IDC Forecasts Double-Digit Growth In European IT Spending By 2004

LONDON – APRIL 24, 2002 – New Black Book data released by IDC provides evidence that the Western European IT market is on the brink of a recovery.


Recently modified figures suggest that hardware spending is likely to remain somewhat subdued during 2002, but a gradual return to health in this key sector will take place in the next 18 months. This, coupled with an anticipated surge in software spending following its lull in 2001 and sustained buoyancy in the services market, will drive top level growth rates of 10.02% by 2004.

IT spending trends in Western Europe are typical of a mature market and follow a similar pattern to North America in that a heavy proportion of spending is concentrated on IT services (45%) and investment in software is relatively advanced (21%). However, a substantial chunk of spending in Western Europe (35%) is still derived from the hardware market and as such fluctuations in this sector will have an important impact on total IT spending growth.

"In 2001 the hardware market declined by 1.9% and was the only sector in the region to report negative growth during the year," said Vicky Hawksworth, Research Analyst in IDC's European IT Markets Center. "This was largely due to economic unrest, but the saturation of the PC market, the inherent link between hardware and the beleaguered telecommunications industry and the need to correct previous over-investment in servers were also chief factors in its downward spiral." Although the market will not bounce back over night, she said, "a measured return to positive growth in servers during 2002 followed by a rebound in the storage market in 2003 will mean that an increase of 2.7% is achieved in Western European hardware investment by 2003 and only Belgium will record a decline."

In 2003, Greece will be home to the most resilient hardware market in the region, owing to a steady pace of spending on PCs and spike in storage systems revenue, notably in the disk area. Fellow southern European countries Spain and Portugal will also be safe havens for hardware spending from 2003 as budgets loosen up and the task of building a fundamental IT infrastructure gets back on track. However, according to Hawksworth, "In the near-term, it is the Nordic countries that are predicted to experience the highest levels of total IT spending growth. Sweden will top the scales at 9% in 2002, driven primarily by

robust investment in software."

Data in this press release comes from IDC's Western European Black Book, V1 2002 (IDC #A01J), recently published under the European Executive Market Watch service.

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