Fourth-quarter IT spending analysis and outlook

1Executive Summary

Worldwide IT spending in the third quarter of 2013 continued to be weak, and the fourth quarter promised much of the same. 2013 IT revenue finished at a lackluster 2.4 percent growth versus 2012. Growth for 2014 will be an improvement: up 4.9 percent. Smartphones and tablets will be the main growth drivers, but we expect some pricing pressure that will moderate the revenue growth outlook for 2014. Traditional IT services and IT hardware spending will continue to be constrained by the relentless IT spending deflationary environment, where public cloud (primarily SaaS), mobility, and social are beginning to materially alter the expected products and services, pricing, and delivery methods of IT.

There was good news from the public cloud segment, where spending grew to $52 billion in 2013 (up 22 percent over 2012) and will grow by 16 percent in 2014. The cloud represented 4.7 percent of software and services spending in 2013, and it will grow to 5.5 percent of spending in 2014. Cloud growth is finally beginning to materially dilute traditional IT spending growth — a trend that will only accelerate throughout this decade.

2012–2014 worldwide IT spending ($ billions)

Market segment

2012

 

2012 growth rate

2013

2013 growth rate

2014

$

2014 growth rate

Note
Smartphones and tablets

$321

24.4%

$350

9.0%

$399

+14.0%

Smartphones and tablets

Hardware

$419

-2.3%

$416

-0.8%

$419

+0.9%

PCs, servers, storage, peripherals, network

Software

$270

5.5%

$288

6.7%

$310

+7.6%

Systems, middleware, solutions (including SaaS)

Services

$809

1.0%

$809

0%

$826

+2.1%

Consulting, IT outsourcing, systems integration, BPO, education, maintenance (including IaaS)

All spending

$1,819

3.8%

$1,863

2.4%

$1,954

+4.9%

 

Thumbnail image courtesy of Ingram Publishing/Thinkstock.

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