China passes Japan to become world's 2nd largest IT market

The U.S. still has an IT market three times the size of China, though the latter is seeing far more rapid growth, IDC says

China overtook Japan in IT spending this year to become the world's second largest IT market, according to market research firm IDC.

The U.S. remains the largest IT market the world, still more than three times the size of China. But China's IT spending is increasing by double digits, and technology industry investment is a high priority thre.

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China's IT spending increased by 8.3 percent this year, nearly double that of the U.S., and is forecast to further grow by 14.1 percent next year, said Frank Gens, chief analyst at IDC.

The clearest evidence of China's interest in building a technology market is its development of the world's fastest supercomputer, topping the Top 500 list.

China's overall IT spending is projected to hit $204 billion in 2014, versus $686 billion in the U.S., said Gens. U.S. IT spending grew 4.7 percent in 2013, and is forecast to rise by 3.8 percent next year. China's IT spending will increase by $25 billion in 2014, the same dollar increase as in the U.S.

"It's going to be quite a while before it (China) closes the gap" with the U.S., said Gens, who expects China's IT growth rate to slow as it grows.

In 2013, China's IT spending will total $179 billion, beating Japan's $173 billion by $5 billion.

China's rate of spending says "that China is the place you have to be if you are in the IT market," said Gens.

In the global market, IDC expects global IT spending to rise by 5.1 percent next year to over $2.1 trillion. The 2014 forecast for the global IT market would have been higher -- 5.6 percent -- if not for the steep decline in PC sales, said Gens.

PC sales account for about 10 percent of all global IT spending. IDC projects that PC revenue will decline by 9 percent this year, and by about 6 percent next year. The PC revenue decline is reflected in PC shipments, which are down 10.1 percent, reported IDC.

Despite the revenue drag created by global PC sales, other segments of IT spending, including IT services and software, increased this year. Server revenue declined by 3.5 percent this year but is expected to increase by 1.6 percent next year.

Gens said IT spending is rising, but users are shifting to cloud computing, mobile technology and big data, and IT managers will have to adapt. In 2014, for instance, IDC expects that 25 percent to 30 percent of all servers will be shipped to cloud servers providers. By 2017, that percentage is expected to reach 43 percent.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His email address is pthibodeau@computerworld.com.

Read more about IT industry in Computerworld's IT Industry Topic Center.

This story, "China passes Japan to become world's 2nd largest IT market" was originally published by Computerworld .

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