IDC lowers IT spending forecast for 2014

Worldwide IT spending to grow 4.1% this year, down on forecast of 4.6%

Tags: IDC Middle East and Africa
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IDC lowers IT spending forecast for 2014 'Wild cards' such as the Ukraine crisis and China slowdown had added to a sense of uncertainty, IDC said
By  Tom Paye Published  May 18, 2014

IDC has predicted that worldwide IT spending will increase by 4.1% this year, down from the research firm's previous forecast of 4.6%.

The projected growth will also be down from last year's growth of 4.5%, IDC said in a statement. The research firm's reasoning was that IT spending had been volatile since the beginning of the year, thanks to "macroeconomic wild cards", such as the crisis in Ukraine and the slowdown in China.

Such events have added to a general sense of uncertainty, IDC said, which continues to impact business confidence and investment.

However, IDC had a more positive outlook for the second half of 2014, when pent-up demand should drive a more positive capital spending cycle, it said. In mature economies, organisations will take advantage of a more stable business climate to replace ageing infrastructure, including servers, storage and network equipment, IDC said.  

And in some emerging economies, stabilisation after the slowdown that began in 2013 could drive a period of catch-up spending, particularly in China, the research house added.

Indeed, if it wasn't for a significant weak spot identified by IDC in the IT market, IT spending this year would see moderate growth. Growth in mobile devices has slowed, due partly to price erosion and a more mature installed base, IDC said. Excluding mobile phones, growth in 2014 will accelerate slightly from 2.9% to 3.1%, due to the expected pickup in IT infrastructure investment and the related downstream effect on IT services revenues.

"As smartphone growth continues to cool from the phenomenal expansion of the past few years, tablet shipments have performed weaker than expected over the past couple of quarters," said Stephen Minton, vice president at IDC's Global Technology & Industry Research Organisation (GTIRO).

"This volatility, coupled with the macroeconomic uncertainty in many emerging markets, is somewhat masking a more positive underlying foundation for enterprise IT spending, with firms continuing to invest in working off that pent-up demand to replace old servers, storage and network gear."

Minton added that some of that spending is also driving IT services, despite the fact that an increasing number of businesses are moving more of their traditional IT budget to the cloud. IDC predicted that around 10% of software spending will have moved to the cloud by the end of 2014, while infrastructure-as-a-service (IaaS) will represent 15% of all spending on servers and storage.

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