Sales and manufacturing performance varies widely across tech sectors and regions, benefitting a handful of companies and forcing manufacturers to expand their hiring, production, and marketing investments in certain geographical locations at the expense of others.
That was my take on a recent research report from IDC that confirmed technology spending grew in 2011, despite Europe's tumultuous economic performance. The report indicated total “IT spending increased by 5 percent at constant currency in 2011,” but the growth was largely due to surging infrastructure spending in emerging economies and the increased penetration achieved by smartphones, tablet PCs, and other consumer electronics manufacturers.
That trend will persist in 2012, although the economic landscape may shift, making it difficult for forecasters to pin down how the IT market will perform. Still, certain factors that have governed the industry for 10 or more years will continue to determine future trends, according to IDC. These include economic contractions and turbulence in Western Europe and single-digit performance in North America, but surging growth in many emerging markets, including China, India, Brazil and Russia. IDC further predicts:
- In other regions, however, the momentum of 2011 is still evident in recent polls, which show continuing enthusiasm for tech investment amongst businesses and consumers. In the U.S., where IT spending increased by 7% last year, 2012 is likely to bring another year of solid growth (5%) driven by mobile devices, software and network equipment. Japan will see a return to positive growth, after the declines triggered by last year’s tsunami and earthquake disaster. IT spending in Brazil, Russia, India and China will be up by 9%, 11%, 16% and 15%, respectively.
Recent economic and technological developments will drive the market for the foreseeable future. Starting early in the last decade, the market began fracturing along broad lines — between consumer electronics and enterprise applications on one hand and, on the other, between developed and developing economies. While the United States remains a major market for high-tech companies, its dominance is being challenged by China and India, both of which are spending billions on infrastructure upgrades.
If the US is challenged, Europe is clearly waning. The region's debt-induced malaise crippled high-tech growth in 2011. IDC's forecast is for a 1 percent increase in European high-tech spending for 2012 and 3 percent in 2013. Even this barely optimistic outlook hinges on the continent getting its fiscal house in order. With governments curbing spending and businesses wary about the continent's economic outlook, any unexpected negative developments could throw the continent into a deeper funk.
“Europe is going to be a long, drawn-out recovery,” said Anna Toncheva, program manager and economist in IDC's Global Technology and Industry Research Organization, in the press release. “The debt crisis will take a long time to resolve, and there are numerous downside risks which could yet see the unraveling of the European single currency and, in the near term, an escalation of the crisis due to sovereign debt defaults in peripheral Eurozone countries.”
It's not all negative. Amidst all the challenges high-tech faces, consumer electronics remains a bright spot even in Europe. Sales of electronics devices for personal and household use are on the rise, paced by smartphones and personal computers, especially tablets. IDC said smartphones grew 46 percent in 2011 while software and disk storage systems expanded 6 percent each during the same period. “These positive trends are expected to continue in 2012, when enterprise spending on network equipment will also accelerate as many organizations invest in network upgrades to cope with the continuing increase in digital information,” the firm said.
I don't expect demand for smartphones, tablets, and other consumer electronics products to sink this year. The only uncertainty is in enterprise demand for high-tech devices, and this is contingent upon economic stability in Europe and continued growth in Asia plus the hope that the geo-political landscape remains favorable. Consumers, too, have to keep doing their bit.