Global IT Spending Remains Flat Amidst Tentative Signs Of U.S. Economic Recovery, According to IDC

FRAMINGHAM, MA – JULY 16, 2003 – Worldwide IT spending continued to show stability in second quarter of 2003, but significant gains in corporate spending are yet to happen. According to the 2Q03 update to IDC's Worldwide Black Book, global IT spending is expected to surpass $872 billion, a marginal increase of 1%, for the full year.


In the US, IT spending will be flat this year. Declines in overall hardware spending, largely related to price competition, are being offset by tepid growth in software and services. In Western Europe, IT growth is expected to be less than 1%, down from previous expectations. Asia/Pacific will experience 1.2% IT spending growth, tempered by a 1% market decline in Japan. However, several emerging markets continue to offer much brighter growth prospects, with China expected to see 8% growth in 2003, rising to 16% in 2004. Other bright spots this year include India, Thailand, Spain, Russia and South Africa.

"International markets continue to show some volatility," said Stephen Minton, program director for the IDC Worldwide Black Book. "The softening of economic conditions in Europe, particularly Germany, continues to dampen IT budgets. Meanwhile, the strength of the Euro, while positively impacting U.S. dollar revenue growth for many IT suppliers, has added to the challenges facing the overall economy."

"The US economy is showing signs of recovery," said Kevin White, economist at IDC. "While this has not yet translated into a major uptick in IT spending, economic indicators are now pointing in a broadly positive direction."

Stronger growth is expected in most markets next year, as economic recovery translates into budget increases. IDC expects the U.S. market will recover to 4% growth in 2004 while Western Europe will achieve 3.7% growth and Asia/Pacific (excluding Japan) will exceed 10% growth.

Other key forecasts for 2004 include :

Smart handhelds, including converged voice and data devices, will see growth in excess of 50%.

Network equipment will recover from a 2% decline in 2003 to a 5% increase in 2004.

PCs will see the first year of positive spending growth since 2000 as replacements and upgrades accelerate.

Spending on system infrastructure software will outpace other sectors to grow by 6%.

"We see a continued, but gradual recovery over the next 18 months," said Minton. "Barring economic wild cards, IT spending will benefit from pent-up demand, infrastructure upgrades, product innovation and corporate profit stability, whilst remaining inhibited to some extent by the corporate focus on short-term value, costs and returns. The recovery is already underway, but the pace remains slow."

The IDC Worldwide Black Book Query Tool Version 2 2003 (IDC #29765) provides new and updated forecasts for IT spending in 54 countries around the world. IT spending forecasts for the period 2002-2007 focus on 25 market segments across hardware, software and services, for countries in all regions including North America, Latin America, Western Europe, Eastern Europe, Asia/ Pacific, the Middle East and Africa.

About IDC

IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

IDC is a division of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com

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