IDC: IT spending to increase 6.3% in 2006

Global IT spending should grow by US$100 billion in 2006, says IDC

Global IT spending should grow by 6.3% in 2006, driven by software spending, but that growth would be smaller than the 6.9% in 2005, says IDC.

Global IT spending totaled about US$1 trillion (NZ$1.6 trillion) in 2005, and should grow by about US$100 billion in 2006, IDC said.

Hardware growth of 9% drove spending in 2005, the "fastest rate of growth since Y2K," says Stephen Minton, vice president of the IDC worldwide IT markets research group. But a pent-up demand for hardware and infrastructure upgrades shouldn't continue at the same pace in 2006, he says.

However, software spending should grow by 7%, with hardware and services spending growing at a 6% clip, he says.

Global IT spending grew about 5% in 2004, Minton says. He calls 2006's forecast "pretty good."

"It's a little bit better than most industries," he says. "But we don't see IT going back to double-digit growth."

IT spending grew by 14% in 1995, fueled by the growth of the web and Microsoft's Windows 95 operating system, Minton says. That double-digit growth continued through 2000, but spending declined in the dot-com bust year 2001.

In the US, overall growth in 2006 will be 5.8%, IDC predicts, a slight decline from a 6.4% expansion in 2005. Strongest growth will be in network equipment, outsourcing services and system infrastructure software, including security tools.

Elsewhere, improving economic conditions are contributing to an enhanced outlook for IT spending in Western Europe, where overall IT growth will reach 6% this year, IDC says. The Asia and Pacific region, excluding Japan, will see 9% growth in 2006, led by double-digit spending gains in China, with 14%, and India, with 21%, IDC says.

IDC expects IT spending to grow by about 5% a year through 2009, with lower growth rates due to increasing "maturity" in several IT sectors, including networking equipment, Minton says.

IDC is owned by International Data Group, the parent company of IDG News Service.

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