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June 14, 2010

Global IT industry – a curate’s egg of ‘growth’?

What state is the global IT industry in? It's sometimes genuinely hard to get a clear answer to this, as there is no OECD-style collective data gathering exercise that could be assumed to be completely neutral.

By Cbr Rolling Blog

The only data we have is from market researchers, who do a fantastic job but who all have slightly different collection methodologies and so end up with often slightly different conclusions/predictions (bit like the various estimates of the state of the housing market – Nationwide says this, Council of Mortgage Lenders and Halifax say that, and so on).

Take this week’s prognostication from IDC, which contrasts nicely with recent equivalent analysis from its rival Gartner. The former says global hardware spending will rise by 6.4 % in 2010 (the metric uses something it calls constant currency as an average of the major currencies, so that figures is different if reckoned strictly in dollars alone, see). But at the same time, IDC says spending on software will only rise by 3.1% and IT services will only inch up 1.5%, compared to 2009.

Putting all that together: in 2009 using IDC’s measuring stick IT spending worldwide fell 4.2% (ouch). But – this is the good news, part – global IT outlay is projected to rise for this year by 3.8%, to $1.47trn.

First off, that clearly doesn’t even make up all the ground of last year’s shortfall. And the sluggish rises in non-hardware spending are hardly cause to get out the Cristal in the software or consulting firms.

Still, that rise of interest in hardware and server spending is for IDC a very encouraging sign. It argues there is "pent-up" demand for infrastructure outlay, including investment in more virtualisation and information management. As it says in its communication on the results, "Just as capital spending on hardware is the first thing to fall in a recession, it’s also the first thing to come back up for air when IT budgets are surfacing above water."

The recent Gartner analysis was broadly similar. So – hardware, you CIOs like; you are prepared to write the cheques. But you are less bothered about the software and processes around it, it seems.

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For me, this is yet another straw in the wind that suggests The Cloud is not just hype but really is what an old chum in the database game used to call ‘The Church Of What’s Happening Now’. Hardware is crunching down apps to a minimum and running them all as efficiently as it can. We are stacking those data centres with more and more kit; the days of the server per project/application are truly over.

One thing I didn’t tell you yet about the IDC figures; that global rise does not lift our boat here in Europe. Total IT spending in Western Europe fell 6.5% in local currencies – a painful 13.5% in dollar terms, note – and is at best expected to return to par value this year. By contrast, indeed very sharp contrast, China will spend 13% more this year on all aspects of information technology and India’s market will grow an equally impressive 14%.

So – how is the global IT industry faring? Maybe there’s no such thing in reality, apart from in Steve Ballmer’s spreadsheet. Instead, we have a picture of ongoing, relentless consolidation in mature markets, more and more of the action spreading East and potential for a very modest general market rise here in 2011.

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