July 14, 2013
At the half mark through 2013, both the global and the European tech markets have pockets of strength and other pockets of weakness, both by product and by geography. Forrester's mid-2013 global tech market update (July 12, 2013, “A Mixed Outlook For The Global Tech Market In 2013 And 2014 –The US Market And Software Buying Will Be The Drivers Of 2.3% Growth This Year And 5.4% Growth Next Year”) shows the US market for business and government purchases of information technology goods and services doing relatively well, along with tech markets in Latin America and Eastern Europe/Middle East/Africa and parts of Asia Pacific. However, the tech market in Western and Central Europe will post negative growth and those in Japan, Canada, Australia, and India will grow at a moderate pace. Measured in US dollars, growth will be subdued at 2.3% in 2013, thanks to the strong dollar, and revenues of US tech vendors will suffer as a result. However, in local currency terms, growth will more respectable, at 4.6%. Software — especially for analytical and collaborative applications and for software-as-a-service products — continue to be a bright spot, with 3.3% dollar growth and 5.7% in local currency-terms. Apart from enterprise purchases of tablets, hardware — both computer equipment and communications equipment — will be weak. IT services will be mixed, with slightly stronger demand for IT consulting and systems integration services than for IT outsourcing and hardware maintenance.
Our European tech market report shows that the same mixed patterns hold in Western and Central Europe, but at lower rates of growth (see July 12, 2013, “Continued Gloom For European ICT Markets –Tech Recession Extends Through 2013, At Least”). Measured in euros, purchases of IT goods and services by European businesses and governments will decline by 1.7%. Measured in local currencies, weighted average growth will be 0.2%, due to the strength of the British Pound, Swiss Franc, and Scandinavian currencies against the euro. Measured in US dollars, growth will be 0.6%. Southern Europe south of the Alps continues to be in moderate to deep recessions, with tech markets in Greece, Italy, Portugal and Spain continuing to be weak (though the Greek tech market may have hit bottom). Northeast Europe (Belgium, France, the Netherlands, and the UK) will show little or no growth in their tech markets in 2013. Northwest Europe (Germany, Denmark, Finland, Norway, Sweden, Switzerland, Austria, Poland, and many of the other Central European countries) will have the best performance, but even here growth will be in the low single digits in 2013. As at the global level, software in Europe will be the strongest category of tech buying, with services next, and hardware weakest.
We continue to expect somewhat better growth in tech demand in 2014, as US economic growth strengths, Europe at last starts to recover, and China, India, and Japan work past through some of their economic challenges. On a global basis, we are projecting 6.5% growth in local currency terms for 2014, and 5.6% in US dollars. In Western and Central Europe, our outlook is for 3.9% in euros in 2014, and 3.1% in US dollars.
The dominant theme for tech markets continues to be downward pull on business and government demand due to recessions or weak growth, and upward push from the attraction of new cloud, mobile, and smart computing technologies. Where worries about weak economic growth have eased as in the US, South Korea, and Australia, the attraction of these new technologies is starting to push tech market growth ahead of nominal GDP growth. Where worries about the economic outlook persist as in Japan, Germany, Canada, the UK, the Nordics, the Netherlands, and Switzerland but the lure of new technologies is strong, the result is modest growth in tech spending. Elsewhere, economic factors dominate, with tech growth in India, China, Latin America, Southern Europe, and Eastern Europe/Middle East, Africa tending to emulate economic growth. In these markets, apart from smart phones and tablets, business and government demand still tends to focus on established technologies, with only pockets of interest in cloud and smart computing technologies.