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% in constant currency terms.
Annual 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.
Worldwide ICT spending is set to accelerate over the next five years, thanks to the growth of new technologies including the Internet of Things (IoT), robotics, augmented and virtual reality (AR/VR), cognitive computing and artificial intelligence (AI). The growth of cloud will also cannibalize from traditional ICT revenues, concentrating more IT capital spending into the hands of large cloud service providers. Traditional IT spending will grow at an annual rate of 3-4% through the next five years, while telecom spending increases by approximately 1% per year.
New growth opportunities have meanwhile emerged in the new technologies which IDC calls “Innovation Accelerators” (IoT, cognitive AI, robotics, AR/VR, 3D printing, and next-gen security). New ICT spending from these categories will grow by 17% in 2017, and will continue to accelerate over the next five years as adoption levels surge around the world, including in emerging markets.
“The Innovation Accelerators are an important driver for the 3rd Platform, which is rapidly replacing the 2nd Platform of on-premise datacenters, devices, and software,” said Stephen Minton, vice president in IDC’s Customer Insights & Analysis group.
“Not only does this introduce new high-growth categories like VR viewers, drones, 3D printers, and IoT solutions, but it also represents a growing shift in traditional categories like the growth of IoT servers or cognitive AI software,” added Minton.
While emerging markets like Asia/Pacific (excluding Japan) are driving the growth of some new categories, enterprises in the United States continue to be early adopters of software-based innovation, including cloud, big data and analytics, and cognitive AI. It will take longer for some emerging economies to reach the same level of software development and infrastructure that has enabled the rapid growth of cloud-based computing in the U.S. Nevertheless, the direction of ICT spending is the same in every region.
“In the Central & Eastern Europe (CEE) region, most 2nd Platform technology categories are in decline,” said Thomas Vavra, vice president of Software research in the CEMA region.
“Conversely, and with the exception of a couple of mobile device categories, every technology on the 3rd Platform is growing strongly. In short, 3rd Platform investments are the growth engine of the IT market in the region.”
Like many emerging markets, CEE has lagged behind some mature economies when it comes to the adoption of technologies such as cloud, which are more dependent on fixed-line infrastructure, or in the development of cutting-edge software solutions for the local market. Asia/Pacific, for example, accounted for more than 50% of global IoT spending in 2016 but only 6% of investment in cognitive AI. In the longer term, however, the continued growth of investment in mobile infrastructure and software solutions will come to drive these regions to the next level of 3rd Platform innovation.