Report: Tech Sector Recovery Just Around the Corner

It has been a tough year for the technology sector, but Forrester sees a light at the end of the tunnel.

The research firm said it expects that the tech sector, propelled by a robust U.S. economic recovery, will turn around faster than previous projections indicated. In addition, e-commerce is expected to remain strong.

"E-commerce growth will continue to expand independent of the tech recovery, but the tech recovery will help to propel even more e-commerce," Forrester analyst Bruce Temkin told the E-Commerce Times.

Underfunding Tech

"Companies are at this point underfunding some valuable tech investments that would help their e-commerce efforts. But even without a lot of the tech investments that I still think need to be made, both consumers and businesses are continuing to increase their purchases online," Temkin said.

According to the report, consumers boosted their online purchases by 12 percent in 2001, and the average corporation bought 9.5 percent of materials on the Web in the fourth quarter of 2001, up from 7.1 percent in the third quarter.

Cautious Growth

In October 2001, Forrester predicted the technology sector would see 2.2 percent growth in the second half of 2002. In its latest report, Forrester increased that projection to 3.9 percent. The increase is still modest, however, and reflects continued caution among technology executives.

Forrester said it expects double-digit growth to resume in 2003, with 10.4 percent growth in the tech sector.

The anticipated increase will be driven by several factors, including a boost in corporate IT spending and new technologies like Web services -- which will redefine integration -- and wireless capabilities for consumers, which will extend to everyday devices by 2005.

More Broadband

Those innovations will "reinvigorate the entire tech sector," the report said, and growth will continue into 2004. Forrester said it sees the tech sector growth rate reaching 12.5 percent by 2004, up from a previous estimate of 11.8 percent.

An increase in broadband adoption also will drive faster growth. About 17 percent of Web users now have broadband access, according to the report, and an additional 16 percent are planning to get high-speed access in 2002.

"With the economy in full swing, the tech sector will get back to its long-term growth trend," Temkin said. "Technology's best days are still ahead."