IDC: Economic slowdown won't derail rebound in IT spending

Despite a drop in PC sales worldwide, IDC says that overall IT spending is poised to hold steady in 2011

Economic turmoil and uncertainty in the United States, Europe, and Japan has left plenty of IT vendors and stockholders fearful of whether more lean days lie ahead. Fortunately, IDC had some reassuring words to offer at a Web conference Wednesday: IT spending is holding fairly steady worldwide with mostly slow, steady growth on the horizon.

The overall report wasn't entirely upbeat, as IDC's growth projections for the PC market worldwide -- a longtime indicator of consumer confidence -- have declined since April. Still, IDC's overall projections for such product segments as storage, software, and particularly mobile devices worldwide, have become rosier.

In the United States, IDC foresees slightly higher growth in IT spending for 2011 than the company predicted in April, up from around 6.8 percent to 7 percent, despite the fact that IDC now expects the PC market to shrink by around 0.4 percent this year instead of rising by just over 1 percent. According to IDC, this trend isn't as big of a concern as it might have been in years past ago when PC sales were a more reliable indicator of IT sales. One possible explanation: The dollars that would traditionally have gone into upgrading PCs may instead be going toward smart mobile computing devices, such as tablets.

IDC also foresees less spending on servers and printers in the United States than it projected in April, but the company's predicting healthier growth for storage sales: Projections shot up from around 5 percent to around 7 percent, thanks at least in part to the rise in big data. Software sales for 2011 also look brighter in the United States as IDC predicts growth of 6 percent instead of around 5 percent.

Growth in spending on IT services in the United States looks to be at around 4.4 percent instead of 4.2, while spending on networking gear is expected to hold steady at around 8 percent.

Globally, the big-picture perspective of IT spending isn't too shabby. In April, IDC predicted overall 2011 growth in worldwide IT spending to hit around 7 percent; the updated figure for June is down just a hair. By category, IDC sees higher-than-expected growth in spending on services (around 4 percent), software (around 5 percent), networking (just over 5 percent), storage (around 4 percent), and servers (around 2.5 percent). IDC's reduced its projections for PCs and printers, though, but both segments should see worldwide growth instead of loss.

The big standout among the various IT product segments is smartphones: IDC predicts growth there of around 37.5 percent worldwide, up from around 36 in April.

Beyond 2011, IDC expects growth in IT spending to remain steady through 2012 and then to gradually decline to around 6 percent year over year by 2015. Growth in software spending will gradually rise to 7 percent, the services market will level out at just under 5 percent, and growth for hardware will continue to slowly decline, from 10 percent in 2012 to around 6 percent by 2015.

IDC's projections for IT spending growth in Western Europe weren't quite as optimistic overall: The company reduced its forecast from around 5.5 percent to around 3.5 percent. In particular, PC sales in the region looker far bleaker than expected previously: IDC indicated growth of around 3 percent in April but now expects that market to shrink by 8 percent. Similarly, printer sales are expected to grow by a fraction of a percentage instead of around 3 percent.

Software and services growth projection remain steady at around 3.9 percent and 1.5 percent respectively. IDC still foresees a drop in storage sales, but not as significant a decline as reported in April. The current prediction is a dip of a fraction of a percentage instead of 2 percent. Growth in networking equipment saw a boost and is predicted to reach almost 5 percent, rather than just over 4 percent.

Japan, meanwhile, appears to be recovering more rapidly that IDC has expected back in April, thanks to gradual recovery and reconstruction following the disaster that hit the country. The research company still expects IT spending will be down across the board for the year, but for the most part, those drops won't be quite as bad. Overall, IT spending in Japan will be down by around 2.5 percent, not by around 4 percent as IDC predicted in April.

For example, Japan's predicted PC sales will be down about 14 percent instead of around 17 percent. Server growth will be down about 7 percent instead of around 13 percent. The only product category that is set to take a bigger hit than initially expected is networking; instead of a drop of around 4.6 percent, it is now around 4.9 percent.

In emerging markets, including China, Russia, Brazil, and India, IDC's growth predictions are holding steady. China is expected to see hardware grow by around 22 percent. The services market in Russia will expand by nearly 25 percent, and India should enjoy steady growth of over 15 percent in services, software, and hardware.

This story, "IDC: Economic slowdown won't derail rebound in IT spending," was originally published at Get the first word on what the important tech news really means with the InfoWorld Tech Watch blog. For the latest developments in business technology news, follow on Twitter.

Copyright © 2011 IDG Communications, Inc.

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