The uncertain global economy in general-and Europe in particular-is helping tamp down IT spending worldwide this year, though how hard IT spending will be hit depends on who's doing the calculating.
According to the analysts at IDC, when measured in terms of constant currency, IT spending worldwide should increase 6 percent over 2011, to $2.1 trillion, thanks in part to the continued popularity of smartphones, tablets, storage technology, software and networking products. However, Forrester analyst Andrew Bartels is forecasting much slower growth of 3.6 percent.
In terms of U.S. currency, IDC is expecting growth of about 4 percent, while Bartels is forecasting 1.3 percent.
Despite the differences in outlook, both the IDC analysts and Forrester's Bartels said the two key factors in keeping IT spending growth lower than usual are the struggling economy worldwide and the better-than-expected strength of the U.S. dollar against other major currencies.
"Overall â¦ the tech market outlook for 2012 is not bright," Bartels wrote in a Sept. 10 blog post. "Growth of 3 percent to 4 percent is unimpressive, even taking into account weak growth in the U.S. and European recession. Things will improve in 2013, with local currency growth edging up to 5.1% and U.S. dollar growing of 4.3%. But there will need to be a significant improvement in global economic growth before global tech markets will boom."
In January, Forrester predicted that IT spending by businesses and government agencies would grow 5.4 percent in U.S. dollars. Bartels said he is seeing slower economic growth in a number of regions, not only Europe and the United States, but also emerging markets like China and India, which in the past have been drivers of growth even as more mature markets leveled off.
Still, he said, most of the slowdown is happening in Europe, which is struggling with troubles with the euro and economies such as Greece, Spain and Italy, and in terms of product categories, the communications equipment market is being particularly hard hit. The United States and Asia will see IT spending increases of 4 to 5 percent, and emerging markets in regions such as Latin America, Eastern Europe, Africa and the Middle East will jump 8 percent.
However, in Western and Central Europe, the tech market will drop 2.5 percent.
Many IT product segments will grow 4 to 5 percent-such as software, IT consulting, systems integration services, and IT outsourcing-and computer equipment will rise 3 percent. However, communications equipment spending will drop by almost 1 percent.
There will still be demand for software as a service, smart process apps and analytics-all expected to jump 12 percent in spending-as well as Apple's Mac computers, which will see a 9 percent growth in business sales, and tablets from both Apple and vendors using Google's Android operating system.
IDC analysts had a brighter outlook in the report they issued Sept. 10. While sales of PCs, servers, peripherals and telecommunications provider equipment were weaker than normal, that was offset to some extent by strong growth in software, storage, networking and mobile device sales, according to Stephen Minton, vice president of IDC's Global Technology and Industry Research Organization.
"In spite of economic uncertainty, which continues to inhibit enterprise investment in some tech segments, the continuing demand for tablets, smartphones, storage capacity and network-performance improvements actually outperformed expectations in the first half of the year," Minton said in a statement. "Software spending has been robust, even in regions where economic trends have been weakest, as businesses turn to software tools and applications as a means of implementing cost-reduction strategies."
In the United States, IT spending will rise 5.9 percent, down from the 8.5 percent increase in 2011, though IDC analysts expect that the launch next month of Microsoft's Windows 8 will help revive PC sales. The emerging markets, including Russia, India, Brazil and China, will see growth in IT spending of 8 to 14 percent. By comparison, Japan will see only a 2 percent bump, while Europe's IT spending will grow 1 percent.
"While this is a tough year for many IT vendors, the overall performance of the industry has been healthier than many expected in the first half of this year," Minton said. "In particular, the strength of software spending seems to prove that many enterprises have unlocked significant productivity and efficiency improvements. If the economy avoids downside scenarios in the second half of the year, a PC upgrade cycle in 2013 should help to maintain this momentum."