IT spending expected to drop another four percent this year
Goldman Sachs has delivered some bad news for IT vendors. In its “Independent Insight: U.S. Technology Strategy” report released Monday, Goldman Sachs predicts that IT spending growth in 2008 will drop to 4 percent from a former projection of 6 percent and that pricing pressure on vendors is going to get worse.
The good news, however, is that Goldman Sachs doesn’t see IT spending levels dropping to their 2001-2002 or 1990-1991 levels due to more rational IT spending from 2003 to 2007. In other words, we have don’t have as far to fall. Market share, brand, and size are critically important in a slowing economy, as the report notes. Pricing discounts are becoming ever more aggressive as vendors seek to hold up demand even as budgets shrink, which Goldman Sachs believes favors “larger solution providers that can offer attractive pricing and payment terms on bundles of products relative to smaller “best-of-breed” vendors that may lack similar flexibility.”
Comments are closed.