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Global Outlook for 2014 Business Technology Investment

Overall business technology spending is on course to increase by 4 percent this year

Are you likely to increase your business technology investment next year? If you are, then you're not alone. Worldwide ICT spending is expected to accelerate in 2014, after dipping to its slowest pace of growth since the financial crisis in 2013, according to the latest market study by International Data Corporation (IDC).

Overall business technology spending is on course to increase by 4 percent this year at constant currency, reaching $2.04 trillion -- that's down from last year’s growth of 5 percent, due mainly to the slowdown in key emerging markets including China and Russia.

IDC forecasts that in 2014, a rebound in China and continued momentum in the U.S. and Europe will see a return to overall industry growth of more than 5 percent (reaching $2.14 trillion).

The Business Technology That Will Drive Growth
In fact, almost half of this year’s industry growth is due to continued strength in smartphone and tablet shipments. Excluding mobile phones, IT spending will increase by only 2.6 percent this year at constant currency (just 0.7% in U.S. dollar terms, based on year-to-date exchange rates).

Enterprise IT spending in many regions has been tepid since last year, with weaker spending on PCs, servers and storage than previously expected. Tentative signs of stability in commercial PC shipments during Q3, however, may foreshadow the gradual recovery in enterprise infrastructure investment which IDC expects to unfold in the next 12-18 months.

Spending on servers, storage and enterprise networks will increase by just 1 percent in 2013 before accelerating to growth of 4 percent next year.


Global Business Technology Market Assessments
While the U.S. market is on course to post IT spending growth of 5 percent this year, that translates into just 3 percent excluding mobile phones. Enterprise spending in the U.S. has been relatively resilient, given the ongoing political volatility, but spending on PCs and servers will decline this year while storage investment is flat.

Both the storage and server markets in the U.S. are expected to improve in 2014, but PC spending is likely to remain weak in spite of signs of stability in Q3 as tablet cannibalization continues at lower price points.

Market conditions are gradually improving in Western Europe, where overall IT spending is on course for growth of 2 percent this year (1% excluding phones), and where economic momentum has taken a turn for the better in many countries.

IDC assumed that this gradual recovery will continue next year, translating into IT spending growth of 3 percent driven mainly by strengthening sales of commercial software. This year has also seen a moderate improvement in Japan, driven by the government’s short-term policy initiatives; while IT spending is on course to be flat in 2013 (0% growth), this marks an improvement from our previous forecast of a 1 percent decline.

IDC forecasts that IT demand will accelerate in China next year, in line with their expectation that macroeconomic growth and business confidence will improve. In China, overall IT spending is on course to increase by just 8 percent this year, the weakest pace of growth since 2008 -- next year, they forecast an acceleration of growth to 14 percent led by strengthening sales of PCs, servers, storage, software and IT services.

Growth in India will remain broadly strong, driven mainly by smartphones and tablets, but IDC expects a slowdown in PC sales after state-level government initiatives helped to drive strong growth in 2013, while there are also signs of weakening growth in other sectors.

A gradual deceleration in tech spending is also emerging in Brazil, while in Russia the economic slowdown has driven overall industry growth to just 1 percent this year (from 15% in 2012). IDC says that they forecast a rebound in Russia to 10 percent growth next year, driven by smartphones, software and services.

Read the original blog entry...

More Stories By David H Deans

David H. Deans is the Managing Director at the GeoActive Group. He has more than 25 years of experience in the Technology, Media and Telecom sectors.

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