IDC‘s latest Black Book figures reveal a modest revival in the Western European IT market in 2003. New IT spending data suggests that the market bottomed out in 2002, and is set to grow by 2 per cent this year. In 2003, package software and services will capture most of the rebound, expanding 3.3 and 2.5 per cent respectively.
Following a particularly difficult year, the hardware markets will stay essentially flat in 2003, before returning to more positive trends in 2004. In the short term, geopolitical tensions will dominate and contribute to constrain demand for IT products.
Some of the most dynamic markets will include mobile connectivity solutions, web services, and converged devices. In parallel, focus on security issues will continue to grow, fuelled by the threat of terrorism and cyber crime.
“Overall, the Western European IT market remains inhibited by challenging business conditions and tight spending on capital goods and technology. Nevertheless, prospects are encouraging, and we see some bright spots emerging in the market, particularly around the concept of mobility and wireless,” said Vicky Hawksworth, research manager for IDC’s European IT Markets Center.
According to IDC, amid positive trends, the IT market will continue to consolidate in the first half of the year, and spending on IT will remain essentially discretionary. European results from IDC‘s recent end-user survey Project Barometer – show that the majority of companies (37 per cent) expect to spend most of their 2003 IT budget on routine infrastructure upgrades, while spending on new initiatives will be lower priority in 2003, particularly among larger organisations.
Companies will tend to migrate away from large, expensive rollouts, moving instead towards smaller, point-to-point solutions with shorter implementation times. Organizations will also seek to capitalise on previous investment by squeezing value out of existing systems and running their IT departments more efficiently, Ms. Hawksworth adds.
IDC‘s latest forecasts have factored in current economic uncertainty and the impact of a short ground war in Iraq on business and consumer confidence. Nevertheless, for IDC, a prolonged and thornier conflict could result in further deterioration of the economic and IT outlook.
“Given today’s economic climate, organisations are still reluctant to finance major equipment upgrades. Their number one priority remains to restore profit margins and keep costs down. While this may be detrimental to IT spending in the short term, it will generate a substantial amount of pent up demand once confidence returns,” said Elsa Opitz, research analyst with IDC‘s European IT Markets Centre.
2003-04-14
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