Gartner's global IT spending forecast growth, in U.S. dollars, has been revised upward overall, from 3.2% to 5.4% for 2010 and from 3.5% to 5.1% in 2011, as shown in Table 1.

Source: Gartner (December 2010)

The main reasons for the upward revision are as follows:

• Currency exchange rate fluctuations have continued to affect our U.S. dollar-denominated forecast. Of the 2.2 percentage point increase in IT spending growth in 2010, 1.6% is attributable to the recent devaluation of the U.S. dollar against other currencies.
• However, in constant dollars (that is, stripping out the effect of currency exchange rate movements), IT spending growth in 2010 has been revised up from 3.4% to 4% as upward revisions in telecommunications spending has more than compensated for downward revisions to our forecast for client computing spending.
• Both in relative and absolute terms the most significant changes in the telecom forecast have been made in the mobile services and mobile device segments.
  • In relative terms, the most significant change occurred in the mobile device forecast. Strong sales of mobile devices in 3Q10, driven by smartphones in mature markets and white-box devices in emerging markets, as well as stronger local currencies, resulted in an upward revision of our forecast across 2010 through 2014. The CAGR for global mobile device revenue from 2009 through 2014 has been increased to 14.3%, up from 12.1% in the 3Q10 forecast.
  • In absolute terms the most significant change occurred in the mobile services forecast. A combination of updated connection data, increased average revenue per unit (ARPU) in certain countries and stronger local currencies resulted in an upward revision of our mobile service forecast across 2010 through 2014. The CAGR for global mobile services revenue from 2009 through 2014 has been increased to 7%, up from 5.3% in the 3Q10 forecast.
• The reductions in the client computing forecast for 2010 reflect concerns for U.S. and Western European PC growth given weak 3Q10 results and a still highly uncertain economic outlook for both markets. The reductions also reflect assumptions about displacement of PCs by media tablets in these markets — although the reductions on this account are relatively small as media tablet displacement is seen as a much bigger long-term problem. The reduction in the Western European forecast also reflects more aggressive assumptions about average selling price (ASP) declines in the region, which are expected to come about as the dollar continues to decline and constant U.S. dollar ASPs in Western Europe converge toward their U.S. counterparts.
• For 2011, currency exchange rate fluctuations actually have masked a downward revision to the underlying spending forecast. The 1.6 percentage point increase in U.S. dollar-denominated spending growth is assisted by a 2% gain because of U.S. dollar devaluation. Looked at another way, in constant dollars we have reduced the forecast for spending growth in 2011 from 4.7% to 4.3%, which is a 0.4% drop.
• The reduction in the overall IT spending forecast for 2011 is almost entirely the result of the reduction in the PC forecast, again concentrated in the U.S. and Western Europe with reductions to the Asia/Pacific forecast chipping in some additional downward pressure. Here again, the reductions to the U.S. and Western European PC forecasts reflect concern for PC growth given likely weak economic growth in 1H11. Media tablets also are expected to take a somewhat bigger bite out of growth than in 2011. The reduction to the Asia/Pacific forecast for PC spending reflects concern that the region’s strong growth in 2010 likely pulled some growth from 2011, precipitating a write-down of 2011. It also incorporates some effect on China's PC growth of the expected slowdown in Chinese economic growth. The reductions in the Western European and Asia/Pacific PC spending forecasts also reflect the assumption of slightly faster constant U.S. dollar ASP declines, fueled by further declines in the dollar.
• Longer term, the forecast for annual growth in global IT spending in U.S. dollars for 2012, 2013 and 2014 is virtually unchanged at about 4.5%, although the upward revisions for 2010 and 2011 have had the effect of increasing the five-year CAGR through 2014 to 4.8% from 4% last quarter.

IT Spending Forecast by Technology Sector

Gartner's updated global IT spending forecast by technology sector is shown in Table 2.

Source: Gartner (December 2010)

"Gartner Market Databook, December 2010 Update"