By Paul Carton
November 20, 2008

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

In one of the survey's few upbeat findings, the corporate smart phone market continues to show growth - with Research in Motion (RIM) maintaining its huge lead, but Apple (AAPL) continuing to make inroads in small to medium-sized businesses.

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


U.S. Corporate IT Spending Breakdown

Simply put, the IT spending projections for 1st Quarter 2009 are abysmal - the worst ever for a ChangeWave survey dating back to 2001. An unprecedented 45% of respondents say their company'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.

Most disturbingly, spending is plunging at a time of year when we normally experience 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.

We 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

Nearly four-in-ten (39%) say they'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 company's IT spending. In fact, nearly half (48%) now believe IT spending won't pick up for their company until the 3rd Quarter of 2009 or later - a two-fold increase since our August survey.


Corporate Smart Phone Market Continues to Grow

In the same survey, we also looked at the corporate smart phone market and found it's actually showing growth. That is - 35% of respondents report their company plans to buy smart phones next quarter, up 1-point from August.

RIM (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.

We note that RIM's corporate share is heavily concentrated among larger companies (over 1,000 employees), while three quarters of Apple'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 hasn't been seen before in a ChangeWave survey dating back to 2001. In short, the current ChangeWave survey findings virtually guarantee that we'll be seeing the technology sector get hammered with pre-announcements before the January earnings season gets underway.

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Jean Crumrine co-wrote this article.