IT Budgets Down In Europe, Up Slightly Globally In 2012
November 12, 2012 Timothy Prickett Morgan
Those of us who live and work in the United States can sometimes forget that other parts of the world are affected by what we do and we are affected by what they do. And so it is that we ponder IT spending in Europe, which is not doing great here in 2012, and for the world at large. Hope springs eternal, and according to the prognosticators at Gartner, IT spending will be on the upswing in 2013 in EMEA and the world over and carry on growing modestly through 2016.
“This year is a pessimistic year for IT spending in Europe,” conceded Peter Sondergaard, senior vice president at Gartner and global head of research, in discussing the forecasts for European IT spending. “In 2012, we estimate that IT spending will decline 3.6 percent in EMEA and 5.9 percent in Western Europe. However, the EMEA region will return to growth in 2013 and continue to grow through 2016 when spending will reach $1.247 trillion.”
Sondergaard was speaking at the Symposium/ITxpo 2012 event in Barcelona, Spain, a town and country that has taken its lumps in recent years thanks to the Great Recession, and the news that IT spending would be down this year was no doubt not much of a surprise to the 4,000 attendees.
To be precise, Gartner is forecasting that IT spending in Europe, the Middle East, and Africa, which are usually talked about as one unit by economists and businesses, will hit $1.138 trillion this year when gauged in U.S. dollars. Spending on mobile devices of various kinds–smartphones, ultrabooks, notebook PCs, and tablets–will collectively account for $136 billion in spending this year, and is now projected to grow to $188 billion four years from now across the EMEA region. That is 12 percent of all IT spending this year and 15.1 percent four years from now. Tablet sales are projected to be up 8 percent in Western Europe this year, but notebooks are expected to see a 5 percent decline in that subset of the region.
Garter says that by 2016, the end of its forecast period, two-thirds of the workforce in EMEA will have a smartphone or a tablet, and they will expect for applications to work properly on them. Thus, Gartner says that software makers will have to retool their applications to work on these devices. But the good news is that companies and consumers alike will be willing to spend more dough to get software functionality ported to these new mobile platforms, and that is driving aggregate software sales in EMEA. Gartner says software revenues in EMEA across all types of software will rise by 3.1 percent this year and should break the $100 billion barrier by 2016.
Gartner released its update for IT spending all around the world, and cut back its projections for 2012 due to the strengthening U.S. dollar against other currencies. Richard Gordon, the VP of research at Gartner who does projections, cut back his global IT spending to only 1.7 percent growth, to $3.55 trillion over 2011’s $3.5 trillion. We had a nice 7.8 percent bump last year, and we are not getting anything like that this year.
That said, if you take out the effects of converting sales to the U.S. dollar and measure sales in local currencies within their regions, then the aggregate global IT growth rate will be probably closer to 5 percent growth this year, Gordon explained on an interview on the Gartner site going over the latest projections for 2012 spending.
As you can see, on a global basis, Gartner is projecting that IT spending from 2013 through 2016 inclusive will grow at around 4 percent per year, give or take a little. It is not clear what currency effects are built into those estimates, but it very likely includes an ever-strengthening greenback and therefore a dampening effect from currency exchange rates. That said, IT spending will be nearly $1 trillion higher in 2016 than it was in 2010. Even with inflation taken out of those numbers, that is still a phenomenal amount of extra cash that the world is pouring into systems, software, services, and telecom.
The question is, why don’t we all feel richer?