IDC: Tech to hit bottom in 2002

This year may end up being the worst so far for high technology.

Research firm IDC said that the worldwide information technology industry will suffer its largest decline ever in 2002, shrinking by 2.3 percent. The company released the numbers Wednesday as part of its Worldwide Information Technology and Communications Spending Forecast.

The report comes the same day as a Bush aide told Comdex Fall 2002 attendees that the tech sector won't recover as quickly as the overall economy.

The worldwide storage market is expected to be hardest hit this year, according to IDC, with spending declining by 10.6 percent in 2002. The market consisting of personal computers, servers and workstations will likely shrink by 9.3 percent, and the network equipment market is expected to contract by 7.6 percent.

The declines were "in sharp contrast to the average annual growth rate of 12 percent enjoyed by the industry over the past 20 years," John Gantz, chief research officer for IDC, said in a statement.

However, an IDC representative said this year could mark the end of the high-tech hangover. Analysts expect 2003 to bring a 5.8 percent growth rate worldwide. In the United States alone, IDC predicts a 4.4 percent growth rate in overall IT spending next year. Spending on storage and software is expected to pick up by 2005, while PC revenues are expected to improve slightly in the coming year and then dip again in 2004.

The numbers cited by IDC assume a relatively stable economic outlook. But for the first time, the company is also issuing what it calls a "downside" forecast, or a growth prediction based on significant economic or political changes. Researchers said a prolonged war in Iraq or another stock market plunge could reel in the growth rate to just 2 percent worldwide and 3 percent in the United States for 2003.