On Friday, the freshly published International Data Corporation (IDC) Worldwide Black Book revealed that worldwide IT spending will increase by 4.1% in constant currency this year, down from IDC’s previous forecast of 4.6% and also down from last year’s growth of 4.5%.
According to IDC’s data shared with MMW, IT spending has been volatile since the beginning of the year, with macroeconomic wild cards including the crisis in Ukraine and the slowdown in China adding to the general sense of uncertainty which continues to impact business confidence and investment.
From the report summary:
Pent-up demand should, however, drive a more positive capital spending cycle in the second half of this year. In mature economies, organizations will take advantage of a more stable business climate to replace ageing infrastructure including servers, storage and network equipment. In some emerging markets, stabilization of the economy after the slowdown that began in mid-2013 could drive a period of catch-up spending, especially in China where IT spending has cooled significantly over the past 12 months.
Aside from macroeconomic wild cards, the other weak spot in the IT market since the previous quarter has been slowing growth in mobile devices (smartphones and tablets), due partly to price erosion and a more mature installed base. IDC has lowered its forecast for total IT spending growth this year from 4.6% to 4.1% in constant currency, primarily as a result of downward revisions to mobile device forecasts.
“As smartphone growth continues to cool from the phenomenal expansion of the past few years, tablet shipments have performed weaker than expected over the past couple of quarters,” explains Stephen Minton, Vice President in IDC’s Global Technology & Industry Research Organization (GTIRO). “This volatility, coupled with the macroeconomic uncertainty in many emerging markets, is somewhat masking a more positive underlying foundation for enterprise IT spending, with firms continuing to invest in working off that pent-up demand to replace old servers, storage and network gear. Some of that spending is also driving IT services, despite the fact that an increasing number of businesses are moving more of their traditional IT budget to the Cloud.”