Gartner Technology Demand Index Shows IT Spending Begins to Strengthen Heading Into Second Half of 2003.

Business Editors

STAMFORD, Conn.--(BUSINESS WIRE)--Aug. 18, 2003

Gartner Analysts Say Current Spending Uptick Is an Important First

Step in Fueling a Turnaround in IT Demand

Early signs exist that IT spending will strengthen in the second half of 2003, which provides the necessary first steps for a turnaround in IT spending for 2004, according to the Gartner Technology Demand Index, an index included in a monthly economic indicator service launched by Gartner, Inc. (NYSE: IT and ITB).

According to a weekly poll drawn from a 20,000-member Gartner panel of IT decision makers from small, midsize and large businesses, U.S. businesses spent below their budgeted levels, recording a score of 95.1 on the Gartner Technology Demand Index for July (an index value of 100 would mean businesses spent exactly what they had budgeted for the month). After hovering around 80 in March and April, the Index has remained above 90 for the past three months, flirting with the key 100 level. This indicates that IT demand is slowly returning to budgeted spending levels.

"The underlying data still reflects a conservative market that is focused on cost control. The overall positive trend is offset by occasional negative data points, which we anticipate will continue to decline in frequency through the end of the year," said David Hankin, senior vice president and general manager of Gartner. "Based on the trends we see, we are optimistic that spending will return to or exceed budgeted levels in the fourth quarter of this year."

In July, software spending went above the budgeted parameters (see Table 1), as the software segment scored 107.3 on the Technology Demand Index. One application area that has shown the strongest current demand is the design and engineering segment.

"The strong current demand in the design and engineering area is primarily due to the growing interest in new standards such as J2EE (Java 2, Enterprise Edition), .NET and Web services, which require new tools for building applications," Hankin said.

Table 1

Gartner Technology Demand Index for July 2003

Sector                                                  Spending Index
----------------------------------------------------------------------
Hardware                                                         88.8
Software                                                        107.3
Networking and Telecommunications                                89.1
IT Services                                                      95.5
Aggregate Overall IT Spending                                    95.1
----------------------------------------------------------------------

Note: An index of 100 would mean actual spending totaled the

projected budget for the month.

Source: Gartner (August 2003)

The Gartner Technology Demand Index measures IT decision makers' purchase preferences across more than 400 vendors by sector and product. Vendors ranked high by this measure stand to gain the most in demand in 2004 relative to 2003. Large vendors with strong brands, such as Cisco Systems, Dell, IBM and Microsoft, dominated the vendor rankings (see Table 2).

Table 2

Gartner Vendor Demand Index Top 20

                                                                 3Q03
                                                         2Q03  Ranking
Vendor                                 Sector, Product Ranking  (thru
                                                                 July)
----------------------------------------------------------------------
Dell                                 Hardware, Servers     19       1
Microsoft               Software, Systems Applications     12       2
Microsoft        IT Services, Software Maintenance and
                                               Support      1       3
Microsoft               Software, Back Office Software     11       4
Microsoft         Software, Collaborative and Personal      6       5
                   Software, Application Development,
Microsoft            Integration, and Deployment Tools      4       6
Dell               Networking and Telecom, Enterprise
                                             Equipment     33       7
Cisco Systems                 Networking and Telecom,
                              Infrastructure Equipment      3       8
Dell              Hardware, Desktops, and Workstations     16       9
Dell                   Hardware, Notebooks and Laptops     20      10
IBM              IT Services, Application Development
                              and Integration Services     32      11
Dell                   Hardware, Input/Output Hardware     70      12
Cisco Systems    IT Services, Hardware Maintenance and
                                               Support     10      13
IBM              IT Services, Software Maintenance and
                                               Support     25      14
IBM                   IT Services, Consulting Services     35      15
IBM                     Software, Systems Applications     64      16
Hewlett-Packard  IT Services, Software Maintenance and
                                               Support     74      17
Northrop Grumman IT Services, Application Development
                              and Integration Services      2      18
IBM                         IT Services, IT Management     39      19
AT&T Wireless          Networking and Telecom, Mobile
                                              Services     72      20
----------------------------------------------------------------------

Note: 3Q03 rankings include survey results from only the first

month of the third quarter.

Source: Gartner (August 2003)

The Gartner Technology Demand Index is an offering within Gartner IT Watch. Gartner IT Watch uses results from weekly polling of the 20,000-member IT decision maker panel to produce an early warning indicator for investment professionals and vendors. Gartner IT Watch captures short- and long-term attitudes toward investment in IT products and services, and reflects anticipated changes in spending trends because of current events and broader economic factors.

Analysis is provided monthly for the overall IT market and is further broken out to provide insight into current and projected spending in vertical industries. It also identifies vendors and products that will lead recoveries or play a shaping role in IT spending patterns. For more information on Gartner IT Watch, e-mail [e-mail] or visit www.gartner.com/1_researchanalysis/ITwatch.jsp

About Gartner

Gartner, Inc. is a research and advisory firm that helps more than 10,000 clients leverage technology to achieve business success. Gartner's businesses are Research, Consulting, Measurement, Events and Executive Programs. Founded in 1979, Gartner is headquartered in Stamford, Conn., and has more than 3,800 associates, including approximately 1,000 research analysts and consultants, in more than 75 locations worldwide. Revenue for calendar year 2002 totaled $888 million. For more information, visit www.gartner.com.