09:35 AM

Forrester Says Tech Recession Is Over

Increased spending on hardware and software will put an end to the IT downturn in 2010, analyst firm says.

U.S. and global spending on IT hardware and software will bounce back strongly in 2010, market watcher Forrester said Tuesday.

The research firm is calling for tech spending in the U.S. to grow 6.6% this year, to $568 billion, after being down 8.2% in 2009. Worldwide spending will jump 8.1% to more than $1.6 trillion, following a decline of 8.9% last year.

"The technology downturn of 2008 and 2009 is unofficially over," said Forrester principal analyst Andrew Bartels, in a statement.

Regionally, the Continent will see the strongest growth. Forrester expects tech spending in Western and Central Europe to increase 11.2% on the back of the Euro's strength versus the dollar. Canada, Asia Pacific, and Latin America are also predicted to enjoy solid growth rates of 9.9%, 7.8%, and 7.7%, respectively.

U.S. IT spending growth is pegged at 6.6%, while the research firm expects spending in the so-called EMEA region, which comprises Eastern Europe, the Middle East, and Africa, to grow by just 2.4%.

"All the pieces are in place for a 2010 tech spending rebound. In the U.S., the tech recovery will be much stronger than the overall economic recovery, with technology spending growing at more than twice the rate of gross domestic product this year," said Bartels.

The data also signals 8 potentially hot tech stocks.

Software will enjoy the greatest uptick in sales, according to Forrester, which sees worldwide spending on software growing by 9.7%. Some of that could be driven by key new products from Microsoft and other vendors. Microsoft launched Windows 7 in October of 2009, and is slated to ship Office 2010 in the middle of this year.

Forrester also sees a strong rebound in the hardware sector in 2010, with spending on computer equipment expected to increase 8.2%. Communications equipment sales will grow 7.6%, sales of IT outsourcing services will climb 7.1%, and sales of consulting and integration services will increase 6.8%, Forrester said.

Forrester believes the IT industry is on the verge of a six- to seven-year cycle of growth and innovation that will be driven by "smart computing," which represents a marriage of advanced hardware and software technologies that can drive new levels of automation and efficiency.

"New technologies of awareness married to advanced business intelligence analytics make computing smart," said Bartels.

"Smart Computing rests on new foundation technologies such as service-oriented architecture, server and storage virtualization, cloud computing, and unified communications. 2010 marks the beginning of this next phase of technology advancement," said the analyst.

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