Smartphones Boost IT Spending

November 25, 2013 by Nicolas A. Zeitler 0

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If it were not for buoyant smartphone sales, the pace of growth in global IT spending would be 40% slower. This is reflected in new figures recently released by market researchers IDC. According to IDC, overall tech spending will reach US$2 trillion by the end of 2013. That’s an increase of 4.3% on the previous year. However, if you exclude sales of mobile devices, the increase is only 2.6%.

The predicted growth rate of just over 4% for tech spending in 2013 is the slowest acceleration since the financial crisis of 2009. This economically testing year was followed by a year of rapid spending growth in 2010 (8%) and increases of around 5% in IT expenditure in both 2011 and 2012. However, the analysts expect to see a return to stronger growth rates in 2014, when total IT spending is forecast to exceed US$2.1 trillion. IDC bases its prediction of buoyant growth on the expectation that key emerging markets like China and Russia will recover and that economies in Europe and the United States will continue to gain momentum.

More investment in PCs, servers, and storage in 2014

A slowdown in IT infrastructure investments in recent months means that total enterprise spending on PCs, servers, and storage components in 2013 will increase by only 1% over the previous year’s figure. However, IDC expects to see growth accelerate again next year, and is predicting an increase of 4% for these products.  “This has been a tough year for many IT vendors, with infrastructure spending in the first half of 2013 proving weaker than previously expected,” says IDC analyst Stephen Minton.

Next: A look at the forecasts by region

Here’s an overview of the outlook for each region:

USA: mobile devices account for 40% of growth

In the U.S.A.,  IT spending is expected to increase by 5% this year – or 3% if mobile devices are excluded.  Enterprise IT spending is relatively stable, but expenditure on PCs and servers is expected to slow this year, while investments in storage will remain at their 2012 levels.  Nevertheless, IDC predicts that these segments will grow again in 2014. However, with tablet shipments continuing to eat into PC sales, the PC market is unlikely to show much upward momentum.

With a brighter economic climate in many countries, IDC anticipates that growth in IT spending in Western Europe will reach 2% in 2013 (1% excluding mobile devices). As the overall economy continues to improve, growth is expected to advance to 3% in 2014, driven largely by burgeoning sales of enterprise software.

Although IDC is predicting 0% growth in Japan in 2013, this is nonetheless an improvement on the original forecast of a 1% decline.  Short-term economic initiatives by the Japanese government appear to have impacted positively on growth.

Next: China records weakest IT growth since 2008

In China, growth in IT spending in 2013 is set to fall to its slowest rate since 2008: 8%. This is nonetheless significantly higher than the average global growth rate.  Strengthening macroeconomic development will, says IDC, fuel a 14% increase in spending in 2014, driven mainly by stronger sales of PCs, servers, storage, software, and IT services.

Growth in India, slowdown in Brazil, and sharp decline and Russia

For India, IDC predicts only that growth will “remain broadly strong”, driven chiefly by smartphone and tablet sales. The analysts have detected a slowdown in growth in Brazil, while in Russia, the increase in enterprise IT spending is on course to fall from 15% in 2012 to 1% this year. However, IDC expects this figure to climb to 10% again in 2014, driven by burgeoning sales of smartphones, software, and IT services.

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