In this post I summarize my findings to Q4 2023 and provide forecasts to 2025 for the ITC market by offering category and region. Overall there’s been good growth in spending since the on-set of the COVID-19 pandemic in Q2 2020 and the invasion of Ukraine by Russia in 2022; worldwide market growth was 10% in 2021, but just 1% and 2% in 2022 and 2023 respectively.
It is an everlasting problem for IT market researchers that we have to produce predictions for the year ahead before we have a chance to properly assess what happened at the end of the prior year. In my case a strong fourth quarter made the total market $151b larger in 2023 than I believed it would be. Comparing regional spending is also slightly problematic because we have to take account of (sometimes wild) fluctuations of local currencies against the $US, which I take for my assessments. In my chart above I show 2 lines for both Asia Pacific and EMEA;
- The ‘constant $’ dotted line for each shows the value of the market at exchange rates for each quarter fixed to those of Q1 2013 (using the Yuan Renminbi for Asia Pacific and the Euro for EMEA).
- The ‘current $’ solid lines show local quarterly values converted at the exchange rate applicable for each quarter individually.
The divergent lines for market sizes in EMEA is due to the significant devaluation of the Euro over time. Using constant conversion rates (the dotted line) shows that spending within EMEA has been much higher than when using constant ones. The has been less variation in Asia Pacific due to a closer matching of the value of the Yuan Renminbi to the $US historically.
There was of course much disruption caused by the COVID-19 pandemic, which had a dramatic effect on sales (especially in EMEA when assessed in constant dollar calculations – the dotted red line n the Figure above).
In 2023 Apple was the stand-out leader of the ITC market with double the market share of Microsoft in second position (see my Figure above, where I show market shares for the top 9 suppliers worldwide whose sales were $453B of the total $7,245B market. Other leading positions were taken by Telecoms suppliers Verizon, Deutsche Telekom and AT&T alongside other hardware suppliers Samsung, Dell and HP (Inc. and Enterprise combined). The fifth largest supplier was Amazon through sales of AWS cloud services – not bad for a vendor who arguably wasn’t an ITC supplier before its introduction.
My Figure above gives market shares for each of the four categories I study. In the year Amazon was the leader of the IT services market, Apple lead the hardware market, Microsoft – the software area and Verizon – the telecoms market. It’s interesting that spending on software was larger than on hardware for the first time in 2023.
In my Figure above I show market shares for each of the three regions for the total ITC market. There are some interesting differences:
- In the Americas there is only one top supplier – Deutsche Telekom – which is not an American company,
- In Asia Pacific there are only two – Apple and Microsoft;
- However in EMEA only three of the nine (Vodafone, France Telecom and Deutsche Telekom) are national suppliers.
These discrepancies are due in part to the increased regionalization of our market. I expect this to become even more extreme as the US government bars many US-designed technologies from being sold in China. Apple and Microsoft are the only companies to achieve top 9 status in all three regions.
Having assessed all quarters in 2023 I’ve drawn up full forecasts for 2024 and 2025 shown in the dotted lines of the Figure above. When looking at growth by category on an annual basis I expect:
- IT services to extend its lead over the other categories growing from $2.8T in 2023 to $2.9T in 2024 and $3.0T in 2025;
- Software to remain larger than Telecoms and Hardware, growing from $1.6T in 2023 to reach $1.7T by 2025;
- Hardware, which saw a 6% decline in sales in 2023 to $1.5T, should start to grow again, reaching $1.6T in 2025;
- Telecom services, which declined 11% in 2022 and 3% in 2023, should also start to grow again this year and reach $1.5T in 2025.
Overall I now expect the total market spending to be 3% in both 2024 and 2025. Free from the pandemic the world will continue to grow the ITC market each year, albeit with some divergence in the solutions being implemented in each region. I don’t have enough room here to show you how I see each of the 29 offerings will proceed – let me know if you’d like more detail.
My quarterly forecast of total ITC revenue/spending, net profit (both expressed in US dollars) and headcount for 2024 and 2025 is shown in the dotted lines of the Figure above. I expect:
- Revenue and headcount will grow by 3% and 1% in both 2024 and 2025;
- Net profit will decline by 39% in 2024 and grow by 17% in 2025.
My overall conclusion is that there will be small improvements in the market in the next couple of years.
I show my long-term regional forecast to 2033 in my Figure above. If right the comparative positions of each region will remain as they are now, but with a widening gap between the Americas in the other regions. Spending in EMEA will remain higher than in Asia Pacific, although the gap between the two will narrow. The most important consideration is exchange rates. EMEA currencies have dropped in significant value against the US dollar; Asia Pacific ones, less so. Measuring the value of the market will become more interesting should either the Yuan Renimbi or Euro surpass the US dollar as industry’s leading currency; unlikely perhaps unless the growing number of conflicts around the planet lead to another world war.
It pleases me to be able to assess this market – in the 40years I’ve been an analyst it has grown from being bracket as a part of ‘plant and machinery’ in government statistics to being the largest single market in the world. I was justified in picking computer market research as my profession!