Worldwide IT Spending Set to Rebound in Second Half of 2017
Worldwide IT spending is expected to increase by 4.5% in 2017 in constant currency terms, a significant improvement on last year’s growth of 2.5%, with stronger upgrade cycles for infrastructure and mobile devices leading the improvement in the second half of the year. According to IDC, total IT spending this year will reach $2.1 trillion and is forecast to increase by another 4% in 2018 as positive momentum continues into next year. Including telecom services, which will increase by just over 2% in constant currency terms this year, the overall ICT market will reach $3.5 trillion in 2017.
The strongest growth this year will come from infrastructure hardware, enterprise software, and mobile devices. With cloud service providers expected to accelerate their datacenter investments in order to keep pace with growing demand for cloud services, total server spending will increase by 4% this year and 5% in 2018. Enterprise spending on server and storage infrastructure will also pick up in the second half of 2017, driven by product refresh cycles. Meanwhile, demand for Infrastructure as a Service (IaaS) will remain robust, with spending set to exceed $25 billion this year and more than $50 billion by 2020.
Last year saw a significant slowdown in the smartphone market, as increasing maturity and price competition affected many markets. Stronger growth is expected in the second half of 2017, as premium vendors launch significant new products while smartphone penetration and value continues to grow steadily in key emerging markets including China. Overall smartphone spending will increase by 7% this year to $439 billion, a big improvement on last year's 1% growth.
Software spending will increase by 7% this year to more than $471 billion in constant currency, driven by continued enterprise investment in big data and analytics alongside ongoing adoption of Software-as-a-Service (SaaS) and other key growth segments. Meanwhile, IT services spending will post growth of 3% this year, led by project-oriented services. In telecom services, growth will still be driven by fixed and mobile data services while voice revenues continue to decline.
Asia/Pacific (excluding Japan) will post the strongest regional growth in IT spending this year, set to increase by 8% in constant currency terms, followed by the United States (4%). China and India are both expected to post overall IT spending growth of 10% in constant currency terms this year, although China is likely to see a moderating pace of growth in the next few years as the economy begins to slow. IT spending growth will be weaker but stable in Western Europe (3%), Canada (2%), and Japan (2%) as mature economies continue to face headwinds including Brexit and demographic challenges.
Emerging markets including Brazil, Turkey, and Nigeria, will show improvements compared to 2016, but will remain sluggish by historical standards. While the United States remains the largest IT market, China is now the largest single market for devices and will account for almost 25% of all spending on PCs, tablets, phones, and peripherals this year.