Forget the doomsayers, IT spending will rise

Bucking the conventional wisdom that IT spending will decrease, an AMR Research survey instead says that US firms in the manufacturing and services industries are likely to increase IT spending next year, and at an average rate of five per cent.

Among those surveyed who are inclined to increase spending - by that average of five per cent -- were IT directors in the transportation, oil and gas, financial services, and health care industries, according to AMR. Those in the automotive, chemicals, and retail markets anticipated minor increases in their IT budgets and overall, 57 per cent of the respondents expected to add to their IT spending, 33 per cent predicted flat budgets and eight per cent are facing IT budget cuts.

However, even though 32 per cent of IT budgets for service and manufacturing enterprises will be spent on ERP, e-commerce applications will be getting an increasingly larger slice of the pie. Manufacturing firms devote 42 per cent of their application budgets to ERP, more than double the 19 per cent set aside for e-commerce. Companies in the services sector still have ERP as part of their spending plans, but at 25 per cent; e-commerce applications edge out the back-end business suites with 26 per cent of budgets, on average.

Network and system management set cracking paceThe worldwide network and system management market is on pace to reach $US10.2 billion in 2000, an increase of 19 per cent over 1999 revenue of $US8.58 billion, according to Dataquest. The market is projected to grow at a compound growth rate of 19.7 per cent through 2004 when revenue will surpass $US21 billion.

The overall growth rate of 19.5 per cent from 1998 to 1999 was down from 23.9 per cent the previous period and while year 2000 added some confusion and was blamed for slowdowns, especially near end of 1999, "megamergers" and management changes were probably a bigger factor, Dataquest found Some subsegments ignored all obstacles and pushed strongly ahead. The network and service management products saw 45 per cent year-over-year growth, with desktop management coming in second at 33.3 per cent growth.

Strong growth in the LAN switching

The LAN switching market is one of the few remaining bright spots in the enterprise hardware market. According to IDC, worldwide port shipments of LAN switches will increase from 79,000 in 1999 to more than 231,000 by 2000 and during that time revenues will jump from $US13.2 billion to $US28.7 billion.

"The need for high availability networks will be one of the biggest factors driving growth of LAN switches. Network managers interested in running efficient multiservice networks that prioritise traffic, optimise bandwidth, and guarantee application performance will begin to use more sophisticated features of LAN switching equipment". said IDC.

Vendors hoping to increase their LAN switching revenues should look beyond the United States. The domestic market will grow slower than any other region of the world and well below the overall market's rate. Because of its low growth, the US will go from accounting for 52 per cent of worldwide LAN switching revenues in 1999 to 33 per cent in 2004.

Thriving on the Web and beyond

The Web and Web-Enabled Devices will generate $US269 billion in sales and influence another $US378 billion in offline sales in 2005 according to Forrester Research. Despite the fact that dot-com retailers have been dropping like flies all year, online retail is alive and well Forrester's research showed. In fact , online devices' impact on sales is magnifying and rippling through retail -- beyond the Net and into the brick-and-mortar world.

According to Forrester, PCs will retain the spotlight, generating $US246 billion in online sales in 2005, ITV will play a supporting role, and mobile devices will make rare cameo appearances. Though these non-PC devices will close only $US23 billion in online sales in 2005, they will influence another $US128 billion in offline sales.

B2B value to explode

A study released by Jupiter Communications predicts tremendous growth for business-to-business (B2B) commerce in the US over the next five years. B2B commerce will increase from $US336 billion this year to $US6300 billion in 2005, dominated largely by the computer and telecommunications sector, Jupiter found.

In keeping with this, businesses are advised to adopt new models for online trade, as online B2B commerce is likely to increase from three per cent to 42 per cent of total B2B domestic trade over the next five years.

Jupiter's study, US Business-to-Business Trade Projections, analyses the trading patterns of 12 major industries and concludes that five of them will play a major role in future online B2B trade. The five -- aerospace and defence, chemicals, computer and telecommunications equipment, electronics, and motor vehicles and parts -- are expected to conduct more than half their total B2B buying and selling online by 2004.

Cable Model Shipments on a climb

Despite component constraints, worldwide cable modem market shipments totaled nearly two million units in the second quarter of 2000, according to Dataquest. While many manufacturers did well in the quarter, some vendors could not fulfil demand because of a shortage on key parts.

Given constraints on the availability of radio frequency (RF) tuners and flash memory, among other components, most vendors reported that they could have shipped at least 30 to 35 per cent more units in the face of unquenchable worldwide demand for broadband cable access devices. Vendors that diversified their component sourcing were able to meet demand and picked up the slack from vendors that could not deliver against demand.

Motorola Broadband Communications remained atop the leader board with 32.5 per cent of the market. The company continued to do well in the Data Over Cable Service Interface Specification (DOCSIS) space, where it was also No. 1 vendor. More vendors are entering the DOCSIS segment, according to Dataquest analysts said and Motorola Broadband Communications should expect to see increasing challenges in this market.

Networking equipment aims for $US50 billion The worldwide networking equipment market grew to $US11.8 billion in the second quarter of 2000, a healthy eight per cent increase from the preceding quarter, according to Cahners In-Stat Group. The networking equipment market is positioned for more robust growth in 2000, and year-end total revenues are expected to hit almost $US50 billion.

As expected, growth quickened in Q2 2000, due to strong enterprise backbone purchases, continued service provider network build-out, and growth in the demand for branch office and SOHO networking equipment.

Healthy outlook for Australian IT

The total Australian IT market in 1999 reach $A22.0 billion, and is expected to increase to a total of $A36.3 billion by the year 2004, according to figures released recently by IDC Australia. The overall IT spend grew by 11.7 per cent in 1999 over 1998, while the compound annual growth rate (CAGR) for 1999-2004 is estimated to be 10.6 per centIDC forecasts show spending on services almost doubling between 1999 and 2004, reaching a level of $A16 billion by 2004. Similarly, vendors of packaged software will continue to enjoy healthy growth at a CAGR of 15.3 per cent. Overall Australia had a very positive 1999. The following have been singled out by IDC as some of the major market trends:

Revenues in the networking segment were positively affected by the growth of e-commerce and e-business, modernisation of small and branch office networks, and continuing migration to auto-sensing Fast Ethernet technologies.

Liberalisation of the telecommunications industry and strong growth in the ISP industry led to strong hardware growth in Australia. These two factors combined with the mature state of the country's IT market and users have resulted in the emergence of one of the region's leading digital economies.

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