Companies’ spending on technology infrastructure is expected to jump more than 10 percent next year, according to research firm Moody’s Economy.com, the Boston Globe reports.
The company estimates that business investments in hardware and software, such as computer servers, networking applications and storage equipment, will jump 11 percent in 2006, up from $492.5 billion in 2005 to $546.9 billion next year.
“Businesses are flush with cash,” said Mark Zandi, chief economist for Moody’s Economy.com. “They’re looking for ways to expand. The equipment they invested in for Y2K is rapidly deteriorating. So I see business demand as being strong next year.”
Zandi suggests technology investments will exceed the peak levels seen in 2000.
Forrester Research Analyst Andrew Bartels is not so optimistic for tech spending in 2006. Bartels thinks companies are still only two-thirds of the way through a period of “technology digestion” following spending sprees in the late 90s, the Globe reports.
“Economically, we’ll see some growth in 2006,” Bartels said. “But then we see the economy running out of steam because of high energy prices, high interest rates, and flattening of the housing market.”