A slowdown in the growth rate for tablet and mobile phone sales and economic uncertainty in emerging markets are putting a damper on global IT spending, according to IDC.
Worldwide IT spending will increase 4.1% in constant currency this year, to $3.7 trillion (€2.7 trillion) IDC said Friday. That is down from last year’s 4.5% growth and from IDC’s prior forecast of 4.6% growth.
The move to cloud technology and pent-up demand to replace old servers, storage and network gear provides a solid foundation for IT spending, according to IDC. Especially in the latter half of the year, enterprises may end up doing some catch-up spending to replace old equipment.
But “wild cards” in the economy for Europe and Asia, an erosion of mobile phone prices and a slowdown in the tablet market caused IDC to cut expectations for IT spending for the year.
Part of the problem is that it is difficult for smart phone and tablet vendors to maintain the extraordinary sales growth they have experienced over the past few years.
“As smart phone 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 in IDC’s Global Technology and Industry Research Organisation, in a statement.
In March, IDC forecast the total tablet market, including tablets and 2-in-1 devices, to grow 19.4% in 2014, down from a growth rate of 51.6% last year. IDC also said earlier this year that worldwide smart phone shipments would be 1.2 billion units — that is a 19.3% jump over last year, but represents a much smaller increase in% terms than 2013’s 39.2% rise.
Otherwise, the crisis in Ukraine has provoked a sense of uncertainty in Europe, and IDC expects IT spending in Russia to decline by almost 1% this year. The slowdown in Russia will have an impact on other countries in the region, IDC said.
In Asia, “China remains a wild card,” IDC said in its report. Demand for IT spending after the slowdown of 2013 could help buoy IT spending in the country. However, IDC noted that some economists are forecasting that Chinese GDP growth could slump below 7% in 2014 and 2015.
Based on exchange rates in the first quarter, the 4.1% growth in constant currency terms translates to just 3.4% growth in US dollars, as currency volatility hits US-based vendors, IDC noted.
Marc Ferranti, IDG News Service
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