Outlook cloudy for enterprise IT

17 Aug 2010

It’s back to uncertainty on the enterprise front.

Cisco last week announced a bumper quarterly profit but sparked a tech sell-off when CEO John Chambers complained about “unusual uncertainty.”

He said major customers believed the economic recovery was slowing and expect at best “a very gradual return to more normal economic conditions.”

Cisco’s outlook reinforced analyst warnings of slowing demand. Gartner’s Kenneth Brant said last week the research firm had advised vendor and service provider clients “to develop contingencies to mitigate the risk of zero growth in 2011.”

“The bottom line is that technology providers need to be prepared for the worst case, where commercial IT markets stagnate and governments transition to fiscal austerity programs,” Brant said.

IDC has reached a similar conclusion. “Our surveys indicate that businesses are still cautious about committing to new, long-term IT projects, and are still anxious about the possibility of a double-dip recession,” it said.

“Decision-making cycles remain long, and many enterprises have contingency plans in place for the next 12 months which could see more projects suspended.”

A good deal of the uncertainty centers on Europe, where governments – the biggest IT customers - have yet to swing the axe on spending.

The hope of the side remains in the emerging markets. IDC expects full-year growth of 21% in China this year, 13% in India and 17% in Russia.

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