60% of corporate clients surveyed by Merrill Lynch & Co in its latest technology report say hardware spending had increased. 45% said spending could well decrease next year. They told the brokerage that PCs would be likely candidates for the chop, not data centers. Services are now accounting for 30% of IT budgets with quality being more important than cost. One third of respondents have actually outsourced operations. IBM followed by HP, Compaq, EDS and Andersen Consulting were the leading services suppliers. While two-thirds of the companies are doing in electronic commerce and are enjoying improved cycle times and improved customer relationships. Although no vendor is reckoned to have a significant mindshare IBM and Microsoft were most mentioned. Merrill Lynch says IBM has scored points with its e- business ads but needs to follow-through with product and Microsoft will be there if it can bolster its corporate offerings. Interestingly, while Sun was mentioned, the brokerage is getting concerned that Sun has branded the ingredient (Java) but not the solution.