More computers

International Journal of Productivity and Performance Management

ISSN: 1741-0401

Article publication date: 1 September 2004



(2004), "More computers", International Journal of Productivity and Performance Management, Vol. 53 No. 6.



Emerald Group Publishing Limited

Copyright © 2004, Emerald Group Publishing Limited

More computers

IDC is forecasting a 3.9 per cent recovery in European IT spending during 2004. After two years of market decline 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 per cent, driven by robust system infrastructure sales, notably across all areas of security. Total hardware sales will grow by 4 per cent, masking contrasting trends within the market – although hardware shipments are picking up, price consolidation continues to dampen revenue growth, and spending on systems is expected to show a 1 per cent 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 per cent 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.

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