2013: The Year Of IT Economic Recovery?

January 7, 2013 Jenny Thomas

Since we are just a week in to the new year, it might still be a little too soon to say with absolute confidence how the various economies of the world are going to fare. However, the Gartner analysts are bullish about saying we should see pocketbooks opening a little wider for IT spending in 2013, predicting worldwide IT spending will total $3.7 trillion this year, a 4.2 percent increase from 2012 spending of $3.6 trillion.

Just to be clear, since we’re all a bit beat up by the economic uncertainty that has characterized the past several years, this is good news. This 2013 outlook for IT spending growth in U.S. dollars has been revised upward from 3.8 percent in the 3Q 2012 forecast put out by Gartner. Also to be clear, Gartner analysts said much of this spending increase is the result from projected gains in the value of foreign currencies versus the dollar. When measured in constant dollars, 2013 spending growth is forecast to be a slightly muted 3.9 percent. But that is still better than what we saw in 2012.

“Uncertainties surrounding prospects for an upturn in global economic growth are the major retardants to IT growth,” said Richard Gordon, managing vice president at Gartner. “This uncertainty has caused the pessimistic business and consumer sentiment throughout the world. However, much of this uncertainty is nearing resolution, and as it does, we look for accelerated spending growth in 2013 compared to 2012.”

Gartner’s outlook on the future is bright, with growth predicted across the board, as you can see on this chart:

New for 2012 and going forward, Gartner broke up its “computer hardware” category into two new categories: devices and data center systems. With the explosion of smartphones and tablets basically messing with the curve of the traditional computer hardware category, this split reveals spending on devices is more than four times what is happening in data centers. We also learn that in 2012 spending on devices (including PCs, printers, thin clients, smartphones, and tablets) increased over spending on data center gear (including servers, switches, and storage).

The table above also shows us that Gartner thinks businesses will be spending a lot on devices, up 2.9 percent in 2012 to $627 billion and up 6.3 percent in 2013 to $666 billion. This level of spending blows away spending and growth rates alike for data center systems, which rose by 2.3 percent to $141 billion in 2013 and are anticipated to rise by 4.5 percent this year to reach $147 billion. Growth rates for these two hardware categories will even out to 4.2 percent in 2014, with device spending being 4.5 times that of data center hardware spending.

While worldwide devices spending is forecast to reach $666 billion in 2013, this is a significant reduction in the outlook for 2013 compared with Gartner’s previous forecast of $706 billion in worldwide devices and 7.9 percent growth. The long-term forecast for worldwide spending on devices has been reduced as well, with growth from 2012 through 2016 now expected to average 4.5 percent annually in current U.S. dollars (down from 6.4 percent) and 5.1 percent annually in constant dollars (down from 7.4 percent). These reductions reflect a decline in the forecast growth in spending on PCs and tablets that is only partially offset by marginal increases in forecast growth in spending on mobile phones and printers. Gartner blames competition in the tablet market that will result in reduced selling prices for the slower than expected growth in the tablet category.

The biggest mover on Gartner’s chart, in terms of percentage of growth, is enterprise software spending, which is forecast to total $296 billion worldwide in 2013, a 6.4 percent increase from 2012. This segment will be driven by key markets such as security, storage management, and customer relationship management. Gartner warns that this change will be short-lived as it predicts that beginning in 2014, markets aligned to big data and other information management initiatives, such as enterprise content management, data integration tools, and data quality tools will begin to see increased levels of investment.

The global telecom services market continues to be the largest IT spending market. Gartner analysts predict that growth will be predominately flat over the next several years as revenue from mobile data services compensates for the declines in total spending for both the fixed and mobile voice services markets. By 2016, Gartner forecasts that mobile data will represent 33 percent of the total telecom services market, up from 22 percent in 2012.