Worldwide IT spend expected to increase 4% in 2003

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By: Wise Marketer Staff |

Posted on January 1, 2003

Worldwide spending on IT products and services is expected to increase by 4% in 2003, despite IT spending in the US increasing by only 3.6%, according to Aberdeen Group's latest report, 'Worldwide IT Spending 2003-2006: Measuring the Incremental Recovery'.

The forecast puts total worldwide information technology (IT) spending at US$1.26 trillion for 2003, and anticipates a figure of US$1.44 trillion in 2006. However, the report notes that overall long-term growth (projected at a compound annual growth rate of between 4% and 5%) is likely to be less than that experienced in the late 1990s.

"The catalysts for technology spending growth have undergone a fundamental change," explained the report's author, Hugh Bishop, senior vice president for Aberdeen Group. "Corporate top-line revenues, capital spending levels, and national economic health now dictate IT purchases. Industry growth will be more incremental, and tied to basic business principles."

According to Bishop, North America is ahead of all other regions in projected 2003 spending, followed by Europe and the Asia Pacific Rim. The IT spending growth from 2003 to 2006 in these three leading regions will be led by Asia Pacific Rim at a compound annual growth rate (CAGR) of 6.5%, followed by North America at 4.9%, and Europe at 2.6%.

Key findings
The report highlights a number of factors that have played significant roles in worldwide IT spending, and explains future growth inhibitors:

  • The factors contributing to excessive growth in the late 1990's are not repeatable. These elements included corporate retooling around Y2K issues, the internet and e-commerce euphoria phenomenon, excessive venture capital investment in dot-coms, traditional enterprises accelerating e-business deployments to match the dot-com threat, and unsustainable IT spending in the telecommunications sector.
  • Long-term IT spending is gated by gross domestic product (GDP) growth and corporate revenue growth. IT spending now accounts for 3.88% of the world GDP and 4.42% of the United States' GDP.
  • China's importance is likely to increase dramatically. The report predicts that China will leap from being the sixth largest market for IT products and services (in 2002) to being the third largest by 2006, overtaking Germany, the United Kingdom, France, and Italy.
  • Gains in software and services spending are usually at the expense of hardware spending. Worldwide hardware expenditures are expected to increase by a total of only 8.3% from 2002 to 2006, while software and services are set to increase by 27.2% and 17.7% respectively over the same time period.

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