ITC spending -5.5% in Q2 2015 – we’re in another downturn

category forecast

I’ve just finished assessing the revenues of 150 separate IT and C vendors and am sorry to report that their results continued to worsen. In fact the total market declined by 5.5% to $1.5T in Q2. For the year to the end of June the market was down 2.8% to $6.1T.  The Figure shows my forecast for each of the 4 contributing categories on a rolling 4 quarter basis to the end of 2016. In the year to the end of June hardware was up 0.4%, IT service down 1.5%, software up 0.2% and telecom service down 6.5%. For the quarter itself, everything was down – hardware by 0.1%, IT service by 3.7%, software by a staggering 6.5% and telecom service by 5.5%.

I know you’ll want to learn more, especially about the links with China’s economic troubles and the turbulent movements of currency I’ve been reporting for some time.

dollar forecastLooking at the regional forecast from a current $US perspective, the Americas have kept the combined head above water over the last few quarters, while EMEA and Asian Pacific markets fell steeply (see Figure). But, as you know, this doesn’t tell the whole picture, because currency values against the $US have fallen steeply – in Q2 the Euro fell by 22%, the Yen by 19%, the Rouble by 51% and the Ukrainian Hryvnia by 83% for instance. The Chinese Yuan Renminbi was one of only 3 currencies that gained value against the $US – but has been hastily devalued this week of course.

local forecastSo we get a very different picture of market movements if we use local currency (in fact I’ve used the Euro for EMEA and the Yen for Asia Pacific in this Figure). In local currency values Asia Pacific and EMEA have done substantially better than the Americas. Their success however has been largely due to the currency fluctuation. The ‘free cash’ liquidity crisis that’s drove Black Monday this week is mirrored in this vast difference in the view of market values. But this doesn’t look set to continue: there’s nothing like a stock market crash to defer and/or cancel company spending. My hope (as these forecasts suggest) is that the downturn will be short – certainly not as bad as 2008-9.

So how are the leading vendors doing?

Of the top 7 only Apple (+25.9%), Verizon (+4.3%) and AT&T (+2.0%) showed growth for the year. Samsung (-14.5%), NTT (-10%) and IBM (-9.3%) did worst using current $US values (see Table).

Worldwide IT and communications market share ($US billion) – <Q2 2014 And <Q2 2015

<Q2 2014 Share % <Q2 2015 Share % Growth %
Apple $178.1 2.8% $224.3 3.7% 25.9%
Samsung $165.6 2.6% $141.6 2.3% -14.5%
Verizon $123.6 2.0% $129.0 2.1% 4.3%
AT&T $110.8 1.8% $113.0 1.9% 2.0%
HP $111.9 1.8% $106.7 1.8% -4.7%
NTT $108.4 1.7% $97.6 1.6% -10.0%
IBM $96.7 1.5% $87.7 1.4% -9.3%
Other $5,359.8 85.7% $5,179.1 85.2% -3.4%
Total $6,255.1 100.0% $6,079.1 100.0% -2.8%

Apple’s growth is amazing, especially as it reported huge increases in iPhone sales in China in the last quarter.

For the next 2 quarters I expect continued falls and have adjusted my ITC forecast downwards to -4.9% for 2015. I’m sorry for all of us, but the Chinese economy, stock market, currency and market performance indicators all point towards another market downturn.

As always I have a massive amount of data for those of you looking at a regional, product or services perspective – don’t be shy in contacting me to learn more.

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