Consumers’ appetite for traditional hardware, software, and telecommunications is expected to grow by only 3.7 percent to $4 trillion, a drop when considering the 4.2 percent it recorded in 2017.
The latest Worldwide Black Book: Standard Edition from the International Data Corporation (IDC) shows that weakening economy due in part to tariffs, rising interest rates, and sluggish Chinese growth, along with the end of a capital spending cycle, will see decline to less than 3 percent as tech spending lags behind GDP growth.
The IDC report predicts that annual spending will exceed $4.5 trillion. The strongest growth over the period will come from software and services related to third platform and digital transformation projects. Hardware investments will be led by cloud service provider spending on server and storage infrastructure.
It also expects weaker growth from sell of PCs and tablets, peripherals, external storage systems, and traditional outsourcing.
“The infrastructure market is increasingly stable because a large proportion is now tied to the service provider model and overall demand for cloud services, which shows no sign of slowing down even in the event of a weakening economy,” Stephen Minton, vice president, Customer Insights & Analysis. “To some extent, this spending will be more insulated against economic downturns than end-user capital spending. Therefore, the IT market will be less vulnerable than it was in the past when any kind of GDP slowdown would translate into big declines for hardware spending. Nevertheless, economic risks are now higher than three months ago.”
He also noted that slowing growth in China could be a result of astronomical growth of mobile adoption which is currently dominating the market. Strong growth in software and services will only represent a very small proportion of average ICT budgets.
“Cloud and mobile are still the big drivers for traditional ICT spending, as legacy products and services like desktop PCs and fixed-line networks either stagnate or begin to decline,” Minton said.
Every region, including sub-Saharan Africa saw uptick in technology demand in 2017 due to stronger economic performance. The Middle East and Africa posted improving growth of over 2 percent, benefiting from business and consumer confidence, which enabled ICT players to work off the pent-off demand that had swelled in previous years of subdued growth.
