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Global IT spending hits $1.554n, beats estimates

By Staff

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 per cent 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 per cent 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 per cent to more than $661 billion, the fastest rate of growth for hardware investment since 1996. Storage spending grew by 14 per cent, servers by 9 per cent, and PCs by 11 per cent.

"Like the global economy, the global IT industry performed better than expected in 2010," said Stephen Minton, vice president of IDC's IT Markets and Strategies Group. "With business profits and stock markets back into a cycle of growth, many organizations took the opportunity to make up for lost time by upgrading mission critical systems and infrastructure over the course of the year. While downside macroeconomic risks are still present, we entered 2011 on the back of a resounding rebound for the technology industry."

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 per cent and 2 per cent 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 per cent this year to $1.65 trillion with another year of double-digit growth for hardware spending (10 per cent), while software and services markets will increase by 5 per cent and 4 per cent respectively.

"The global economy could still be a wild card," said Anna Toncheva, program manager and economist in IDC's IT Markets and Strategies Group. "The sovereign debt crisis in Europe may raise its head again, and we still lack sufficient visibility into many variables to be sure that a double-dip recession will not occur. However, the consensus opinion is currently that such a downturn is much less likely now than six months ago, and this continued economic stability will provide the foundation for another year of strong growth in the IT industry."

The US IT market grew by 6 per cent in 2010, and will expand by another 5 per cent 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 per cent last year, which will be followed by a 10 per cent 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 US. 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.

"Last year was a big year for the technology industry," said Minton. "Some of the growth was just a bounce back from the declines of 2009, when the market declined by 4 per cent, but there was also a very real surge of demand as businesses around the world continue to deal with the issue of managing, storing, securing, and analyzing the increasing flood of digital information that is resulting from the proliferation of mobile devices and embedded computing platforms. As long as the economy remains stable, we look forward to another strong year of investment in 2011."