Corporate IT Spending Will Slow in 4th Quarter, Larstan Reports; Survey Shows Reduction in Rate of Growth of IT Spending for 4th Quarter.

WASHINGTON -- Led by Decline in Laptop and Desktop Spending

Corporate information technology (IT) spending is still growing, but the rate of growth will slow in the 4th quarter, according to a new study from ChangeWave Research released this week - led by a decline in laptop and desktop spending.

The findings are based on a survey of 628 business and technology professionals involved with IT spending in their organizations. The survey, completed September 1, 2004, shows a continuation of the downward trends reported in ChangeWave's previous two IT spending surveys, and points to a slowdown in overall economic growth for the second half of 2004.

The complete study - "A Q4 Slowdown in Corporate IT Spending" - is available at http://www.changewave.com/itspending.

Q4 IT Spending Slowdown: There was a decline in the number of respondents reporting their company will increase IT spending in the 4th Quarter. Only 31% of the respondents say their company will increase 4th Quarter IT spending, while 17% say their spending either will decrease or there will be no spending at all.

Compared to the previous quarter, this is a 3-point decline in the number of respondents who say their company's IT spending will increase. Moreover, it's the lowest percentage recorded by ChangeWave since June 2003.

And the trend appears to extend beyond a simple one-quarter blip. "After five consecutive quarters of increased IT spending, this is the third quarter in a row in which we've seen a downturn in the rate of IT spending growth," says Tobin Smith, founder of ChangeWave Research.

Q3 IT Spending Update: As part of the survey, respondents were also asked if their corporate IT spending is on track thus far in the 3rd Quarter. A total of 18% said they have spent "More than Planned," down 1 percentage point from the previous survey - while 26% said they have spent "Less than Planned," up four percentage points from the previous survey.

Focusing On The Future: Looking ahead to the first half of 2005 (Jan-Jun), 30% of respondents think their company's overall IT budget will be greater than second half 2004 (Jul-Dec) - but this is down 6-points from the previous survey. On a positive note, only 15% think it will be less than the second half of 2004 - a 4-point improvement from the last survey.

Individual Winners and Losers: The largest drop-offs in 4th quarter IT spending will occur in laptops, desktops, database management software, application server software and PDAs. In particular, this is the third survey in a row that Desktops registered a decline and the second survey in a row for Laptops - a clear signal that the corporate PC upgrade cycle peaked back in the 1st Quarter and has since been in decline.

There are still some IT sweet spots however: Voice over Internet Protocol (VoIP) and Customer Resource Management software registered the largest 4th Quarter spending improvements.

Bottom Line: These Q4 IT Spending survey results show a continuation of the downward trends reported in the previous two ChangeWave IT spending surveys, and point to a slowdown in overall economic growth for the second half of 2004.

The complete ChangeWave Research Report, "A Q4 Slowdown in Corporate IT Spending," is available for free download at http://www.changewave.com/itspending.