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IDC slashes 2013 worldwide IT spending forecast

Market watcher blames dwindling PC sales and global economic unrest for revising down spending figures.

over spending

Market watcher IDC has slashed its 2013 IT spending growth forecast, driven in part by the continued decline in PC shipments.

The analyst house said IT spending during the second half of 2012 and first quarter of 2013 fell below market expectations, with many IT vendors reporting problems closing deals.

This it blamed on a mix of global economic problems, including the ongoing European debt crisis, which had left many firms unwilling to invest as much as previously forecast on IT.

As a result, IDC has revised down its worldwide IT spending growth forecast from 5.5 per cent to 4.9 per cent for 2013.

As well as the uncertain global economic landscape, IDC said the decision to downgrade its spending forecast had been "largely driven" by the rapid decline in PC shipments since the second half of 2012.

This is a trend IDC expects to continue, with PC spending expected to fall by three per cent this year, which would make 2013 the third successive year of declining PC revenues.

As stated in previous reports from IDC and fellow market watcher Gartner, the ongoing decline in PC shipments has been largely attributed to the increasing popularity of tablets and smartphones.

"The shift to mobile devices remains a key driver for overall tech spending growth," said IDC in a statement.

"Excluding mobile phones and tablets, worldwide IT spending increased by only 2.8 per cent in 2012 and is forecast to grow by just 2.6 per cent this year,

"Worldwide spending on smartphones will increase by 17 per cent in 2013 while tablet spending will grow by 32 per cent," it continued.

It's not just the PC sales that are being affected by the emergence of newer technologies, as the rise of cloud is also taking its toll on commercial software and IT services sales, said IDC.

"Just as tablets are cannibalising PC spending, so the growth of cloud services continues to cannibalise commercial software and IT services.

"IT services demand remains stable, but the pass-through from capital spending and software deployment remains tepid by historical standards."

Stephen Minton, vice president of IDC's Global Technology and Industry Research Organisation, said the cannibalisation trend has accelerated over the past two quarters.

"The trickle of substitution is becoming a flood, as many organisations look for ways to do more with less in the context of an uncertain economy in which CFOs are attempting to protect profitability by limiting the size of budget increases," said Minton.

"Just as outsourcing got its boost from the 2001 recession, and virtualisation from the financial crisis of 2009, low-cost mobile devices and the cloud are being partly driven by the willingness of businesses to look for new ways of getting things done in return for improvements in efficiency," he added.

Minton also flagged Western Europe as one of the worst areas for IT spending, while emerging markets were hailed as the "engines for growth" when it comes to driving up investments in IT.

"Our surveys confirm that underlying demand for IT products and services remains strong, but that businesses [are] being forced to delay new projects or investments in the face of longer decision-making cycles and a lack of short-term visibility," he said.

"This storm could pass quickly, if governments in the US, Europe, China and Japan succeed in steering their ships towards calm waters in the second half of the year."

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