IT Hardware Spending Continues to Grow in Emerging Markets

IT hardware spending growth rates among large organizations in emerging markets will surpass those of mature markets in 2009, according to a survey by Gartner, Inc. Despite the economic downturn, 84 percent of these organizations did not cancel any IT projects since October 2008. Furthermore, IT hardware spending in emerging markets is expected to increase for servers, storage, virtualization, cloud computing and green IT.

Survey respondents were asked a series of questions regarding their annual expectations for enterprises in 2009, including if budgets would increase or decrease in various technology segments. The survey results showed 66 percent of respondents said there would be no change, or an increase in IT budgets in 2009

Thirty-five percent of respondents said they would increase investments in virtualization, 32 percent said there would be increased investments into green IT, and 7 percent would invest more in cloud computing.

Gartner has identified several reasons why large enterprises in emerging markets are showing this level of confidence. First, in many of these economies, these organizations have IT plans in place that include equipment renewal and a clear picture of their total cost of ownership. Secondly, these organizations, which represent anywhere from 8 percent to 12 percent of the business pyramid in many of these countries, have larger financial resources and rely less on lending to cover their IT operations than in midsize and small enterprises. Third, these large entities have a clear picture of their role internationally as many are involved in exports and therefore need to have the best technology tools to compete on a worldwide basis.

Inroads by virtualization in the server space are becoming more visible in emerging markets as virtualization is now viewed as a critical component in the cost-saving strategy of large organizations. Although emerging markets are at the initial curve of adoption in green IT, Gartner said that its adoption will become mandatory due to increasing legislation because of the specific needs and energy challenges facing many emerging countries.

Cloud computing is a new IT delivery model in emerging markets, and while it is gaining momentum, the survey revealed that about 50 percent of organizations in emerging markets have not heard of cloud computing or have heard the term but don't know what it means. However, in markets like Brazil, 28 percent of channels are already delivering software as a service.

The survey also found that enterprises are focusing their investments on data management with storage and server and audio/video/Web conferencing as the top priorities. Voice over IP also reached a prominent position with respondents as landline and cell communications continue to be generally expensive in emerging markets while Internet connectivity and broadband expansion keep dropping in price and increasing in efficiency.

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