Research firm projects spending will rise nearly 9%, with sales driven by more PC purchases.
While there's still a wait-and-see attitude among industry experts, there are indications that companies may no longer have short arms and deep pockets when it comes to IT spending.
The latest positive forecast was in the worldwide semiconductor market, which Gartner's Dataquest unit says will increase by 8.9% this year to $167 billion. Revenue last year was $153.4 billion.
Among the factors expected to drive semiconductor sales are more PC purchases. A majority of PCs used by businesses today are near retirement age, having been purchased before 2000. However, to what extent companies replace aging PCs will depend on whether there's a high return on investment through worker productivity and on the hiring of new workers, Gartner analyst Andrew Norwood says.
The latter is closely tied to whether there are improvements in the world economy and whether world leaders settle the uncertainty over the pending war with Iraq.
"A PC upgrade cycle may start late this year or the first half of next year," Norwood says. Projections for the semiconductor market are based on Gartner's forecast of a 7.8% increase in PC unit sales for 2003, which was revised downward from the firm's projection of 10.7% three months ago.
Gartner isn't alone in expecting a start in the PC-replacement cycle. The trade group Semiconductor Equipment and Materials International has predicted an increase in capital spending later in the year. While the group said orders slid 10%, to $742 million, in January from December, they were 15% higher than the $645 million posted a year ago.
The growing popularity of wireless technology is also expected to drive semiconductor sales higher. "The mobile market is showing higher growth, and that is expected to be a factor," Norwood says.
When businesses start replacing PCs, they're expected to opt for laptops that are wireless-ready and run on processors that help extend battery life. In 2002, only 5.7% of notebooks were ready to access the Internet through a wireless network. That figure will rise to 35% this year and 90% by 2005, market researcher Cahners In-Stat predicts. Other industry experts believe half of business users will use laptops in two years, up from one in five today.
When demand rises, semiconductor prices are also expected to increase, Norwood says. During the last couple of years, manufacturers have had little motivation to spend money on factory equipment to increase output, which will lead to more back orders.
In another Dataquest report released Monday, the research firm says the Latin American server market suffered a 15.6% decline in shipments last year compared with 2001, while revenue dropped 19.2%.
Hewlett-Packard, the market leader in unit shipments, suffered a 3% drop in market share to 29%, while third-place Dell Computer jumped to 13.6%, from 8.9% in 2001. Second-place IBM increased to 19.5%, from 15.9%.
Server revenue for the year was $1.47 billion. IBM led the pack with $666.7 million, a drop of 7.9% from 2001, followed by HP with $371.3 million, or 28.6% less than a year ago, and Sun Microsystems with $122 million, 47.5% less. Fourth-place Dell increased revenue by 33%, to $97.4 million.
5 Top Federal Initiatives For 2015As InformationWeek Government readers were busy firming up their fiscal year 2015 budgets, we asked them to rate more than 30 IT initiatives in terms of importance and current leadership focus. No surprise, among more than 30 options, security is No. 1. After that, things get less predictable.