Here are several excerpts from an article by Zach Church, News Writer for SearchCIO-Midmarket.com, Better Hardware Prices Bright Side to Economic Recession:

IT spending will slow this year, as the U.S. economy edges toward a recession, analysts say. But for those with wiggle room in their budgets, 2008 may be the year to garner big savings on hardware.

Spending on hardware in the U.S. has gone up each of the past five years, including a 10% bump in 2005. But Andrew Bartels, a vice president and principal analyst at Forrester Research Inc. in Cambridge, Mass., is predicting a 1% drop in hardware spending this year.

It’s a byproduct of the pained U.S. economy, but there are silver linings. Bartels has one to suggest.

“If you’re a CIO and you’re trying to negotiate with Dell and HP and Cisco, they’re going to be hungry for business,” Bartels said. “You’re going to want to be aggressive about pushing for competitive bids.”

Midmarket CIOs planning hardware purchases in the coming months should take time to shop around and solicit bids from competing manufacturers, Bartels said. Play the bids off each other and also pay attention to when you are buying.

“The classic situation is for CIOs to realize that a vendor at the end of the quarter is more willing to make deals because they’re trying to book business for the end of the quarter. That’s classic,” Bartels said. “Well, it’s going to be greater this quarter.”

Overall spending on IT products — including software and services — in the U.S. should increase about 2.8% this year, down from an estimated 6.2% increase last year, according to a report by Bartels and other Forrester analysts. Released Feb. 11, it revises downward a previous prediction of 4.6% growth in the market.

To make their predictions, analysts at Forrester considered data on IT investment and economic growth and also considered the financial reports of 46 major IT vendors.

The other good news buried in the economy talk is that an IT downturn should be mild — at least compared with the woes of the national economy as a whole.

The U.S.gross domestic product grew at an annual rate of only 0.6% in the fourth quarter of last year, down from a 4.9% annual rate in the third quarter.

But a survey of 1,500 CIOs conducted late last year by Gartner Inc. in Stamford, Conn., projected a 3.3% increase in U.S. IT budgets in 2008. The Forrester report predicts a similar increase. Analysts at Gartner plan to “double check” by conducting the survey again in light of recession fears.

But a Gartner report claims IT spending won’t drop so far as to actually send the industry into recession. It’s consumer spending that will spiral, the report argues — the result of the nation’s recent home foreclosure crisis.

“While a recession may still hit the U.S., we as yet see no evidence that IT spending — especially new IT capital spending — will experience negative growth in 2008,” Gartner fellow and vice president Ken McGee wrote in the Feb. 1 report.

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