Global Tech Spending Remains Strong, Despite Economy

By CIOinsight

IT spending increased by 5 percent at constant currency in 2011, despite the worsening economic situation in Western Europe and volatility in other regions, according to the IDC Worldwide Black Book. Emerging markets continued to lead the way, with tech spending in the BRIC countries (Brazil, Russia, India and China) enjoying another year of double-digit growth. Strong demand for mobile devices and software across most regions ensured a positive finish to the year, despite the impact of the hard disk drive (HDD) shortage on PC markets.

In U.S. dollar terms, the IT industry grew by almost 9 percent in 2011, but the report warned year-to-year comparisons could be difficult for U.S.-based IT vendors this year if currency conditions are less favorable. In constant currency, IDC projects another year of 5 percent growth for worldwide IT spending in 2012. Hardware and software spending are each forecast to increase by 6 percent (in constant currency), with 4 percent growth in IT services.

Strongest growth in 2011 came from smartphones (+46 percent), software (+6 percent) and disk storage systems (+6 percent). Businesses continued to invest in infrastructure upgrades, along with new software applications and mobile devices (including tablets). IDC said these positive trends are expected to continue in 2012, when enterprise spending on network equipment will also accelerate as many organizations invest in network upgrades to cope with the continuing increase in digital information, which will meanwhile ensure another positive year for the storage market. By the end of 2012, the PC industry will also return to positive growth, the report noted.

"There are risks to the outlook for 2012, mainly related to macroeconomic weakness in Europe, where IT spending is still weak," said Stephen Minton, vice president of IDC s global technology and industry research organization. "In a downside scenario, things could get much uglier in Europe and have a ripple effect through other regions. But leading indicators in the U.S. have improved in recent months, and emerging markets show no signs of a slowdown yet."

The macroeconomic crisis in Europe has already had a severe impact on IT spending in that region, according to IDC's research. Overall IT investment was flat in 2011, with declines in spending on PCs, servers, storage, peripherals and enterprise network equipment. The recovery in Europe will be a long haul, with less than 1 percent growth this year and 3 percent in 2013.

"Europe is going to be a long, drawn-out recovery," said Anna Toncheva, program manager and economist in IDC's global technology and industry research organization. "The debt crisis will take a long time to resolve, and there are numerous downside risks, which could yet see the unraveling of the European single currency and, in the near term, an escalation of the crisis due to sovereign debt defaults in peripheral Eurozone countries."

In other regions, however, the momentum of 2011 is still evident in recent polls, which show continuing enthusiasm for tech investment among businesses and consumers. In the U.S., where IT spending increased by 7 percent last year, 2012 is likely to bring another year of solid growth (5 percent) driven by mobile devices, software and network equipment. Japan will see a return to positive growth, after the declines triggered by last year s tsunami and earthquake disaster. IT spending in Brazil, Russia, India and China will be up by 9 percent, 11 percent, 16 percent and 15 percent, respectively.


To read the original eWeek article, click here: Tech Spending Remains Strong, Despite Economic Volatility: IDC
This article was originally published on 02-07-2012