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5G Smartphones Will Help Drive Overall IT Spending, But the Coronavirus Crisis Weighs Heavily

February 20, 2020 By Finley Engineering in

IT spending will increase about 5% on a worldwide basis in 2020, according to an IT spending forecast from International Data Corp. (IDC). But the Coronavirus crisis is a wildcard that could impact the cycle.

Smartphone sales will grow – primarily in the second half of the year — thanks to the introduction of 5G, while software and services investment are expected to remain stable, the research firm predicted. Sales of new 5G smartphones is key to overall IT growth.

“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 and analysis group, in a prepared statement. “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.”

Excluding smartphones, IT spending growth will drop from 7% in 2019 to 4% in 2020, according to IDC. Software growth will drop as well, falling from last year’s 10% to less than 9%. Growth will also dip for IT services, from 4% to 3%.

Most of the slowdown will be due to a 6% decline in PC sales as the recent buying cycle (partly driven by Windows 10 upgrades) comes to an end. Last year saw PC sales increase 7% over the previous year.

“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,” added  Minton.