IDC Lowers Expectations for IT Spending as Sequester and Global Economic
Uncertainty Take a Bite Out of Business Confidence
Worldwide IT spending growth projected to be 4.9% this year, down from 5.6% in
FRAMINGHAM, Mass. -- May 14, 2013
According to the just released International Data Corporation (IDC) Worldwide
Black Book (Version 1, 2013), IT spending was slightly below expectations in
the second half of 2012 and first quarter of 2013. Economic uncertainty
surrounding the U.S. government sequester, European debt crisis, and weakening
GDP in China has resulted in volatile spending patterns across most segments
of the market, with many IT vendors reporting difficulty closing deals at the
end of Q1 2013. IDC now projects worldwide IT spending growth of 4.9% this
year in constant currency, down from the previous forecast of 5.5% growth and
representing a slowdown from the 5.6% growth recorded in 2012. As a result,
worldwide IT spending is forecast to reach $2.06 trillion in 2013. Worldwide
ICT spending, which includes telecom services spending, will increase by 4.5%
to $3.7 trillion.
The strength of the U.S. dollar may continue to have an adverse impact on the
reported revenues of U.S.-based IT vendors. In 2012, IT spending increased by
just 2.9% in U.S. dollars, a significant downturn from 9.5% U.S. dollar growth
in 2011. Based on average exchange rates from Q1 2013, this year's growth is
on track to increase by 4.2% in U.S. dollar terms.
Deteriorating PC Shipments
The reduction in IDC's overall forecast for 2013 is largely driven by rapidly
deteriorating PC shipments since the second half of 2012. According to the new
report, IDC now expects PC spending to decline by 3% in constant currency this
year, representing a third successive year of declining PC revenues. The shift
to mobile devices remains a key driver for overall tech spending growth.
Excluding mobile phones and tablets, worldwide IT spending increased by only
2.8% in 2012 and is forecast to grow by just 2.6% this year. Worldwide
spending on smartphones will increase by 17% in 2013 while tablet spending
will grow by 32%.The combined growth rate for PCs and tablets, meanwhile, will
remain stable in the range of 4-5%.
"Cannibalization has accelerated over the past two quarters," said Stephen
Minton, Vice President in IDC's Global Technology & Industry Research
Organization (GTIRO). "The trickle of substitution is becoming a flood, as
many organizations look for ways to do more with less in the context of an
uncertain economy in which CFOs are attempting to protect profitability by
limiting the size of budget increases. Just as outsourcing got its boost from
the 2001 recession, and virtualization from the financial crisis of 2009,
low-cost mobile devices and the cloud are being partly driven by the
willingness of businesses to look for new ways of getting things done in
return for improvements in efficiency, scalability, and cost of ownership."
Cloud Services Cannibalizes Software and IT Services
Just as tablets are cannibalizing PC spending, so the growth of cloud services
continues to cannibalize commercial software and IT services. Software
spending in the U.S. grew slightly slower than forecast in 2012, and IDC has
consequently reduced the U.S. software forecast to 6% growth for 2013 (from
7%). IT services demand remains stable, but the pass through from capital
spending and software deployment remains tepid by historical standards. IDC
now forecasts growth of 5.6% in worldwide software spending in 2013 (constant
currency), and 3.8% in IT services.
Decline in Server Revenues
Meanwhile, the report suggests a decline in overall server revenues while
storage infrastructure spending will cool somewhat after the major spending
cycle of 2011/2012. IDC now projects 2.4% growth in worldwide storage hardware
revenues this year, down from 6.1% growth in 2012. Network infrastructure
investment was strong in 2012, as many carriers invested in the deployment of
LTE networks, but this will also cool in 2013. Service provider spending on
network equipment will increase by 1.1% this year, compared to 5.8% in 2012.
Enterprise network spending should remain more stable, projected to post
growth of 6.8%.
Emerging markets are still the engines of growth for worldwide IT spending,
with strong trends continuing in markets such as India and Brazil in recent
months. The weakest performing geographies will be Western Europe and Japan,
where slow economic growth is inhibiting IT spending while the U.S. market
remains fragile in the context of political uncertainty. "It's all about the
economy," continued Minton. "Our surveys confirm that underlying demand for IT
products and services remains strong, but that businesses are once again being
forced to delay new projects or investments in the face of longer
decision-making cycles and a lack of short-term visibility. This storm could
pass quickly, if governments in the U.S., Europe, China, and Japan succeed in
steering their ships towards calm waters in the second half of the year."
IDC's Worldwide Black Book provides forecasts for IT spending in 54 countries
around the world. The forecasts focus on 25 individual market segments across
hardware, software, IT services, and telecom services for individual countries
in all regions including North America, Latin America, Western Europe, Eastern
Europe, Asia/Pacific, the Middle East, and Africa. The Worldwide Black Book
Query Tool presents all data in the following exchange rate views: U.S.
dollars in constant currency, annual and year-to-date exchange rates, and
Additional products in this category include the Worldwide Enterprise Black
Book, which analyzes annual IT spending in relation to four company size
segments based on employee counts. The Worldwide Black Book, Premium Edition,
includes cloud spending forecasts, quarterly IT spending forecasts by region,
IT vendor market share analysis, macroeconomic indicators, IT/Internet
penetration, and CIO survey data. The United States Black Book: State IT
Spending by Vertical Market is a quarterly analysis of the status and
projected growth of the IT industry in 50 states and across 15 vertical
For additional information about this research, or to arrange a one-on-one
briefing with Stephen Minton, please contact Sarah Murray at 781-378-2674 or
email@example.com. To request information on custom data cuts or
subscription services, contact firstname.lastname@example.org.
International Data Corporation (IDC) is the premier global provider of market
intelligence, advisory services, and events for the information technology,
telecommunications, and consumer technology markets. IDC helps IT
professionals, business executives, and the investment community to make
fact-based decisions on technology purchases and business strategy. More than
1000 IDC analysts provide global, regional, and local expertise on technology
and industry opportunities and trends in over 110 countries worldwide. For
more than 49 years, IDC has provided strategic insights to help our clients
achieve their key business objectives. IDC is a subsidiary of IDG, the world's
leading technology media, research, and events company. For more information,
please visit www.idc.com, email email@example.com, or call 508-872-8200.
Meg Sullivan, 508-935-4237
Senior Marketing Specialist
Sarah Murray, 781-378-2674
Press spacebar to pause and continue. Press esc to stop.