Networking, Software Spending Will Grow Again; PC Sales To Continue Struggling

Buying in technology sectors such as network equipment and software will stabilize this year and return to pre-2001 growth rates by 2006, IDC analysts say.

But the recovery will not be universal. PC sales will continue to decline, and IT spending in Europe and Latin America will be uncertain because of weak economies, IDC says.

Politics, the threat of war, and a weak global economy could discourage spending. IDC also paints a worst-case scenario that has spending declining again this year and next, with recovery delayed until 2004.

Software and related consulting services will see the biggest gains, with 10% year-over-year growth by 2006. IT services will see growth paralleling software, as managers look to service providers for help in consolidating applications.

Storage hardware sales will grow, but broader hardware sales will decline. Hardware sales declined more than 20% last year and will see a double-digit decline again this year, IDC says.

Meanwhile, analysts at Gartner say PC growth will be about 7% next year, off from the high double-digit growth of previous years. PC shipments will reach 127.3 million units worldwide this year, up 1.8% over last year.

The low growth rates signal an end to the traditional three-year upgrade cycle for PCs. IT managers and consumers are now waiting longer than three years before replacing PCs.