China passes Japan to become world's 2nd largest IT market

First place U.S. still has IT market 3x size of China, though the latter is seeing far more rapid growth, IDC says

China overtook Japan in IT spending this year to become the world's second largest IT market, according to market research firm IDC.

The U.S. remains the largest IT market the world, still more than three times the size of China. But China's IT spending is increasing by double digits, and technology industry investment is a high priority thre.

China's IT spending increased by 8.3 per cent this year, nearly double that of the US, and is forecast to further grow by 14.1 per cent next year, said Frank Gens, chief analyst at IDC.

The clearest evidence of China's interest in building a technology market is its development of the world's fastest supercomputer, topping the Top 500 list.

China's overall IT spending is projected to hit $US204 billion in 2014, versus $US686 billion in the US, said Gens.

U.S. IT spending grew 4.7 per cent in 2013, and is forecast to rise by 3.8 per cent next year.

China's IT spending will increase by $US25 billion in 2014, the same dollar increase as in the US.

"It's going to be quite a while before it [China] closes the gap" with the US, said Gens, who expects China's IT growth rate to slow as it grows.

In 2013, China's IT spending will total $US179 billion, beating Japan's $US173 billion by $US5 billion.

China's rate of spending says "that China is the place you have to be if you are in the IT market," said Gens.

In the global market, IDC expects global IT spending to rise by 5.1 per cent next year to over $US2.1 trillion.

The 2014 forecast for the global IT market would have been higher - 5.6 per cent - if not for the steep decline in PC sales, said Gens.

PC sales account for about 10 per cent of all global IT spending. IDC projects that PC revenue will decline by 9 per cent this year, and by about 6 per cent next year.

The PC revenue decline is reflected in PC shipments, which are down 10.1%, reported IDC.

Despite the revenue drag created by global PC sales, other segments of IT spending, including IT services and software, increased this year.

Server revenue declined by 3.5 per cent this year but is expected to increase by 1.6 per cent next year.

Gens said IT spending is rising, but users are shifting to cloud computing, mobile technology and big data, and IT managers will have to adapt.

In 2014, for instance, IDC expects that 25 per cent to 30 per cent of all servers will be shipped to cloud servers providers. By 2017, that percentage is expected to reach 43 per cent.

Patrick Thibodeau covers SaaS and enterprise applications, outsourcing, government IT policies, data centers and IT workforce issues for Computerworld. Follow Patrick on Twitter at @DCgov, or subscribe to Patrick's RSS feed . His email address is pthibodeau@computerworld.com.

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