IT Spending Expected to Rebound in 2014: IDC
Worldwide IT spending is expected to accelerate next year after dipping to its slowest pace of growth since the financial crisis in 2013, according to a report from IT research firm IDC.
In 2014, a rebound in China and continued momentum in the United States and Europe would see a return to worldwide industry growth of more than 5 percent, reaching $2.14 trillion.
Global tech spending is on course to increase by 4 percent this year at constant currency, reaching $2.04 trillion, down from last year's growth of 5 percent, due mainly to the slowdown in key emerging markets, including China and Russia, the report noted.
Enterprise IT spending in many regions has been tepid since last year, with weaker spending on PCs, servers and storage than previously expected, with almost half of this year's industry growth 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, or just 0.7 percent in U.S. dollar terms, based on year-to-date exchange rates, IDC calculated.
"This has been a tough year for many IT vendors, with infrastructure spending in the first half of 2013 proving weaker than previously expected," Stephen Minton, vice president in IDC's Global Technology & Industry Research Organization, said in a statement. "The overall industry has been propped up by continued strength in mobile devices, especially smartphones, but the slowdown in emerging markets was another headwind for infrastructure-focused tech firms on top of government sequestration in the U.S. and continued sluggish growth in Europe."
The report highlighted tentative signs of stability in commercial PC shipments during the third quarter, which could foreshadow the gradual recovery in enterprise infrastructure investment, which IDC expects to unfold in the next 12 to 18 months as a broad-based capital spending cycle kicks into gear.
However, spending on servers, storage and enterprise networks will increase by just 1 percent in 2013, before improving to 4 percent growth next year. Both the storage and server markets in the United States are expected to improve in 2014, but the report cautioned that PC spending is likely to remain weak in spite of signs of stability in the third quarter as tablet cannibalization continues at lower price points.
"Momentum in developed economies has been broadly positive since the start of 2013," Minton continued. "The gradual turnaround in Europe is restoring business confidence, leading to a strengthening of our assumption that next year will be better than this year for most IT vendors. But while the news from developed economies has been mostly positive since January, the drag on overall industry growth this year has been the slowdown in emerging markets."
IDC forecast that IT demand would accelerate in China next year, in line with the firm's 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 growth pace since 2008. Next year, IDC forecasts an acceleration of growth to 14 percent led by strengthening sales of PCs, servers, storage, software and IT services.