Business

U.S.’s software strength to lead modest growth in global tech market

Above: Forrester's projected global business and government spending on IT products and services in 2014 (US$ billions).

Image Credit: Forrester

As the global economy continues it shaky recovery, the technology market is expected to demonstrate modest growth. But don’t expect a return to the massive growth rates of the late 1990s any time soon.

On Thursday, research firm Forrester published a two-year forecast for the global tech market, predicting 5.5 percent growth in information technologies purchases in 2014 (adjusted for exchange rates). That’s only a tad better than the 4.3 percent global growth seen in 2013, though the research firm expects a stronger IT growth rate of 6.9 percent in 2015.

Forrester predicts the global technology market will be worth $2.22 trillion in 2014 between software, hardware, and IT services.

“Overall, we’re looking at 2014 as being a somewhat better year for the tech market than 2013, with the U.S. market doing the best, relatively speaking,” said Andrew Bartels, the author of the Forrester report, in a conversation with VentureBeat. “Additionally, the technology market for software is expected to do well.”

While the U.S. is expected to solidify its position as the largest single-country tech market in 2014, with projected growth of 6.3 percent, the report anticipates major tech market growth in Brazil and Mexico, at 11.6 percent and 10.1 percent, respectively. China and India are also expected to grow 7.7 percent each. But those countries are all coming off fairly weak years, noted Bartels.

“As their economies improve in 2014, so too will their tech buying pick up as they recover,” he said.

The U.S. market growth and strong performance of the software market are interconnected, Bartels explained. The U.S. is the largest provider and consumer of software, including software-as-a-service (SaaS), analytics solutions, and mobile apps, some of the sector’s strongest performers.

SaaS has seen more than 20 percent growth rates annually, and Bartels anticipates that will continue. Sustained growth in SaaS will hurt the IT services industry, because there’s simply much less implementation that goes along with SaaS than with on-premises software.

Bartels expects hardware sales to lag behind software. Only the tablet market is expected to perform well, while laptops and PCs will see a “modest recovery.”

While overall growth is the tech market is improving, it’s not doing “really great,” so hardware and software vendors may still discount their products in order to secure sales.

“Make purchases now before prices start to rise,” Bartels advised. “It’s a good time to invest.”


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