September 11, 2012
With two thirds of 2012 completed, it has become clear that the global tech market is not going to grow as fast this year as we had expected in January. Back then, we predicted that business and government purchases of information technology would grow by 5.4% in 2012 when measured in US dollars. In our latest forecast (see September 10, 2012, Global Tech Market Outlook 2012 To 2013: Economic Weakness Will Slow, But Not, Stop Growth), we now expect growth of 1.3%. Much of this slowdown is due to greater-than-expected strength in the US dollar against other major currencies. Measured in local currencies to eliminate currency fluctuations, we project 2012 growth will be better at 3.6%. Still, this too is lower than our January prediction of 5.3%, which is the result of slower economic growth in the US, Europe, China, and India.
I want to point out that, apart from the currency effects, the slowdown is concentrated in one geography – Europe – and one tech product category – communications equipment. In local currency terms, the tech markets of the US and Asia Pacific will grow by 4% to 5%, while emerging markets in Latin America and Eastern Europe, Middle East, and Africa will expand by over 8%. The weak spot will be Western and Central Europe, where the tech market will shrink by 2.5%. On a similar basis, software, IT consulting and systems integration services, and IT outsourcing will grow by 4% to5% or more, and computer equipment by almost 3%. But communications equipment purchases will decline by almost 1%.
Other bright spots in the gloomy picture include software-as-a-service (where growth will be 12% in US dollars); smart process apps and analytics (12%); Apple Mac computers (9% growth in sales to business), and Apple and Android tablets (50% or more). Geographically, Brazil, China, and India will grow by 9% or so.
Overall, though, the tech market outlook for 2012 is not bright. Growth of 3% to 4% is unimpressive, even taking into account weak growth in the US and European recession. Things will improve in 2013, with local currency growth edging up to 5.1% and US dollar growing of 4.3%. But there will need to be a significant improvement in global economic growth before global tech markets will boom.