1. www.idc.com 2004 and Beyond : Vision for the Worldwide IT Market Stephen Minton Director, Worldwide IT Markets International Data Corporation

2. September 11 Global recession Telecom winter The High Tech Climate Dot-com crash

3. Since Then … Enron, WorldCom, etc. Wall Street War in Iraq Oil Prices SARS

4. … An Industry Cratered WW IT Spending Growth (%) 1999200020012002 10.8% 11.5% -4% -0.5%

5. Corporate Profits On The Up…. Source : Consensus Economics Source : US Department of Commerce Strong correlation between profits and IT spending 2001 was biggest fall in US corporate profits since Great Depression

6. United States IT Spending Growth Source : IDC Black Book October 2003

7. Regional IT Spending Growth % Growth Source : IDC Black Book Preliminary June 2003

8. Worldwide IT Spending Growth % Growth Source : IDC Black Book October 2003 Slightly outpacing nominal GDP growth by 2005 and onwards The bottom was last year

9. Worldwide IT Spending, 1989-2007 ($m)

10. Key Trends  Hardware: vendor consolidation, price competition, commoditization, optimization  Software: age of complexity, growth via modules and software that simplifies, standardization, price competition in applications, innovation the key to growth  Services: smaller projects, enterprise application-related activity slowing as software slows, outsourcing growth

11. Biggest Challenge Facing IT Department IDC US End-User Survey Q3 2003

12. IT Department Top Issues Infrastructure upgrades, replacements and cost reductions are top focus areas; growing focus on new software apps IDC US IT Department Survey Q3 2003 “What keeps you awake at nights?” IDC US IT Department Survey Q3 2003 % After job insecurity, projects and budget cuts, IT departments worry most about infrastructure

13. Areas Suffering From Critical Under- Funding Due To Spending Cutbacks IDC US End-User Survey July 2003 % respondents, n=557

14. System Infrastructure Software Spending Growth (North America) Source : IDC Software Market Forecaster, September 2003

15. Major priority areas in next 12 months % respondents IDC US End-User Survey Q3 2003

16. Reasons to Increase IT Spending….. IDC US End-User Survey Q3 2003 % respondents

17. The Big Picture Complexity – Driver and Inhibitor Infrastructure : Pent-Up Demand, Commoditization, Simplification Security Is Everywhere

18. Conclusions IT Spending Growth will continue to recover with overall economy and business investment, but muted in comparison to pre-2001 Focus on key market opportunities, including Security and Serverware software The CEOs are still nervous – must play to cost-conscious market with appropriate message

19. Please email me at sminton@idc.com Questions?