The bad news is that in its November report on IT spending, Goldman Sachs is projecting a 5 percent decline in 2009 in developed economies (the United States, Western Europe, and Japan), or 65 percent of IT spending, compared with 4 percent expected growth in 2008 and 7 percent growth in 2007. The slowdown will span all vertical markets (financial services, communications, and so on).
The good news? Goldman Sachs expects IT spending in developing economies, which accounts for 35 percent of IT spending, to hit 7 percent growth in 2009. The net? A 1 percent decline in IT spending in 2009.
The other good news? Most IT budgets are weighted toward operating expenditures, with OpEx consuming 75 percent of budgets, leaving just 25 percent for capital expenditures. Why is this good news? Well, that depends on how you make money. If you're an open-source or SaaS company, you fall into the OpEx spending category, where most of the money will be in 2009. If you're trying to peddle proprietary licenses (CapEx), well, good luck with that.
Of course, it's not all bad news for proprietary software vendors, as "operating budgets, which comprise staffing and recurring elements such as maintenance, typically have more resilience associated with them, even in downturns," according to Goldman Sachs. Given that an increasing percentage of revenue for software giants like Oracle comes from maintenance, they should be able to at least tread water on existing deployments.
Hardware vendors, however, should expect a gloomy 2009, but not everyone will be hurt equally.… Read more