Location: http://news.zdnet.co.uk/story/0,,t269-s2130600,00.html
UK set for Europe's ICT spending top spot
Graeme Wearden <mailto:[log in to unmask]>
The UK will overtake Germany as Europe's largest market for information and
communication technology in 2005, according to a new study from Forrester
Research.
The analyst group predicts that the UK's ICT market
<http://news.zdnet.co.uk/story/0,,t269-s2124440,00.html> will have grown to
£138.2bn by 2005, compared to £133bn in 2002. In contrast, Forrester
believes that the German ICT market will be worth £138.1bn in 2005, and will
actually fall to £136bn this year compared to £138bn in 2002.
The key factor, according to Forrester, is that business confidence is
expected to remain particularly low in Germany over the next few years,
which will have a knock-on effect on spending on ICT products and services.
"Business sentiment in Germany is so negative, and will remain so, that
people will think they need to save money by cutting back on their ICT
spending," Charles Homs, senior analyst at Forrester Reseach, told ZDNet UK
on Monday.
Forrester predicts the UK's software market will overtake Germany's this
year, as did its IT services market in 2001. Germany is expected to still be
spending more than the UK on both hardware and telecommunications services
by 2007 -- the limit of Forrester's projections at this time -- though.
According to Homs, many German companies will cut back on their spending on
new IT projects, and concentrate just on maintaining existing systems.
"If you ask an IT manager what would happen if you cut his annual budget by
20 percent, he'll say 'nothing' because you can always postpone a project
until a later stage," said Homs, adding that on average 66 percent of IT
budgets are spent on existing systems, with the remaining 34 percent devoted
to new projects.
This means that most companies have the flexibility to postpone investment
in new ICT products and services in the short term.
Homs warns, though, that this can have negative long-term consequences of a
firm's productivity.
"Companies who compete in a multinational environment will find that if they
keep postponing new IT projects then eventually their competitors will start
to outperform them
<http://news.zdnet.co.uk/story/0,,t269-s2123693,00.html>," cautioned Homs.
Forrester also warns that the tech spending gap between Europe as a whole
and the US will widen by 4.3 percent, or £41bn, this year, and that the
technology boom enjoyed by Ireland in recent years is coming to a close.
"Forrester believes that in light of the current economic conditions and
next year's EU expansion, subsidies and tax incentives [for Ireland] will be
a thing of the past," said the analyst firm, adding that, "with wages rising
to commonplace Northwestern European levels, Ireland's magnetism for ICT
companies will quickly fade."
************************************************************************************
Distributed through Cyber-Society-Live [CSL]: CSL is a moderated discussion
list made up of people who are interested in the interdisciplinary academic
study of Cyber Society in all its manifestations.To join the list please visit:
http://www.jiscmail.ac.uk/lists/cyber-society-live.html
*************************************************************************************
|