alliance Research Network. Jean Crumrine is an Associate Director of Research. The Research Network is a group of 20,000 highly qualified business, technology and medical professionals -- as well as early adopter consumers -- who work in leading companies of select industries. ChangeWave surveys its network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

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