Growth in global technology spending will slow next year, hurt by a U.S. economic downturn that could crimp spending on computer hardware, research firm IDC said on Thursday in a report with predictions for 2008.
IDC estimates worldwide technology spending growth to range between 5.5 percent and 6 percent in 2008, down from about 7 percent this year. U.S. spending growth will dip to 3 percent to 4 percent next year from 6.6 percent in 2007, IDC said.
Companies will target faster-growing emerging markets along with small and medium-sized businesses to offset slower U.S. spending growth, IDC predicted, and in some cases they will need to make acquisitions to launch into promising sectors.
Frank Gens, IDC's senior vice president of research, said Web search leader Google could cement its position in the small and medium-sized business market with an acquisition of Salesforce.com or Intuit, two companies with strong Web-based business applications.
"Google wants a beachhead into the small, medium-sized business market," said Gens, who expects such businesses to increase spending by 8 percent to 10 percent next year.
IDC analysts accurately predicted last year that major software firms like Oracle and SAP would acquire business intelligence software makers like Hyperion Solutions and Business Objects.
IDC sees big software makers targeting business application firms in emerging markets such as Brazil's Datasul, China's Kingdee and India's 3i Infotech.
A foothold in those markets will be crucial since IDC sees tech spending in Brazil, Russia, India, China and nine other emerging countries, including Poland and Mexico, growing 16 percent in 2008.
IDC also predicts U.S. mobile phone operators will follow in the footsteps of Verizon Wireless, which announced last month plans to open its network to any phone or software by the end of 2008.
IDC also sees Microsoft and IBM fully into the market for Web-delivered software, putting them increasingly into competition with Google and even networking giant Cisco. Cisco will use its WebEx videoconferencing technology as a platform to offer a variety of Web-delivered services targeted at businesses, according to IDC.