Global IT spend saved by mobile device uptake

IDC's latest State of the Market research reveals smartphones and tablets are propping up the market, but Western Europe is seeing a bigger slowdown than expected

Mobile device and smartphone uptake has prevented European IT spend plunging into negative growth in 2011, IDC has claimed.

The analyst broadcast its State of the Market: IT & Economic Outlook 2012 forecast last night, which revealed a continuing "volatile situation", with enterprise hardware spending in western Europe slowing down more than predicted.

Overall global IT spend is set to show seven per cent growth in 2011, mainly propped up by spending in emerging economies that have seen "gangbuster" growth in IT spend, according to the analyst.

Stephen Minton, vice president of worldwide IT markets at IDC, said: “Western Europe IT spending has softened, which shows the impact of the debt crisis. However, overall IT spending has performed better than we expected given the softness in the global market, with the exceptions of PCs, particularly in consumer spending.

“But we are still trying to understand the impact of the austerity measures that governments are putting in place and just how soft the European economy will be in the next 12 months,” he added. “And even though we have not arrived at the real downside scenarios, we have seen enough softening in mature regions to downcast our [2012] forecasts to some extent.”

However, if smartphones and tablets were removed from IT spending forecasts in 2011, global growth would be only 2.5 per cent, Minton revealed.

“Mobile devices have had a huge impact on the industry this year,” he said. “Tablets are still relatively new and growth rates of more than 100 per cent have been recorded in 2011. Smartphones are one of the biggest overall contributors to IT revenue, accounting for five per cent of all spending on mobile devices.”

Looking to 2012, Minton was cautiously optimistic about escaping a global recession.

“Our 2012 IT spend forecasts are based on the assumption of a weak European economy – between zero and one per cent growth – and in the US between one and two per cent growth. This is pretty weak by historical standards, but certainly not the worst scenarios we have ever seen,” he said.

However, IDC has reduced its IT spend forecast for western Europe in 2012 from five per cent to below 3.5 per cent. But overall the global IT spend is set to be propped up by emerging market spend yet again and will hover around the seven per cent mark again for 2012, Minton said.

“Looking at the downside scenario – which we are all hoping will not happen – the unravelling of the debt crisis in Europe could lead to a pretty weak economy of decline,” he said. “Western Europe is already on course for negative IT spend once tablets and mobile devices are taken out of the picture.”

Mobile devices will be among the most resilient sectors, Minton said, with hardware – PCs, servers and peripherals – bearing the brunt, but no sector will escape unscathed.

“Hopefully, political leaders in Europe will get their act together, and more stability in Europe should prevent an outright recession and an IT spending crash,” Minton said.

“Our best hope is that the economy stabilises, bringing back consumer confidence, and does not lurch into a downside scenario, which is already impacting business spending, and that our downside scenarios prove to be overly pessimistic, with business releasing more spend on IT.”