Slowdown hits IT budgets

Analysts have slashed their predictions for IT budget growth in half. Merrill Lynch is anticipating IT budgets will grow by only 2.6% this year.

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By  Zoe Moleshead Published  September 18, 2001

Analysts have slashed their predictions for IT budget growth in half. Merrill Lynch is anticipating IT budgets will grow by only 2.6% this year, down from earlier estimates of 5-6% growth.

However things look set to pick up in 2002 with the expectations that IT spending will grow by 4.6%

Merrill Lynch analyst Steven Milunovich, told TechWeb improvements should come in the second quarter next year, with increased spending benefiting PCs, services, software and storage.

Networking and storage are maintaining their positions in IT budgets though. "Corporations can always use a faster network, so spending is relatively strong in contrast to service provider outlays," said Milunovich. "PCs and services (were) taking it on the chin."

With the total cost of ownership (TCO) becoming increasingly important to CIOs, customers are looking to push prices down particularly on hardware. "Vendors that can attack the total cost of ownership issue in coming years will be best positioned," explained the analyst.

The survey also revealed that while Dell and Microsoft gained market share, HP lost ground, and IBM's services both gained and lost market share.

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