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Worldwide IT Spending to Reach $2.1 Trillion in 2014

There is now significant pent-up demand for IT investment next year in higher-growth markets

So far, 2014 has turned into a banner year for CIOs that have invested the time and effort to plan for hybrid cloud services, while building strong strategic relationships with their Line of Business leadership. Their approved capital investment budget spend is on-track and operational expenses are contained, as planned.

Savvy senior executives across the globe continue to make selective investments in new business technology. In fact, there could be a moderate IT infrastructure spend over the next 12-18 months, which will likely increase the demand for open source software and professional services as new cloud service projects are approved.

Worldwide IT spending is now forecast to increase by 4.5 percent in 2014 at constant currency, that's according to updated projections from the latest market study by International Data Corporation (IDC). By and large, this enterprise growth is still being driven by smartphones, apps and the mobile cloud.

Aside from mobility related investment, the strongest IT growth will come from enterprise software, including rapidly expanding requirements -- such as cloud computing, Big Data analytics, data management, and collaborative applications.

IT Procurement Results and Regional Outlook
Meanwhile, although some emerging markets remain constrained, there is now significant pent-up demand for IT investment next year in higher-growth markets -- including India, Brazil, and Russia. Besides, demand has already driven a significant rebound of IT spending in China.

That being said, some IT market segments performed weaker than expected. In particular, the enterprise infrastructure refresh cycle was disrupted by declines in business confidence. However, strong underlying demand will drive improvements in the data center server, storage, and network infrastructure markets.

"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," said Stephen Minton, vice president at IDC.

The commercial PC refresh has proven stronger than originally forecast. As a result, IDC now forecasts PC spending will increase by 3.5 percent in 2014. Western Europe has seen an improvemet, but PC spending in Europe will still be down by 1 percent due to average price declines.

There was a modest market upturn in Japan, where economic growth and upcoming tax increases drove a surge in capital spending in 2013. And while IDC estimates that PC spending in Japan increased by 6 percent last year, it will decline by -4.5 percent this year.

The U.S. media tablet market is now forecast to increase by just 2 percent this year, but will rebound to 7 percent growth in 2015. Worldwide tablet spending has slowed from 29 percent year-over-year growth in 2013 to 8 percent in 2014, but will accelerate back to double-digit growth in 2015 (by ~10 percent).

Overall IT spending growth in China decelerated to 8 percent last year, but is on course for 13 percent growth in constant currency during 2014. Excluding mobile phones, IT spending in China will increase by 5 percent this year -- that's up from growth of just 2 percent in 2013.

Data center server spending in China will increase by 7 percent, storage spending by 8 percent, and software by 9 percent, but the overall market growth outlook is still weighed down by the declining PC market.

IT spending in India will increase by 15 percent next year -- that's up from 8 percent in 2014. In Brazil, the market will accelerate from 10 percent growth this year to 13 percent next year. In Russia, the market is set to decline slightly in 2014 before rebounding to 7 percent growth in 2015.

IDC believes that mature economies have remained more stable since last year, with market growth often outpacing expectations. The U.S. IT market will increase by 4 percent this year, and Western Europe will maintain a 2 percent growth rate overall.

In summary, total worldwide IT spending will reach almost $2.1 trillion in 2014. Including telecommunications services, the worldwide combined ICT market will increase by 4 percent to $3.7 trillion, with telecom services growth of 4 percent driven by mobile data services and increasing broadband penetration.

More Stories By David H Deans

David H. Deans is the Managing Director at the GeoActive Group. He has more than 25 years of experience in the Technology, Media and Telecom sectors.

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