Grim IT Spending Findings Indicate Rougher Times Lie Ahead

The downturn in the U.S. economy is far from over. ChangeWave's latest IT purchasing survey shows an even greater pullback occurring in corporate spending – both for the current quarter so far and for the next 90 days going forward.

At the same time, the Apple (AAPL) iPhone is beginning to gain traction in the corporate marketplace even as RIM (RIMM) maintains a big market share lead.

The survey of 1,947 respondents involved with IT spending in their organization was conducted August 11-21.

First, we asked respondents if their 3rd Quarter IT spending was on track to date, and the results were the worst we've seen in a ChangeWave survey.

Three-in-ten (30%) say they've spent "Less than Planned" – 3-pts worse than our May survey. Just 12% have spent "More than Planned."

Visibility Going Forward – A Picture of Negative Growth

Looking ahead, the results are correspondingly grim, with 29% saying their company's IT spending will decrease (or there will be no spending at all) in the 4th Quarter – 5-pts worse than the previous survey.

At the same time, just 13% say spending will increase – a drop of 2-pts from previously.

Thus, the brief period of stabilizing we picked up in May has given way to another major leg downward. In fact, you have to go way back to the middle of the last recession (August 2001) to find a ChangeWave survey projecting this big of an IT spending downturn.

Impact of High Energy Costs: Better than a third of corporate respondents (35%) reported high energy costs were affecting their company's IT spending plans for second half 2008, 1-pt worse than previously.

Impact of the Election: Almost as importantly, one-in-four respondents (25%) say the looming U.S. presidential election is having an impact on their company's IT spending decisions (5% Significant Impact, 8% Moderate and 12% Slight).

Bottom Line: Historically, ChangeWave's mid-quarter corporate IT spending survey has proven to be an accurate early indicator of how the quarter is actually going to turn out. The grim findings of the current survey indicate that the U.S. economic downturn is far from over – indeed, the findings indicate even rougher times lie ahead.

Not only are IT expenditures lower-than-expected thus far in the current 3rd Quarter, but visibility over the next 90 days shows no signs of improvement.

These survey results also lend strong support to the thesis that corporate America will continue to hold its powder dry in terms of IT capital investment – at least until after the November elections.

And perhaps longer.

When we asked respondents exactly when they thought IT spending would pick up in their company, a robust 39% said not until at least the 2nd Quarter of 2009 or later.

Corporate Smart Phones: Research In Motion Holds its Lead

In the same survey we also focused on corporate smart phone buying, and here Research In Motion (79%) continues to overshadow its two main competitors in terms of planned 4th Quarter purchases – but we note that it's down a full 3-pts from the record high it registered in May.

Note that that we also picked up weaker visibility for RIM in our most recent consumer smart phone survey (June 2008). Thus, at least momentarily, RIM appears to be confronted with visibility issues on both the consumer and corporate fronts.

While the success of RIM's upcoming new product launches could put most of these issues to rest, the first new RIM launch – the Bold – is still not yet available in the U.S. When you place this in the context of the current 'take no prisoners' stock market, RIM could be in for a bumpy ride with investors short term – until they have some proof that RIM's new products are being successfully brought to market.

Apple (17%), on the other hand, continues to show considerable momentum in terms of corporate planned purchases – up 4-pts from previously. In short, while recent ChangeWave consumer surveys have shown the 3G iPhone having a huge impact on consumer demand, the current results show the iPhone is beginning to gain real traction in the corporate market as well.

In yet another positive for Apple, 19% report the release of the 3G iPhone has made their company More Likely to purchase Apple products in the future – only 1% say Less Likely. Thus, the 3G iPhone release appears to be having a positive 'halo effect' in terms of improved overall corporate purchasing intentions for Apple products in general.

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This article summarizes the results of a recent ChangeWave Alliance survey. The Alliance is a research network of 15,000 business, technology and medical professionals who spend their everyday lives working on the front line of technological change. For more info on ChangeWave, or to sign up for real-time alerts email on the hottest technologies and companies, click here.

Comments

[BMWTwisty:]

This is the "Ahh haa" moment where people are realizing the significant difference between the Apple iPhone technology and the other devices. Apple will continue to gain market share and increase sales for a long time. Rimm's share will continue to erode while Apple gains.

2008 Sep 11 09:00 AM

[Tom B:]

The downturn in IT spending could reflect the fact that IT has seen MS Vista and consequently is evaluating their options-- seeing if they can afford to hold out for Win 7, which does NOT promise to be much better, or, perhaps, some are re-tooling custom in-house apps so they can migrate to Apple's OS X. Windows cost a LOT in terms of support, and we are in a period where belts are being tightened.

2008 Sep 11 09:14 AM

[mollytjm:]

yes, belt tightening is turning more businesses to Macs...as IT departments grit their teeth because it means fewer IT jobs, which is why businesses are doing it. IT departments are very expensive. If you have computers that are much easier to use, work better and don't get viruses and still run everything well, and they have free good tech support a phone call away, why would you keep PCs? It's just logical to cut these costs and go Mac. it means smaller IT departments..maybe happier ones though..Macs are also a lot easier for techs to work on. i think Apple will make even faster inroads to businesses in the future.

2008 Sep 11 09:58 AM

[brewer:]

If everyone had Macs, businesses would need far fewer IT staff. Many have used Macs at home at this point, they see that is ALL the kids want, and they are starting to question why they can't use this far better system at work. After all, it's MORE reliable, easier to use, and really not any more expensive--cheaper if you look at the total cost of ownership.

2008 Sep 11 10:10 AM