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ICT spend to reach $5,5trn by 2020


The growth of new technologies including the Internet of Things (IoT), Robotics, and Augmented Reality/Virtual Reality (AR/VR) will drive the next wave of growth in the information and communications technology (ICT) industry, enlarging the overall market opportunity to $5,5-trillion by 2020, according to IDC.
In its newly released IDC Worldwide Black Book: 3rd Platform Edition illustrates the extent to which the industry is dependent upon new technology innovation for growth in the years ahead, as traditional revenue streams begin to decline in the face of cannibalisation, substitution, and the shift to cloud-based solutions.
New technologies, which IDC calls “Innovation Accelerators,” will provide almost $7,4-trillion in aggregate industry revenue from 2015-2020, adding $1,8-trillion to the overall size of the industry in terms of annual sales by the end of the forecast period. A large proportion of this spending will come from the fast-growing IoT market, which is forecast to reach almost $1,3-trillion in annual revenue by 2020, of which more than $1-trillion represents new opportunity outside of traditional technology market categories (devices, infrastructure, software, services, and telecom). Robotics, AR/VR, security, cognitive/artificial intelligence, and 3D printing will contribute the rest of this fast-growing portion of the ICT market.
“The traditional ICT market of data centre infrastructure, client devices, software, services, and telecommunications is now growing at a rate not much faster than real GDP and increasingly resembles a mature sector of the overall economy,” says Stephen Minton, program vice-president, Customer Insights & Analysis. “In fact, even within this traditional taxonomy of technology products and services, all of the growth is now coming from just four segments, which IDC calls the 3rd Platform – cloud, mobility, big data and analytics, and social business. The rest of the industry is already declining, which represents a huge challenge for vendors that are dependent on legacy markets and technologies.”
Between 2015 and 2020, overall ICT Spending, excluding the Innovation Accelerators, will see a compound annual growth rate (CAGR) of just 1% in constant currency terms. Including the Innovation Accelerators, ICT spending will increase by 5% over the same period. In total, the Innovation Accelerators will post a CAGR of 18%. Asia/Pacific (excluding Japan) represents the largest market for Innovation Accelerators, forecast to reach more than $600-billion by 2020, followed closely by the United States. The fastest growth over the same period will be in Latin America, Central & Eastern Europe, and the Middle East and Africa.
“The writing is on the wall for legacy products and services, with the 3rd Platform and Innovation Accelerators driving all of the industry’s growth in the next five years and beyond,” adds Minton. “Device sales are now dominated by mobile devices and cloud service providers represent a growing proportion of all infrastructure hardware and software sales, while big data and analytics are at the heart of the fastest-growing opportunities. Meanwhile, growth in the telecom market is already entirely dependent on mobile.”
With public cloud services still growing at a double-digit rate, cloud will continue to cannibalise from traditional spending on infrastructure, software, and IT services. Big data and analytics is also still expanding at a double-digit rate of growth and is forecast to see a 12% CAGR between 2015 and 2020. Public cloud services and big data and analytics will each provide more than $200-billion in annual revenue by 2020. Meanwhile, the explosion in smartphone sales over the past few years and the ongoing growth of mobile data services means that mobility is already valued at more than $1,5-trillion in annual sales.
“There’s a lot of overlap between old technologies and new opportunities, which means that even the growth of traditional products such as servers and storage are dependent on the 3rd Platform and Innovation Accelerators for future growth,” says Minton. “The challenge for technology vendors is how quickly they can pivot from large, slowly-declining markets in order to achieve their full growth potential. The 2nd Platform still represents more than $1-trillion in annual ICT spending today, but the only way ahead is down.”