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Western Europe IT spending 'to shrink 0.7 per cent' in 2012

The European IT market looks set for a depressing 2012 amidst financial turmoil.

Europe

Western Europe IT spending will shrink by 0.7 per cent in 2012, due to the eurozone and hard-disk drive (HDD) shortage crises.

That was the prediction of Gartner, which today said the fallout from the Thai floods and global economic problems were going to hit IT spending hard this year.

Austerity measures from various Governments across Europe will also make a significant impact on public sector IT spending.

The scenarios are not great. They range from bad, to very bad to catastrophic.

Gartner downgraded its worldwide forecast too, claiming spending would total $3.8 trillion (2.5 billion) in 2012, representing a 3.7 per cent increase from 2011. It had previously predicted 4.6 per cent growth.

"Until the uncertainty is out of the way, we're just going to see continued gloom hanging over the eurozone," Richard Gordon, research vice president at Gartner, told IT Pro.

"The scenarios are not great. They range from bad, to very bad to catastrophic."

Gordon suggested the HDD situation, which has led major vendors like Intel to downgrade their own financial predictions, would continue to plague the IT industry for the rest of 2012.

"There are plans to rebuild but that's going to take time. You can't put in extra capacity overnight. It's quite sophisticated and specialised manufacturing technology," he said. "Our hard drive guys says there is only a week's worth of inventory. So there's not a lot in the channels.

"So likely through the first half of this year and even in the second half we're going to see that disruption. By the time we get to 2013, the industry will be back on its feet again. But this year is going to be quite severely impacted."

Thanks to the eurozone situation, IT departments will have to wait until the middle of the year for any big decisions, as that is when they will know more about the financial situation in Europe, the analyst said.

"In the short-term, I think businesses are going to be very cautious where they place their bets," he added, claiming it was likely IT departments would not be making any "Big Bang" changes in the next six months.

A cloudy future?

As in the recent recession, the cloud computing industry looks set to benefit from the downturn.

"All the uncertainty we've seen over the last four years has helped the case for cloud. More and more companies are liking the look of cloud solutions because it keeps them away from that capital exposure," Gordon added.

"If anything, the ongoing uncertainty will provide more impetus behind cloud just because of all the flexibility it offers."

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