March 31, 2004 3:43 PM PST

IDC: Tech's fortunes are on the turn

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SAN JOSE, Calif.--Spending on information technology will rise by 5 percent worldwide this year, IDC says, in the latest sign of optimism for tech industry prospects.

The forecast is similar to a recent estimate from Forrester Research, which raised its projection for IT spending growth in the United States next year from 4 percent to 5 percent.

Chief Research Officer John Gantz made IDC's prediction public on Wednesday at a company conference here. He noted that IT spending had risen 2 percent last year, after dropping in 2002 and 2001, according to the research company.

"The wheel has just been turned," Gantz said. It's "starting to roll in the right direction," he added.

A key theme of the IDC conference was "40 Years of IT," harking back to the founding of the research firm and to the launch of IBM's System/360 family of computers, both in 1964. Big Blue's technology, which allowed customers to upgrade from and build upon a small computing set-up without a complete reinvestment in software and peripherals, helped start what is today a trillion-dollar IT industry, according to IDC.

But Gantz warned conference participants that a number of challenges face technology sellers today. One is a greater dependence on the state of the broader economy now than in the past, when IT made up just a small fraction of business investment.

"We're now sort of married to the macroeconomy in a way we weren't before," he said.

He also said customers are more demanding than in the recent past and may require technology sellers to prove their gear in a technological "bake-off."

Despite the difficulties, Gantz outlined a hopeful future for technology providers. He suggested that the proliferation of communicating devices, such as radio frequency ID (RFID) tags and mobile phones, will lead to a vast increase in the amount of data being sent on networks by 2012.

What's more, much of the information will be sent to server computers from the "edge" of the network--in contrast to the typical direction flow today. Changes in the network will translate into demand for such things as storage, content management and security, according to Gantz.

"There's going to be a renaissance in our industry," he said.

 

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