IDC’s Black Books finds that IT spending is on track to increase by 5% in 2020, but that uncertainty around the Coronavirus may impact short-term investments:
“Much of this year’s growth is dependent on a positive smartphone cycle as the year progresses, but this is under threat from disruption caused by the Coronavirus crisis,” said Stephen Minton, program vice president in IDC’s Customer Insights & Analysis group. “Our current forecast is for broadly stable tech spending in 2020, but PC sales will be way down on last year, while server/storage investments will not recover to the levels of growth seen in 2018 when hyperscale service providers were deploying new datacenters at an aggressive pace.”
Hyperscale service provider IT spending will recover to 9% growth this year, up from just 3% in 2019, but this is short of the pace of two years ago. Cloud infrastructure and digital services providers will also continue to increase their IT budgets in order to meet strong end-user demand for cloud and digital services, which will continue to expand at a double-digit rate of growth as enterprise buyers increasingly shift their IT budgets to the as-a-service model.
“Much of the explosive growth in service provider spending from 2016 to 2018 was driven by aggressive roll-out of servers and storage capacity, but more spend is now moving to software and other technologies as these providers seek to drive into higher-margin solution markets including AI and IoT,” said Minton. “Nevertheless, after infrastructure spending cooled last year, we expect service provider spending to be broadly stable and positive in the next few years because these firms need to keep driving up capacity in order to deliver services to end-users.”