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IDC: Worldwide IT Spending Growth To Slow in 2014

Worldwide IT spending growth will slow to 4.6 percent this year (down from the previous forecast of 5 percent), according to a new report from market research firm IDC. IDC's Worldwide Black Book provides forecasts for IT spending in 54 countries around the world, focused on 25 individual market segments across hardware, software, IT services and telecom services.

The main culprits, according to IDC: economic slowdown in emerging markets (with currency devaluation and inflation inhibiting business confidence), plus an inevitable deceleration in the massive growth of smartphones and tablets.

While overall industry growth has cooled, some areas of tech spending are heating up as businesses in mature economies (including the U.S. and Western Europe) begin to invest in overdue infrastructure upgrades and replacements, according to the report. This year, spending on servers will increase by 3 percent (after last year's decline of 4 percent) and storage spending will grow by 3 percent (following a 0.5 percent decline in 2013). The PC market is showing tentative signs of stabilization, with improving commercial shipments in mature markets. The increased pace of hardware investment will have a positive effect on IT services revenue, which is forecasted to post growth of 4 percent this year (up from 3 percent in 2013). Enterprise software spending remains strong, with growth expected in the range of 6 percent to 7 percent.

"The inevitable slowdown in the explosive pace of smartphones and tablets is masking an underlying improvement in many areas of IT spending," said Stephen Minton, Vice President in IDC's Global Technology and Industry Research Organization (GTIRO), in a prepared statement. "Businesses in mature economies are beginning to feel more confident about the economy compared to a year ago, and this is translating into new IT investments. There's significant pent-up demand in the U.S. and Europe for infrastructure upgrades, capacity and bandwidth investments, and overdue replacement cycles. Many businesses will choose to fix the roof while the sun is shining in 2014."

The report noted that there are still significant inhibitors that will keep IT spending growth moderate by historical standards. Cannibalization remains a broad trend, impacting everything from PCs (tablets) to software and services (cloud) and ensuring major disruption for individual vendors. Price erosion and commoditization in hardware have spread to mobile devices. While showing signs of bottoming out, the PC market continues to post year-on-year declines in revenue terms, and telecom infrastructure investment remains tepid in many countries as carriers compete for a more mature customer base.

Nevertheless, IDC sees IT market fundamentals as more solid this year than last. "At the end of 2013, we passed the $2 trillion mark in annual IT spending for the first time in history, and $1 trillion in hardware spending," said Minton. "This year's milestones will include half a trillion dollars in spending on mobile devices alone (phones and tablets), and more than $400 billion on software. With some markets on the up while others are on the down ... there will be as many losers as winners in the next 12 months."

The Worldwide Black Book data is available on the IDC site (paywall).

About the Author

About the author: Rhea Kelly is executive editor for Campus Technology. She can be reached at rkelly@1105media.com.

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