Modest optimism in the ICT-sector

Economic outlook is improving. IMF has corrected growth expectations for the world economy upwards last month. ECB reported recently it is counting with a modest growth in Europe.

This leads to more optimism in cyclical sectors as ICT is. Researcher Forrester reported this month that world expenditures in ICT are expected to increase in 2010 with 8%, of which the hardware and software segment will benefit most. This after a decrease of almost 9% in 2009.

Earlier trend watcher IDC detected a break in the downturn when they calculated that the PC sales in the US in Q4 2009 had increased with almost 25% compared to a year earlier. This is one of the largest increases of the last 10 years.

Reasons are the accelerating economy and several technological developments that stimulated new investments. On the other side it must be said that delayed purchases created an incidental impulse.

Gartner predicts a worldwide spending growth of 4,6% until 3,4% US dollar (2,4% euro).

It foresees higher spending in all segments: hardware, software and IT services. The largest growth will take place in emerging markets like Latin America, Middle East, Africa and Asia. The spending increase will be more moderate in Western Europe, USA and Japan.

In the latest Gartner survey under CIO’s in 500 companies the prediction was (Januar 19th)that European companies are going to spend 1,9% less than last year. Because pressure on ICT budgets is keeping on CIO’s are also looking at alternative ways to spend the money. Was the past 5 years BI (business intelligence) number one on their list, it’s now number 5. Virtualisation, cloud computing and making use of social media is now highest at the priority list of the IT director. Cost control is overwhelming number 1, while also productivity must increase.

In spite of economic optimism IMF and ECB are urging us to be cautious. They also see a recovery but are adding that it is fragile.

Part of the positive news has already been absorbed by the financial markets. The electronics and ICT sector saw their share prices increase with more then 70% which was more then double of the market average in the other sectors.

According to IDC Chief Analyst Frank Gens, "2010 will be a year of modest recovery for the IT and telecommunications industries. But the recovery will not mean a return to the pre-recession status quo. Rather, we'll see a radically transforming marketplace — driven by surging demand in emerging markets, growing impact from the cloud services model, an explosion of mobile devices and applications, and the continuing rollout of higher-speed networks. These transformational forces will drive key players to redefine themselves and their offerings and will spark lots of M&A activity."