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Technology

Businesses to Spend More on IT

New products and the need to replace old equipment spark an IT resurgence.

IT spending is on the rebound, driven by pent-up demand from businesses and other users plus advances in hardware and software applications…more-powerful chips, smaller, lighter laptops, smart phones, cloud computing, etc.

That’s a big plus for the economy since sales make up about 4% of GDP.

Overall spending will increase by around 5% during 2010 compared with a decline of 4% in 2009, according to industry researchers. Computing hardware will show an increase of 5.7% during the year, after declining 12.5% in 2009, according to Gartner Inc., an industry research firm. Software spending will grow 5.1% -- and services, 5.7% -- compared with declines of 2.1% and 4%, respectively. Telecom spending will be up 5.1%, reversing a loss of 3.4% a year ago.

Firms’ shopping lists include sophisticated servers from Hewlett-Packard, IBM, Dell and others that cram multiple processing units onto a single chip, speeding processing tasks and dramatically reducing electricity needs. The return on investment in such servers can be as short as six months on power costs alone.

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Purchases of hard disk storage will soar. Demand for additional storage is mushrooming with the increasing use streaming video and social networking applications like Twitter and Facebook to sell products and communicate with customers. Powered by lower cost -- the price per gigabyte will decline by 25% to 30% per year over the next two years -- installed disk capacity will double what has been put in place since 1990.

PC shipments will go up nearly 20% this year over 2009, led by sales of netbooks and other light laptops. Growth will be driven largely by mobile devices.

“We expect mobile PCs to drive 90% of the growth over the next three years,” says George Shiffler, research director at Gartner. But after that, “their contribution is expected to decline noticeably as they face growing competition from new ultra-low-voltage ultraportables and the next generation tablets. Desk based PC shipment growth will be minimal and limited to emerging markets,” he adds.

“With the rise of Web delivered applications, many users no longer need a traditional PC running a resident general purpose operating system and a fast CPU to satisfy their computing needs,” says Gartner principal analyst Ranjit Atwal.“Apple’s iPad is just one of many new devices coming to market that will change the entire PC ecosystem and overlap it with the mobile phone industry,” he adds. Look for tablet sales to pick up big-time next year.

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Meanwhile, smart phones with ever-increasing applications are spreading like wildfire among executives and workers in the field. One-quarter of all phones will be smart by 2011.

Cloud computing will win over more companies’ IT bucks. As more and more businesses opt to perform some tasks requiring pricey software on the Internet instead -- on a per use or subscription basis -- they’ll save themselves money on fixed costs.

But cloud computing won’t negate the need for most companies to buy IT gear of their own. It’s one thing for a firm to use the cloud to make a flashy presentation for clients, saving itself big money on a program it may need only a few times. But few will want to risk putting financial, HR and other private data on the Web.