A new ChangeWave corporate IT purchasing survey shows an accelerating collapse in U.S. business spending that has now reached historic proportions - with record pullbacks occurring both in the current 4th Quarter and going forward.

In one of the surveyÃ's few upbeat findings, the corporate smart phone market continues to show growth - with Research In Motion maintaining its huge lead, and Apple continuing to make inroads into small to medium-sized businesses.

A total of 1,926 respondents involved with IT spending in their organization participated in the survey, conducted November 6-12, 2008.

IT Spending Breakdown

The results show IT spending projections for 1st Quarter 2009 to be the worst ever for a ChangeWave survey, dating back to 2001. An unprecedented 45% of respondents say their companyÃ's IT spending will decrease (or there will be no spending at all) in the 1st Quarter - 16-pts worse than our previous survey.

Only 10% say spending will increase - a 3-pt drop from previously.

"The IT purse strings are almost completely on lockdown," said Tobin Smith, founder of ChangeWave Research and editor of ChangeWave Investing, who added, "At the very least, these results do not bode well for a 1st half 2009 economic upturn."

Not only is IT spending plunging, but it comes at a time of year when there are normally seasonal increases. This becomes immediately apparent when you look at the change from each November - beginning with November 2003 - in the Projected IT Spending chart above.

The survey also asked respondents if their IT spending was on track thus far in the current 4th Quarter. By a wide margin, these results are also the worst on record - with 39% saying theyÃ've spent "Less than Planned" so far this quarter - 9-pts worse than in our previous survey. Just 8% have spent "More than Planned" - a 4-pt drop from previously.

Moreover, in the aftermath of the U.S. presidential election, respondents do not see any immediate improvement occurring in their companyÃ's IT spending. In fact, nearly half (48%) now believe IT spending wonÃ't pick up for their company until the 3rd Quarter of 2009 or later - a two-fold increase since our August survey.

Corporate Smart Phones

The survey also looked at the corporate smart phone market, and found it is actually showing growth, with 35% of respondents reporting their company plans to buy smart phones next quarter, up 1-point from August.

Research In Motion (78%; down 1-pt) continues to garner the dominant share of planned corporate smart phone buying, but the Apple iPhone (22%; up 5-pts) shows considerable momentum going forward.

They noted that RIMÃ's corporate share is heavily concentrated among larger companies (over 1,000 employees), while three quarters of AppleÃ's share is among small-to-medium sized companies (under 1,000 employees).

Further confirming that the 3G iPhone is having a positive impact on the corporate market, nearly one-in-five respondents (18%) say the release of the 3G has made their company More Likely to purchase Apple products in the future.

Bottom Line

U.S. corporate IT spending is in the midst of a huge nose-dive, the likes of which hasnÃ't been seen before in a ChangeWave survey dating back to 2001.

"The current survey findings virtually guarantee that the technology sector will get hammered with pre-announcements on earnings misses before the January reporting season gets underway," said Smith.

Posted to the site on 23rd November 2008

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