Last week Gartner revised its Global IT Spend forecast from that issued in Q3 2012. Gartner views much of the uncertainty surrounding the global economy as nearing resolution and thus the firm’s latest forecasts reflect more optimism. However, the media headlines regarding these changes can be somewhat confusing in terms of expected growth rates.
Gartner now forecasts global IT spending to be $3.7 trillion in 2013, up from the $3.6 trillion predicted for 2012. The confusion, at least for us, lies in the effects of constant currencies. On the basis of constant currency, according to Gartner, global IT spending increased 4.1 percent in 2012, and will increase another 3.9 percent in 2013. That is a reflection of nearly flat line growth and according to quote from a Gartner Managing Vice President published in the Financial Times, reflects that the global IT sector is maturing just a bit.
There are two other takeaways from this recent Gartner IT spend forecast.
Gartner revised downward its forecast for spending related to worldwide IT devices, which includes PC’s, tablets, mobile phones and printers. The current 2013 forecast is now $666 billion, representing a 6.2 percent increase from 2012. However, that forecast was reduced by $40 billion and the 7.9 percent forecast issued in Q3. Global spending from 2012-2016 was also significantly reduced. Gartner notes that increased market competition and cheaper Android powered devices have contributed to the reduction in its devices spending forecast. The implication, in our view, is that existing market players should anticipate an increased competitive environment with perhaps more fallout of existing suppliers. The forecast also presents a strategic message for Apple, which implies it must continue to diversify its product line-up into other areas.
The other takeaway reflects the global IT spending forecast related to Enterprise Software, which Gartner believes has the highest category of projected growth in 2013. According to Gartner, Enterprise Software spending is projected to grow from an estimated $278 billion in 2012 to $296 billion in 2013, representing a 6.4 percent increase. Gartner views hot areas as security and CRM. The firm anticipates that markets aligned to “big-data” information management initiatives will not see increased levels of investment until 2014 and beyond.
In the view of Supply Chain Matters, software related to supply chain management and B2C/B2B fulfillment should have another year of robust growth in 2013. C-level management now understands the critical role of supply chain in insuring global market penetration, successful product launches and in facilitating bottom-line business goal fulfillment. The current revolution in online fulfillment will also motivate many retail and supplier teams to increase investments in online fulfillment, advanced inventory management, supply chain wide enhanced visibility, business intelligence and cross-channel fulfillment programs.
Finally, we the enterprise software market remaining robust in 2013, look to increased acquisition activity among the major enterprise software providers as they each position to be the vendor with the broadest categories of offerings with market appeal in the coming years.
Last week, The Strategic Sourceror Blog reported what we at Supply Chain Matters have long suspected, that Apple is in the process of making a major change in its strategic component sourcing strategy. The Sourceror commentary makes note that recent reports published in the Taiwan Commercial Times point to Apple considering global semiconductor fab provider Taiwan Semiconductor Manufacturing (TSMC) as a new supplier for the A6X microprocessor utilized in some Apple iPad products. If this report proves to be accurate, TSMC will take over supply of this component from existing supplier Samsung Electronics.
In our Supply Chain Matters commentary published In late August 2012, we noted that in the light of the contentious patent infringement court battles among Apple and Samsung, that there may well be strategic supply contract implications. In that commentary, we speculated on whether Apple would gradually replace Samsung as a major supplier for its key ARM microprocessor chips that power iPhones and iPads. We noted that few suppliers could scale to the volume and cost delivery targets of Apple, and thus, any transition of strategic sourcing would gradually occur. The next major turning point would most likely be when certain Samsung multi-year strategic supply agreements reach renewal point.
Again, if these reports are indeed accurate, it would indicate that Apple is indeed moving in the direction of supplementing or perhaps replacing over the long-term, its strategic suppliers of ARM and other microprocessors. The next move to watch for will be confirmation from Apple and TSMC, as well as other announcements from Samsung relative to new supplier agreements with other high tech and consumer electronics providers.