Global IT Spending to Grow 6.2 Percent in 2018, State of the IT Market

Worldwide IT spending is projected to total $3.7 trillion in 2018, an increase of 6.2 percent from 2017, according to the latest forecast by Gartner, Inc.

“Although global IT spending is forecast to grow 6.2 percent this year, the declining U.S. dollar has caused currency tailwinds, which are the main reason for this strong growth,” said John-David Lovelock, research vice president at Gartner. “This is the highest annual growth rate that Gartner has forecast since 2007 and would be a sign of a new cycle of IT growth. However, spending on IT around the world is growing at expected levels and is in line with expected global economic growth. Through 2018 and 2019, the U.S. dollar is expected to trend stronger while enduring tremendous volatility due to the uncertain political environment, the North American Free Trade Agreement renegotiation and the potential for trade wars.”

Enterprise software spending is forecast to experience the highest growth in 2018 with an 11.1 percent increase (see Table 1). Barring unexpected disruption, the software industry is expected to continue capitalizing on the evolution of digital business. Application software spending is expected to continue to rise through 2019, and infrastructure software will also continue to grow, bolstered by modernization initiatives.

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)
		2017		2017		2018		2018		2019		2019
		Spending		Growth (%)		Spending		Growth (%)		Spending		Growth (%)
Data Center Systems		181		6.3		188		3.7		190		1.1
Enterprise Software		352		8.8		391		11.1		424		8.4
Devices		663		5.1		706		6.6		715		1.3
IT Services		933		4.4		1,003		7.4		1,048		4.6
Communications Services		1,392		1.3		1,452		4.3		1,468		1.1
Overall IT		3,521		3.8		3,740		6.2		3,846		2.8
Source: Gartner (April 2018)

Even with a strong end to 2017, worldwide spending on data center systems is forecast to grow 3.7 percent in 2018, down from 6.3 percent growth in 2017. The longer-term outlook continues to have challenges, particularly for the storage segment. The strength at the end of 2017 was primarily driven by the component shortage for memory components, and prices have increased at a greater rate than previously expected. Whereas previously, component shortages were expected to ease into 2018, the shortages are now expected to continue throughout the year with the supply not expected to ease until the end of the year.

Worldwide spending for devices — PCs, tablets and mobile phones — is forecast to grow in 2018, reaching $706 billion, an increase of 6.6 percent from 2017. “The device market continues to see dual dynamics. Some users are holding back from buying, and those that are buying are doing so, on average, at higher price points,” said Mr. Lovelock. “As a result, end-user spending will increase faster than units through 2022. However, total end-user spending and unit shipments are expected to be lower compared with previous forecasts, as demand for ultramobile premium devices, ultramobile utility devices and basic phones is expected to be slow.”

More detailed analysis on the outlook for the IT industry will be provided in the complimentary webinar “IT Spending Forecast Q1 2018: The Digital Storm – Will You Sink or Surf?” at 11 a.m. ET on April 10, 2018, and on demand. During the webinar, Gartner analysts will discuss the full IT spending forecast and details on which IT markets are poised to take advantage of the digital storm.

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across the hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available at Gartner Worldwide Spending Forecast. This quarterly IT Spending Forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

Spending on IT Infrastructure for Deployment in Cloud Environments is Forecast to Grow 10.9% in 2018, According to IDC

According to a new forecast from the International Data Corporation (IDC) Worldwide Quarterly Cloud IT Infrastructure Tracker, total spending on IT infrastructure products (server, enterprise storage, and Ethernet switches) for deployment in cloud environments is expected to total $52.3 billion in 2018 with year-over-year growth of 10.9%. Public cloud datacenters will account for a majority of this spending, 65.9%, growing at the fastest annual rate of 11.3%. Off-premises private cloud environments will represent 13.0% of cloud IT infrastructure spending, growing at 12.0% year over year. On-premises private clouds will account for 61.7% of spending on private cloud IT infrastructure and will grow 9.1% year over year in 2018.

Worldwide spending on traditional, non-cloud, IT infrastructure is expected to decline by 2.0% in 2018 but nevertheless will account for the majority, 54.7%, of total end user spending on IT infrastructure products across the three product segments, down from 57.8% in 2017. This represents a faster share loss than in the previous three years. The growing share of cloud environments in overall spending on IT infrastructure is common across all regions.

In cloud IT environments, spending in all technology segments, except for storage platforms, is forecast to grow at double digit rates in 2018. Ethernet switches and compute platforms will be the fastest growing at 20.9% and 12.4%, respectively, while spending on storage platforms will grow 6.0%. Investments in all three technologies will increase across all cloud deployment models – public cloud, private cloud off-premises, and private cloud on-premises.

Long-term, IDC expects spending on off-premises cloud IT infrastructure will grow at a five-year compound annual growth rate (CAGR) of 10.8%, reaching $55.7 billion in 2022. Public cloud datacenters will account for 83.6% of this amount growing at a 10.6% CAGR while spending on off-premises private cloud infrastructure will increase at a CAGR of 11.4%. Combined with on-premises private cloud, overall spending on cloud IT infrastructure will grow at an 10.9% CAGR and by 2022 will surpass spending on non-cloud IT infrastructure. Spending on on-premises private cloud IT infrastructure will grow at a 11.5% CAGR, while spending on non-cloud IT (on-premises and off-premises combined) will decline at a 2.7% CAGR during the same period.

Gartner: Worldwide PC Shipments Declined 1.4 Percent in First Quarter of 2018
Lower Shipments in Asia/Pacific and the U.S. Drag Down Global Results
Worldwide PC shipments totaled 61.7 million units in the first quarter of 2018, a 1.4 percent decline from the first quarter of 2017, according to preliminary results by Gartner, Inc. The PC market experienced a 14th consecutive quarter of decline, dating back to the second quarter of 2012.

Asia/Pacific and the U.S. experienced declining shipments, while other regions saw some minimal growth, but it was not enough to drive overall growth for the PC industry. In the first quarter of 2018, PC shipments in Asia/Pacific declined 3.9 percent compared with the same period last year, while shipments in the U.S. decreased 2.9 percent.

“The major contributor to the decline came from China, where unit shipments declined 5.7 percent year over year,” said Mikako Kitagawa, principal analyst at Gartner. “This was driven by China’s business market, where some state-owned and large enterprises postponed new purchases or upgrades, awaiting new policies and officials’ reassignments after the session of the National People’s Congress in early March.

“In the first quarter of 2018, there was some inventory carryover from the fourth quarter of 2017,” Ms. Kitagawa said. “At the same time, vendors were cautious in overstocking due to the upcoming release of new models in the second quarter of 2018 with Intel’s new eighth-generation core processors.”

The top three vendors — HP, Lenovo and Dell — accounted for 56.9 percent of global PC shipments in the first quarter of 2018, compared with 54.5 percent of shipments in the first quarter of 2017 (see Table 1). Dell experienced the strongest growth rate among the top six vendors worldwide, as its shipments increased 6.5 percent.

Table 1
Preliminary Worldwide PC Vendor Unit Shipment Estimates for 1Q18 (Thousands of Units)
Company		1Q18		1Q18 Market		1Q17		1Q17 Market		1Q18-1Q17
		Shipments		Share (%)		Shipments		Share (%)		Growth (%)
HP Inc.		12,856		20.8		12,505		20		2.8
Lenovo		12,346		20		12,305		19.7		0.3
Dell		9,883		16		9,277		14.8		6.5
Apple		4,264		6.9		4,199		6.7		1.5
Asus		3,900		6.3		4,458		7.1		-12.5
Acer Group		3,828		6.2		4,189		6.7		-8.6
Others		14,609		23.7		15,637		25		6.6
Total		61,686		100		62,569		100		-1.4

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels. Numbers may not add up to totals shown due to rounding.

Source: Gartner (April 2018)

HP Inc.’s worldwide PC shipments increased 2.8 percent in the first quarter of 2018 versus the same period last year. In EMEA, HP Inc. recorded double-digit growth in both desktop and mobile PCs. This was contrasted with a small decline in other regions. HP Inc. was adversely impacted by declining demand in the U.S., which generally accounts for one-third of its total shipments.

Lenovo’s global PC shipments remained flat in the first quarter of 2018. Lenovo achieved 6 percent growth in EMEA and double-digit shipment growth in Latin America. However, in Asia/Pacific (its largest market), PC shipments declined 4 percent.

After record holiday sales for consumer and gaming products in the fourth quarter of 2017, Dell continued to perform well in the first quarter of 2018. With double-digit shipment increases in EMEA, North America and Latin America, Dell grew in all regions except Asia/Pacific. Desktop and mobile PCs grew in equal measures, showing Dell’s strength in the business segment.

Rising ASPs

The average selling prices (ASPs) of PCs continue to rise. Acknowledging deceleration in the smartphone market, and uncertainty in PC replacement demand, component companies remain cautious about expanding their production capabilities. Therefore, persistent component shortages and a rising bill of materials continue to create an environment conductive to higher prices.

“In contrast to other DRAM-related price spikes, PC vendors are not reacting by reducing DRAM content. Rather they have passed the cost increase to consumers,” Ms. Kitagawa said. “With fewer people buying new machines, manufacturers need to get the highest profit margin from each sale. To do that, they are raising the selling points and focusing on customer experience or perception of value.”

Regional Overview

In the U.S., PC shipments totaled 11.8 million units in the first quarter of 2018, a 2.9 percent decrease from the first quarter of 2017. Dell moved into the No. 1 position in the U.S. based on shipments, as its market share increased to 29.1 percent. HP Inc. moved into the No. 2 position as its shipments declined 4.8 percent, and its market share totaled 28.4 percent in the first quarter of 2018.

Table 2
Preliminary U.S. PC Vendor Unit Shipment Estimates for 1Q18 (Thousands of Units)
Company		1Q18		1Q18 Market		1Q17		1Q17 Market		1Q18-1Q17
		Shipments		Share (%)		Shipments		Share (%)		Growth (%)
Dell		3,440		29.1		3,198		26.2		7.6
HP Inc.		3,363		28.4		3,532		29		-4.8
Lenovo		1,632		13.8		1,714		14.1		-4.8
Apple		1,491		12.6		1,484		12.2		0.5
Acer Group		321		2.7		429		3.5		-25.1
Others		1,586		13.4		1,836		15.1		-13.6
Total		11,833		100		12,193		100		-2.9

Notes: Data includes desk-based PCs, notebook PCs and ultramobile premiums (such as Microsoft Surface), but not Chromebooks or iPads. All data is estimated based on a preliminary study. Final estimates will be subject to change. The statistics are based on shipments selling into channels. Numbers may not add up to totals shown due to rounding.

Source: Gartner (April 2018)

PC shipments in EMEA totaled 18.6 million units in the first quarter of 2018, a 1.7 percent increase year over year. Enterprise shipments increased as many Windows 10 projects that were put on hold in 2017 began to be implemented. The fast approach of the compliance deadline for the General Data Protection Regulation (GDPR) in Europe, as well as earlier reports of cybersecurity breaches, made security a strong priority in the hardware refresh cycle among enterprises. Eurasia continued to be a bright spot for EMEA, as several countries, such as Russia, Ukraine and Kazakhstan, saw strong demand in the first quarter of 2018.

PC shipments in Asia/Pacific totaled 21.9 million units in the first quarter of 2018, a 3.9 percent decline from the first quarter of 2017. As previously mentioned, the PC market in China drove the decline in Asia/Pacific. There is no significant sign of strong upgrading to the special version of Windows 10 from the Chinese government institutions. Consumer demand was weak as most buyers already took advantage of the aggressive promotions offered in the fourth quarter of 2017.

These results are preliminary. Final statistics will be available soon to clients of Gartner’s PC Quarterly Statistics Worldwide by Region program. This program offers a comprehensive and timely picture of the worldwide PC market, allowing product planning, distribution, marketing and sales organizations to keep abreast of key issues and their future implications around the globe.

IDC: Traditional PC Market Exceeds Expectations with Flat Year-on-Year Shipment Growth

Worldwide shipments of traditional PCs (desktop, notebook, and workstation) totaled 60.4 million units and recorded flat (0.0%) year-on-year growth in the first quarter of 2018 (1Q18), according to the International Data Corporation (IDC) Worldwide Quarterly Personal Computing Device Tracker. The results exceeded the earlier forecast of a 1.5% decline and marks the third consecutive quarter where traditional PC shipment volume has hovered around flat growth year on year.

Although the numbers are preliminary, the data seems to indicate a continued build up in commercial renewal activity as the main driver for the stabilizing trend. Business uptake of Windows 10 systems appear to be steadily ongoing, benefiting commercially-focused PC OEMs such as HP, Dell, and Lenovo. Demand for premium notebooks in both the consumer and commercial segments have also helped major vendors retain better margins and garner buyer interest. Furthermore, continued focus on gaming systems has injected slight improvement in pockets of the consumer space. Unlike the first quarter of 2017, an improved supply of key notebook components also loosened pressures on both supply and pricing, leading to some recovery of share for the smaller vendors.

From a geographic perspective, mature markets uniformly fared positively. The U.S. market saw modest growth after six quarters of year-on-year declines and Japan continued with its seventh consecutive quarter of growth. Emerging markets were more of a mixed bag as Asia/Pacific (excluding Japan) (APeJ) shrank for the quarter while Latin America continued to recover positively against a tough 2017.

“The component shortage that initially impacted portions of 2017 led some vendors to stock up inventory to avoid expected component price hikes, and that led to some concerns of excess stock that would be hard to digest in subsequent quarters,” said Jay Chou, research manager with IDC’s Personal Computing Device Tracker. “However, the market is continuing on a resilient path that should see modest commercial momentum through 2020.”

“The year kicked off with optimism returning to the U.S. PC market, especially on the notebook side,” said Neha Mahajan, senior research analyst, Devices & Displays. “A likely rise in commercial activity amidst a positive economic environment is expected to further strengthen demand. The retail platform too shows signs of stability especially with a fast-growing gaming community adding to the confidence.”

Regional Highlights

The USA market saw a promising opening quarter for the year with almost all major vendors reporting increases in notebook sales. Overall, total PC shipments for 1Q18 stood at 13.5 million units.

In Europe, the Middle East and Africa (EMEA), the traditional PC market showed stable growth for the quarter, benefiting from a positive performance across both product categories. Continued mobility adoption and increased customer awareness of the value proposition of more premium devices enabled notebooks to maintain a growth trajectory. On the other side, desktops posted strong results, driven by the growing gaming market as well as long-awaited commercial device refreshes in certain sub regions.

The APeJ traditional PC market ended the quarter slightly short of expectations. India and Indonesia showed better than anticipated results, but the PC market in China performed below forecast with shipments weakened by a smaller number of promotions in the consumer segment and softer demand from the public sector.

The Japan commercial market was a couple points below expectations due to slowing of the momentum seen in 4Q17, but it still maintained healthy growth in 1Q18. The consumer segment was slightly better than the previous quarter in term of growth, but IDC believes shipments during the first three quarters of 2017 affected future demand, causing growth to decelerate in 4Q17 and after.

Company Highlights

HP Inc. maintained a comfortable lead over all others in the market with its eighth consecutive quarter of overall growth (up 4.3% year on year) and growth in all regions except Latin America.

Lenovo saw a flat quarter in 1Q18, the third consecutive quarter in which the company saw year-on-year volume stabilize with flat global growth and a slower pace of decline in the U.S.

Dell Inc. posted the strongest year-on-year growth out of all the major companies, growing 6.4% and buoyed by strong performances in nearly every region.

Acer held onto the fourth position. Its ongoing expansion into gaming and continued investments in Chromebooks have paid dividends for the company, but also caused some tough going in other arenas.

Apple finished the quarter in the fifth position with a year-on-year decline in shipments of 4.8%

Top Companies, Worldwide Traditional PC Shipments, Market Share, and Year-On-Year Growth, First Quarter of 2018 (Preliminary results) (Shipments are in thousands of units)
Company		1Q18 Shipments		1Q18 Market Share		1Q17 Shipments		1Q17 Market Share		1Q18/1Q17 Growth
1. HP Inc		13,676		22.60%		13,108		21.70%		4.30%
2. Lenovo		12,305		20.40%		12,300		20.40%		0.00%
3. Dell Inc		10,190		16.90%		9,573		15.90%		6.40%
4. Acer Group		4,085		6.80%		4,428		7.30%		-7.70%
5. Apple		4,000		6.60%		4,201		7.00%		-4.80%
Others		16,128		26.70%		16,787		27.80%		-3.90%
Total		60,383		100.00%		60,397		100.00%		0.00%
Source: IDC Quarterly Personal Computing Device Tracker, April 11, 2018

Table Notes:
Some IDC estimates prior to financial earnings reports.
Shipments include shipments to distribution channels or end users. OEM sales are counted under the company/brand under which they are sold.
Traditional PCs include Desktops, Notebooks, and Workstations and do not include Tablets or x86 Servers. Detachable Tablets and Slate Tablets are part of the Personal Computing Device Tracker but are not addressed in this press release.
Data for all companies are reported for calendar periods.

Worldwide ICT Spending Including New Tech Expected to Exceed $5.6 Trillion in 2021, According to New IDC Black Book

Worldwide information and communications technology (ICT) spending, including new technologies, is expected to exceed $5.6 trillion in 2021 with growth accelerating through the end of the forecast period as new categories account for a growing proportion of overall investments, according to the latest version of the Worldwide Black Book: 3rd Platform Edition from International Data Corporation (IDC).

By 2021, new 3rd Platform technologies, including Internet of Things (IoT) solutions, robots and drones, augmented reality and virtual reality (AR/VR) headsets, and 3D printers, will account for almost a quarter (23%) of total ICT spending. Overall, 3rd Platform investments, including the Four Pillars of cloud, mobile, big data & analytics, and social, will make up more than 70% of worldwide ICT spending.

The fastest-growing technology markets last year were AR/VR, cognitive and artificial intelligence (AI), 3D printing, and robotics. Meanwhile, IoT has already grown to account for 15% of ICT spending, including new operational technology (OT) software and services, which represent expanding opportunity and potential disruption for traditional software and services vendors. But while the adoption of 3rd Platform technologies is broadly positive across all countries, there are key geographic differences in terms of early adoption and short-term opportunities.

“Mature economies are leading the way in some 3rd Platform markets, thanks to more advanced cloud infrastructure and software innovation driving rapid adoption of solutions around big data and analytics, cognitive AI, and cloud-based software,” said Stephen Minton, vice president, Customer Insights & Analysis at IDC. “It’s a different story with technologies that are focused on industrial use cases in the manufacturing industry, such as IoT and robotics. Emerging leaders like China are driving much of the innovation in real-world deployments around these industry-focused technologies.”

China accounted for 28% of worldwide IoT spending in 2017, and 29% of total robotics investments, compared to just 12% of traditional ICT spending categories (hardware, software, services and telecom). Japan and some other Asia/Pacific countries are also early adopters of robotics and IoT. 3D printing has seen strong early adoption in China and Germany. Cognitive AI investments are dominated by U.S. businesses, who are also leading the way in AR/VR prototypes. Emerging markets, such as India and Brazil, are major contributors to overall mobility spending, but are still playing catch up when it comes to cloud.

“While the traditional ICT market has become more homogenous in the last few years, as emerging markets caught up to mature economies and often leapfrogged legacy technologies in their adoption of mobile solutions, the 3rd Platform brings with it a new period of fragmentation,” added Minton. “The U.S. is once again at the forefront of much new software innovation, while countries like China and Germany are driving industry-focused categories. Understanding these regional and country-level differences, including the drivers and inhibitors behind likely adoption curves for new technologies, will be key to ICT vendor strategy in the next 5-10 years.”

The latest version of IDC’s Worldwide Black Book: 3rd Platform Edition includes forecasts for 33 countries segmented by 44 technologies and 11 platforms. IDC defines the 3rd Platform as a leading driver and force of innovation consisting of the Four Pillars of cloud, mobility, big data & analytics, and social, plus the Innovation Accelerators of IoT, robotics, cognitive AI, AR/VR, 3D printing, and next-generation security.