Four Reasons For Sluggish Tech Market Growth And The Rationale For Future Optimism

Forrester's projected 5.5% growth in the global tech market in 2014 in local currency terms (6.2% in US dollars) is certainly an improvement over the more feeble growth of 2012 and 2013. Still, these mid-single-digit growth rates in the tech market are much lower in the current cycle of tech innovation from cloud computing, mobile, and smart computing compared with the previous cycle of network computing and Internet technologies from 1992 to 2000. Our analysis is that four factors — continued economic uncertainty following the Great Recession of 2008 and 2009, shrinking spending on hardware due to lower prices and virtualization, CEO preferences for conserving cash and buying back stock rather than making capital investments, and cloud pricing models — have combined to keep tech buying relatively subdued. However, when and as these factors start to unwind, CIOs and business tech buyers should brace themselves for a shift upward in the pace of tech spending to 8% or more.