The Bad News Is Good For 2013 Worldwide IT Spending
July 8, 2013 Jenny Thomas
Sometimes the best way to deliver bad news is to try to say it so it seems like good news. That’s the approach the analysts at the information technology research and advisory company Gartner are taking with their latest projections on worldwide IT spending for 2013.
The Gartner analysts put on a brave face and released their latest estimate that worldwide IT spending will hit $3.7 trillion in 2013. Sounds great! And it is when you consider that this is a 2 percent gain over 2012, which Gartner also recently revised up from its original guesstimate to a final total of $3.6 trillion.
So here’s the thing about the good news. Last quarter, Gartner’s forecast for 2013 IT spending growth in U.S. dollars was 4.1 percent. It doesn’t take a mathematician to see 2.1 percent has gone missing somewhere, which is a significant chunk of change when you’re talking in the trillions of dollars. Gartner does have some explanations for the reduction. Firstly, recent fluctuations in U.S. dollar exchange rates are hurting estimates. And while it’s not untrue the U.S. dollar is shrinking, when IT spending in constant currency rates is compared to rates from a year ago, then the global IT budget for hardware, software, and services will grow 3.5 percent in 2013, down only a half point from the March spending estimates.
The big hit is in end-user business devices. The forecast for spending on devices in 2013 has been revised down from 7.9 percent growth in Gartner’s previous forecast to 2.8 percent. It is easy to see how a drop of over 5 percent in would have an impact on the bottom line. Gartner reports that the decline in PC sales, which was recorded in the first quarter of 2013, continued into the second quarter with little recovery expected during the second half of 2013. While new devices are set to hit the market in the second half of 2013, they will fail to compensate for the underlying weakness of the traditional PC market.
So where are the tablets and mobile phones to save the day? They are pulling their weight. The outlook for tablet revenue for 2013 is for growth of 38.9 percent, while mobile phone revenue is projected to increase 9.3 percent this year. Sadly, while new devices are set to hit the market in the second half of 2013, they won’t make up the ground lost in PCs.
Enterprise software spending is also bringing in the bacon with growth of 6.4 percent estimated for 2013. Expectations for customer relationship management have been raised to reflect expanded coverage into e-commerce, social and mobile, and gains are expected in telecom services, where spending is forecast to grow 0.9 percent in 2013. Fixed broadband is also showing slightly higher than anticipated growth.
Other ground is expected to be lost in digital content creation and operating systems, where reductions are anticipated as software as a service and changing device demands impact traditional models and markets.
Gartner analysts will discuss their latest thinking on IT spending growth through 2017 during a webinar on July 9 at 11 a.m. EDT. You can register for the webinar, “IT Spending Forecast, 2Q13 Update: The Impact of Mobility on Spending,” for free here on the Gartner website.
Truthfully, it is good news, maybe unless you’re a PC maker. I don’t know anyone who wouldn’t consider a gain, no matter how small, as a bright spot after the listless economies that still darken nations worldwide.