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2004 Signals Return to Growth in European IT Markets
Latest forecasts compiled by IDC point to a 3.9% recovery in European IT spending in 2004. After two years of market declines and following improvements in the economic outlook, European IT budgets are finally growing again. Already, there has been a pick up in corporate refresh cycles, expected to accelerate during the course of 2004. In the short term, IT investment is essentially being allocated to priority infrastructure renewals and upgrades.
"Companies are starting to feel more confident about overall business prospects," said Elsa Opitz, research analyst for IDC's European IT Markets. "This renewed optimism is helping transform pent-up demand into small IT budget increases, but IT buyers remain prudent, notably with regards to new projects. Extensive pilots and proofs of concept are required prior to real product implementation, significantly prolonging the sales cycle."
Within the three primary markets, software will see the strongest revival at 5.6%, driven by robust system infrastructure sales, notably across all areas of security. Total hardware sales will grow by 4%, masking contrasting trends within the market — though hardware shipments are picking up, price consolidation continues to dampen revenue growth, and spending on systems is expected to show a 1% decline in 2004. Nevertheless, healthy demand for notebooks and consumer devices will help push up overall market growth.
The services market is forecast to expand by 3.1% this year, though discretionary spending on project-based services remains somewhat limited. Companies continue to seek ways of outsourcing operational costs as well as complexity, in a bid to cut their IT bill. This is leading to increased vendor competition and pressures on margins in the contract-bidding process.
Version 1Q, 2004 of the Western European Black Book Query Tool includes IDC's most recent and updated regional and country-level IT spending forecasts for the period 2003–2008. The forecasts cover 25 market segments across hardware, software, and IT services (Western European Black Book Query Tool, vQ1 2004, April 2004, IDC #A61L). To purchase this document contact your local IDC office. 22.04.2004, IDC
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