US Tech Market Will Grow By 7.5% In 2012, 8.3% In 2013

With the US economy showing signs of improvement, the US tech market has been rejuvenated, according to a new US tech market forecast from Forrester, which is forecasting US tech market growth of 7.5% in 2012. This is up from the 6.6% growth projected in November 2011. For 2013, Forrester is forecasting 8.3% growth. Including telecom services, business and government spending on information and communications technology (ICT) will increase by 7.1% in 2012 and 7.4% in 2013.

The lead tech growth category will shift from computer equipment in 2011 to software in 2012 and 2013. Software growth will occur across all categories, but software-as-a-service (SaaS) applications, general business intelligence products, and specialized analytical tools will have the strongest growth. These products will help push total software sales growth up to 11.4% in 2012 and 12% in 2013.

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Worldwide IT Spending Figures Show Mixed Results for 2012

Worldwide IT spending is forecast to total $3.7 trillion in 2012, a 2.5 percent increase from 2011, according to the latest outlook by Gartner, Inc. This is down from Gartner's previous forecast of 3.7 percent growth for 2012.

Gartner analysts said the lower growth rate has more to do with the U.S. currency than an actual decline in spending. The recent strengthening in the value of the U.S. dollar versus other currencies has resulted in the reduced growth rate. However, when looking at spending in constant U.S. dollars, Gartner analysts said IT spending is on pace to increase 5.2 percent in 2012, up from its previous projection of 4.6 percent.

Gartner analysts said IT spending in the government sector is expected to contract moderately on a global basis in 2012 and 2013, driven by austerity measures in the eurozone. While there has been much commentary about the need for government cuts since the sovereign debt crisis emerged in Europe, it is only now that the impact of government budget cutbacks is being felt on IT spending in the region. Similarly, we expect U.S. government spending to be essentially flat in 2012 before contracting in 2013.

In the small and midsize business market, which represents approximately a quarter of all enterprise IT spending, spending is forecast to reach $874 billion in 2012 and will grow to $1 trillion by 2016. Throughout the forecast period, midsized business IT spending outperforms other sectors in each of the next five years, driven by growth in spending on enterprise software.

The worldwide telecom equipment market is forecast to show the strongest growth with spending reaching $472 billion in 2012, a 6.9 percent increase from 2011. Gartner attributes this growth to the continued health of the mobile devices market as well as a more positive outlook for enterprise network equipment, which is being driven by spending on application acceleration equipment, network security, WLAN and Ethernet switches.

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Worldwide IT Spending Outperformed Expectations in 2010, Reaching $1.5 Trillion

Global spending on information technology (IT) surged to its fastest rate of growth since 2007 last year, driven by pent-up demand for hardware upgrades and infrastructure investment after the financial crisis and global recession of 2009. According to the new International Data Corporation (IDC) Worldwide Black Book, the global IT market grew by 8% year over year to more than $1.5 trillion at constant currency. Including telecom services, the overall information and communications technology (ICT) market grew by 6% to almost $3 trillion in 2010.

Hardware spending led the way, as a major capital spending cycle saw IT spending on computer systems, peripherals, storage, mobile devices, and network equipment increase by 16% to more than $661 billion, the fastest rate of growth for hardware investment since 1996. Storage spending grew by 14%, servers by 9%, and PCs by 11%.

The pace of recovery was more robust than after any previous economic recession, in spite of the severity of the 2008/2009 financial crisis. Spending on software and services, while lagging the pace of hardware investment, also returned to positive growth of 4% and 2% respectively. This is set to accelerate in 2011, as investment in new IT projects (including rapid adoption of cloud computing) begins to make up for an inevitable deceleration in the pace of capital spending by the end of the year. The overall IT market will grow by 7% this year to $1.65 trillion with another year of double-digit growth for hardware spending (10%), while software and services markets will increase by 5% and 4% respectively.

The U.S. IT market grew by 6% in 2010, and will expand by another 5% in 2011, but emerging economies are again leading the way and driving the overall growth of the global industry to higher levels. The Asia/Pacific region, excluding Japan (APeJ), saw growth of 13% last year, which will be followed by a 10% increase in 2011. Double-digit growth is also forecast in Central & Eastern Europe, Latin America, and the Middle East & Africa. Meanwhile, other mature economies including Western Europe, Japan, and Canada will continue to expand at a lower but sustainable rate of growth, much like the U.S. High levels of unemployment will continue to inhibit overall IT investment in many of those countries, but positive drivers will include adoption of cloud computing, the continued proliferation of mobile devices, and investment in new software analytics tools. 

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