IDC Says IT Spending Will Come In A Bit Higher In 2014

August 11, 2014 Timothy Prickett Morgan

We are more than halfway through the year, and the forecasters at IDC have taken a look at the state of the economies of the world and the political situation around the globe and come up with a new IT spending forecast for 2014.

The good news is that after revising its forecast down back in May, spending is now projected to rise as much this year as it did last year. To be specific, IT spending will rise by 4.1 percent as expressed in U.S. dollars and at 4.5 percent in constant currency. Three months ago, the economists who put together IDC’s Worldwide Black Book were expecting growth to be four-tenths of a point lower. Back then, uncertainty in the Ukraine and the slowdown of the economy in China was putting a damper on revenue projections for sales of hardware, software, and services in the IT sector. A strong PC refresh cycle among corporations as Windows XP comes to the end of its long life is also helping, as is continued robust spending on smartphones; tablet spending is in fact slowing as companies decide to upgrade their PCs instead of their tablets.

“At the beginning of 2014, we asserted that businesses would choose to fix the roof while the sun was shining,” says Stephen Minton, who is vice president of the Global Technology & Industry Research Organization at IDC that does economic forecasts. “Unfortunately, the weather was literally much colder than expected during the first quarter. The good news is that the U.S. economic outlook has already brightened and this will drive a period of moderate but long-awaited investment in mission-critical infrastructure over the next year. However, accelerating adoption of cloud services will continue to impact sales of traditional on-premise equipment, packaged software, and IT services. This capital spending cycle will be mild by historical standards.”

If you take out mobile phones from the projections, then overall IT spending is going to rise by only 2.8 percent in US dollars and 3.1 percent at constant currency, says Minton. Total IT spending will almost hit $2.1 trillion this year, and if you toss in telecommunication services, then it will rise by 4 percent to hit $3.7 billion.

Everyone is looking at China, and spending growth is now forecast to rise by 5 percent. Server spending in China was flat last year but will rise by 7 points this year, which is good news for indigenous server makers in the Middle Kingdom and maybe a mixed bag for the US-based tier one server makers who use to do business hand over fist in China only a few years ago. Storage spending in China is anticipated to grow by 8 percent (compared to 1.5 percent last year) and software will rise by 9 percent (compared to 7 percent in 2013). India and Brazil are expected to recover and accelerate in 2014 and 2015, with India up 8 points in 2014 and 15 points the year after and Brazil up 10 points this year and 13 points next year. Russia, the other BRIC country, is going to have a slight decline this year thanks to the political turmoil in the Ukraine, but will bounce back with 7 percent growth in 2015.