Enterprise IT spending to rebound in 2014

by CXOtoday News Desk    Nov 07, 2013

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Enterprise IT spending is expected to rebound in 2014 with growth of over 5% globally, according to research firm IDC. IT spending had been lukewarm since last year, dipping to its slowest pace of growth in 2013 owing to the global financial crisis.

IDC sees regions that were badly hit by the downturn including the US, Western Europe, Russia and China will see a rebound with total worldwide spend reaching $2.14 trillion by 2014.

In the past one year, enterprises witnessed weaker spending on PCs, servers and storage. The only segment that had shown a steady growth was smartphone and tablet shipments. Excluding mobile phones, IT spending will increase by only 2.6% this year at constant currency, said IDC.

“This has been a tough year for many IT vendors, with infrastructure spending in the first half of 2013 proving weaker than previously expected. The overall industry has been propped up by continued strength in mobile devices, especially smartphones, but the slowdown in emerging markets was another headwind for infrastructure-focused tech firms on top of government sequestration in the U.S. and continued sluggish growth in Europe,” Stephen Minton, VP-Global Technology & Industry Research IDC, said in a statement.

The report highlighted by end of 2013, spending on servers, storage and enterprise networks will increase by just 1%, but the situation will improve as enterprises will spend more on these technologies in the coming month, resulting to a 4% growth next year. Both the storage and server markets are expected to improve in 2014. IT services will also continue to surge in the coming year.

However, PC spending is likely to remain weak in spite of signs of stability by 2013-end, as tablet cannibalization continues at lower price points. “Momentum in developed economies has been broadly positive since the start of 2013. The gradual turnaround in Europe is restoring business confidence, leading to a strengthening of our assumption that next year will be better than this year for most IT vendors.”

In a separate report, IDC states that rising demand for low-cost Android phones and cheaper handset models, worldwide smartphone market is expected to touch one billion units this year.

Global smartphone market rose by 38.8% year-on-year in the third quarter of 2013 with mobile phone vendors shipping 258.4 million smartphones during the period compared to the third quarter of 2012, it said in a statement. Android smartphone platform will continue to create vast opportunities for new vendors to get into the smartphone space and, also produce new competitive pressures in the coming quarters, it said.