Trillion-Dollar Milestone in Worldwide Spending on IT Products and Services Postponed Until 2002, According to IDC’s 1999 Worldwide Black Book
FRAMINGHAM, Mass.– 12/21/1999 — In its definitive analysis of information technology (IT) spending, International Data Corporation (IDC) reveals worldwide spending on IT products and services totaled $758 billion in 1998, an increase of 6.2% over the 1997 value for end-user spending. Research from the tenth annual edition of IDC's Worldwide Black Book reveals local economic setbacks have tempered worldwide average annual IT market growth from 1998-2003 to 9.5%, postponing the market's achievement of the trillion-dollar milestone until 2002.
IDC estimates place worldwide IT market growth at 9% in 1999. The stabilization of troubled economies, such as Thailand and Brazil, has strengthened the worldwide IT market. The PC and server markets are rebounding, posting solid growth in 1999, while growth in software and services markets continues to accelerate. As spending on software and services increases, these technology segments are garnering a larger proportion of the worldwide product mix.
"Worldwide growth in spending on information technology continued to soften in 1998 as the economic crisis in Asia/Pacific spread to other regions of the world," said Stephanie Hutchison, a senior analyst with IDC's Global Research Organization. "However, it is important to note the effect of currency fluctuations upon these values. Rather than a net decline in demand for IT products and services, exchange rate devaluation profoundly affected IT spending values in both 1997 and 1998." Therefore, IDC's latest forecasts reflect healthy local demand tempered by global market realities. Higher worldwide growth is anticipated for 1999, with a 1998-2003 compound annual growth rate (CAGR) of 9.5%.
A Regional Perspective
Although 1998 was a volatile year for the worldwide IT spending market, characterized by economic downturns, political instability, fierce price competition, and changing market dynamics, 1999 has been a year of recovery for many regional IT markets. IDC research indicates that both Eastern Europe and Asia/Pacific, succumbing to economic and political crises in 1998, witnessed a decline in IT spending. Current estimates for 1999 show considerable improvement in these markets with growth expected to increase from -6% to +2% in Eastern Europe and from -9% to +8% in Asia/Pacific.
Just as Asian economies appeared to have turned the corner, however, Latin American economies fell victim to the Asian flu's wrath, IDC's Worldwide Black Book reveals. Thus, a notable exception to this trend toward recovery is Latin America. Its growth will be a modest 1% in 1999 over 1998 spending levels. Having demonstrated renewed economic strength in the second half of 1999, Latin America is expected to stage a rapid recovery in 2000.
Turning to more developed markets, an invigorated Western Europe has continued to post solid growth, with stronger levels than the market leader, North America, which also continued to benefit from a prosperous economy.
Y2K and Beyond
The specter of Y2K looms heavily on the horizon as the clock ticks toward midnight, January 1, 2000. IDC expects that resources devoted to solving the Y2K dilemma will not be suspended once the problem is cleared up but will be reallocated to other forms of IT spending. For some, infrastructure projects put on hold will be revisited. Areas such as CRM, analytic applications, supply chain automation, and ecommerce will garner significant attention.
Companies are increasingly emphasizing the application of IT business solutions. eCommerce has emerged as the most influential IT solution and will eclipse the market after Y2K. Moreover, the emergence of the customer relationship management (CRM) solution philosophy, which entails shifting focus from automating transactions to increasing customer value, is gaining headway among many forward-thinking organizations. The concept of enterprise resource planning (ERP), in particular, is losing clout with many businesses as they strive to apply technology to the fulfillment of their business requirements.
For the tenth consecutive year, IDC presents an analysis of end-user IT spending and market opportunities across the spectrum of countries in which IDC maintains a research presence. The December 1999 edition of the Worldwide Black Book presents the latest comprehensive view of the IT market based on IDC's research completed as of November 1999. The technology segments covered include hardware, consisting of servers, personal computers, workstations, storage, printers, and data communication equipment, plus packaged software and IT services. The number of countries covered is 52. Results are presented for 1997, 1998, 1999, and 2003 in current U.S. dollars. This coverage represents the largest and most comprehensive volume of its kind analyzing worldwide IT spending trends compiled by local and regional analysts.
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