The good times may soon be back: IDC expects ICT spending to rise but ‘trad’ telecom to lag

Ian Scales
By Ian Scales

Oct 18, 2017

Source: IDC

Source: IDC

  • ICT spending set to get back to historic 'twice global GDP' levels
  • However, traditional spending (telecom and old school IT) will be laggards
  • New tech areas like IoT, AI and VR, will boom

Things are looking healthy for the broad global ICT market which is returning to its long term growth track of twice GDP growth - around 6 per cent - according to IDC.  As you’d expect though, not all sectors are will enjoy the growth goodies at the same rate.

By 2020 what IDC calls ‘traditional’ ICT spending will actually lag average GDP by a considerable margin, or put another way, will take a much lower share of ICT spend.

The ‘traditional’ categories - IT and telecom - are now mature  sectors of the economy, says IDC, and aren’t expected to grow fast because their related technology sectors, like smartphones, for instance, will further saturate and commoditize.

Cloud will cannibalize revenue from traditional ICT, concentrating more IT capital spending into the hands of large cloud service providers. As a result traditional IT spending will grow at an annual rate of 3-4 per cent through the next five years, while telecom spending will increase by approximately 1 per cent a year. Telecom spend will still be large, but the spend growth won’t be there.

The big numbers

Total ICT spending on traditional IT, telecom services, and new technologies will grow from $4.3 trillion in 2016 to $5.6 trillion by 2021, representing a compound annual growth rate (CAGR) of 6 percent in constant currency terms. And that growth will accelerate through the forecast period, from 5.5% in 2017 to 6.5% in 2021, as new technologies account for a growing proportion of the overall market.

The growth that IDC is expecting to make up the 6 per cent will come from what it calls “Innovation Accelerator” categories. These include our old friends IoT, cognitive AI, robotics, AR/VR, 3D printing, and next-gen security and together will grow by 17 per cent in 2017, and will continue to accelerate over the next five years as adoption levels surge around the world, including in emerging markets. IDC reckons IoT, robotics, and AR/VR in particular will come to represent a significant proportion of the overall ICT market by 2021.

IDC sees the ICT market dynamic as involving a change of platforms. The train terminating at one platform is carrying old school on-premises data centres, devices and software while the training getting up steam on the other platform is comprised of  cloud, mobile, big data and analytics plus ‘social’, and will make up 75 per cent of total ICT spending by 2021, it claims.

Email Newsletters

Sign up to receive TelecomTV's top news and videos, plus exclusive subscriber-only content direct to your inbox.