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Meltdown may wipe out $150 bn in IT spending

A decline in economic growth across the world could wipe out more than $150 billion in information technology spending over the next three years, a new report has warned.

The analysts, quoted by C-NET online service, say a worst-case scenario projection could be a global slowdown that would 'reduce worldwide IT spending between 2001 and 2003 by as much as $150 billion, with $50 billion less demand from Europe'.

The report by analysts of high-tech consulting firm IDC, released on Monday, says poor economic conditions would have a severe impact on spending on new technology.

In particular, IDC is concerned that there could be a more severe downturn in Western Europe.

IDC's worst-case projection would imply that IT spending in Europe would rise by just 7.9 per cent in 2001. The research group actually expects to see growth of around 11 per cent this year, more optimistic than some experts predict.

"Software and services are still expected to show strong growth this year", said Stephen Minton, manager of IDC's global IT economic outlook research programme.

But Minton warned that hardware sales would be most badly hit if economic conditions were worse than expected.

While many tech firms claim publicly that economic conditions will soon improve, many experts are less confident.

Last month's Holway Report predicted that demand for IT products would remain modest until at least 2004. Richard Holway, director of Ovum - the analyst firm that publishes the Holway Report - was quoted as saying that spending would stay low because there was no exciting new technology that would boost demand on the horizon.

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