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IT Expenditures To Increase at a Slower Pace in 2012

While IT expenditures is expected to increase worldwide this year, forecasts are being revised downward. The Eurozone crisis and flooding in Thailand, a major hard-drive manufacturing hub, have put a damper on original projections for global information technology spending in 2012.

Market research firm Gartner initially predicted that worldwide IT spending would jump up 4.6 percent this year but Thursday announced it had downgraded its outlook to a 3.7 percent increase. The company changed its forecast--covering all information technology sectors, not just education--because the debt crisis in Europe may result in spending decreases and because floods have wiped out important Thai manufacturing centers.

Worldwide IT spending increased 6.9 percent to $3.7 trillion in 2011.

The Eurozone crisis has caused uncertainty for businesses and consumers in Europe, said Gartner Research Vice President Richard Gordon in remarks released to coincide with the revised forecast. Gordon said he expects IT spending in Western Europe to decrease by 0.7 percent overall in 2012.

Monsoon flooding has wreaked havoc on Thailand since July, leaving one-third of the country underwater. The rising waters have negatively impacted hard drive manufacturing in the country and have had serious implications for businesses worldwide, especially those looking to buy computers, according to Gartner.

Hard drive supply is expected to be reduced by at least 25 percent during the next six to nine months, Gordon said. The anticipated shortage prompted the IT research and advisory company to decrease its shipment forecast for PCs.

"Rebuilding the destroyed manufacturing facilities will also take time, and the effects of this will continue to ripple throughout 2012 and very likely into 2013," Gordon said in a prepared statement.

The diminished hard drive supply will affect all PC original equipment manufacturers, though larger ones may see fewer problems.

The supply issues in Thailand compound the overall cautious environment for hardware spending, according to Gartner.

Gartner projected that spending on telecom equipment will increase the most in 2012, by a total of 6.9 percent to $475 billion. Enterprise software trails in second place, with a projected increase of 6.4 percent to $285 billion, according to data provided by Gartner.

About the Author

Jessica DiNapoli is a finance and technology reporter based in Westhampton Beach, NY. She can be reached at [email protected].

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