Glint of Hope for IT Spending in Second Half of 2009

Jean Crumrine co-wrote this article.

The collapse in U.S. business spending we reported last quarter has extended right into the New Year – though ChangeWave’s latest corporate IT purchasing survey does show a slight leveling off in the rate of decline for 1st half 2009 and a glint of hope for the 2nd half.

A total of 1,939 respondents involved with IT spending in their organization participated in the ChangeWave survey, conducted February 9-17, 2009.

Still Bad – But Not Quite As Awful As Last Quarter

Better than two-in-five respondents (41%) say their company’s IT spending will decrease (or there will be no spending at all) for the 2nd Quarter – an extraordinarily high number, but nonetheless 4-pts improved over our November survey.

Only 10% say their IT spending will increase – unchanged from previously.

Thus while the decline in planned IT spending is the second worst on record for a ChangeWave survey dating back to 2001, it’s not quite as bad as the huge nose-dive we recorded last quarter. Statistically speaking, we are witnessing a slight leveling off in the rate of decline.

We also asked respondents if their IT spending was on track thus far in the 1st Quarter, and here the results are virtually a mirror image of our previous survey.

Nearly four-in-ten respondents (38%) say they’ve spent “Less than Planned” so far in the 1st quarter, while just 7% have spent “More than Planned.”

Regarding individual IT categories, Servers (Change in Net Difference Score = -3) has registered the biggest slowdown since the previous quarter. Networking (-2), PCs (-1), and Security (-1) also look weaker.

A Glint of Hope for 2nd Half 2009

It’s when we asked respondents about the 2nd half of 2009 (Jul-Dec) that we begin to see the first potential signs of improvement.

A total of 28% think their company's IT budget will be less than the 1st half – but that’s a significant 20-pt improvement over our previous survey.

And while just 14% think their 2nd half budget will be greater than the 1st half, that’s also a 4-pt improvement. Importantly, these survey results support the likelihood of a further leveling off in the rate of IT spending decline for the second half of 2009.

Slowdown for Corporate Smart Phones

There’s little in the way of good news for planned smart phone buying, which looks set to slow in the 2nd quarter – the first time we’ve picked such up a reduction in more than 18 months.

Just 33% of respondents report their company plans to buy smart phones next quarter – a 2-pt decline from previously.

In terms of manufacturers, RIM (RIMM) (77%; down 1-pt) appears set to maintain its dominant share of corporate planned purchases going forward. Apple (AAPL) (22%) remains in second place – unchanged from previously.

Bottom Line

Virtually all signs point to an extremely tough corporate spending environment going forward. The decline in planned IT spending is the second worst on record for a ChangeWave survey.

But last quarter’s results were the absolute worst.

Thus in what amounts to a tiny positive these days, our latest survey shows a slight leveling off in the rate of IT spending decline for 1st half 2009 – and contains a glint of hope for the 2nd half.