IT Market Being Pulled Down by PC Sluggishness PDF Print E-mail
Written by Mike Buetow   
Thursday, 09 May 2013 11:36

FRAMINGHAM, MA -- A PC "crisis" is unfolding and dragging down worldwide spending on IT equipment, according to IDC in a webinar today.

Demand for PCs, which make up a large percentage of IT consumption, is expected to fall year-over-year for the second straight year, the first time in history that will happen, says IDC.

The research firm forecast overall IT spending, including software and services, will slip to 4.9% this year from 5.6% last year. Most equipment segments will see growth rates decline year-over-year in 2013.

While PCs in particular are under pressure, the picture isn't as dire as it would have been years ago, said Stephen Minton, vice president of Worldwide IT Markets.

"Not only has spending been so bad, but there was so much expectation and hope that everyone was looking for at the end of 2012," said Minton. "[But] it looks largely confined to the PC area. Ten years ago, we would have taken this to be a leading indicator for the IT industry, but not anymore."

Tablets are a bright spot, with growth of more than 30% forecast for 2013, while servers, hurt by average price declines, and PCs are expected to drop 1 to 3% year-over-year. Demand for storage capacity is softening but remains strong. Enterprise spending on network equipment is expected to rise 6 to 7%. The carrier side is cooling off after large investments in 2012. Phones are forecast to rise about 10% over 2012.

In 2012, the drop in US PC demand was steeper than the growth in tablets, but that trend is leveling and tablets will grow faster this year than PCs decline, IDC said. IDC expects tablets will be half the size of PCs in terms of spending by 2017.

IDC chalked up this trend to what it terms "spending cannibalization." "Businesses and PC users are making their PCs last longer. That trend has been solid and stable for the past 18 months; an increase in tablet demand and decrease in PC demand," Minton said.

Due to the dropoff in PC spending in the December and March quarters, IDC has reduced its overall IT forecast. The firm now expects the overall market will grow slightly slower than in 2012, forecasting IT growth of 4.2% in the US in 2013, and 3.5% in Canada.

Some regions will do better than others, the firm said. IDC sees a rebound in Brazil and the rest of Latin America, for example.

Economic forecasts have been broadly stable since January, despite volatile indicators, Minton said. Corporate profits are relatively weak in many regions.

By region, the US is on a 2% growth track, while the collective Eurozone nations fell for the sixth straight quarter, Japan saw soft growth in the first quarter, and China was softer than expected. Germany has been the anchor of the Eurozone, Minton said, and while Europe is expected to grow 0.1% in 2013, how Germany performs will make the difference between the region's expansion or contraction. Meanwhile, the effect of the US sequester is unclear, but might be greater than some appreciate, Minton said. Business spending was solid in the first quarter, he added.





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