Research firm IDC has cut its IT spending forecast for 2020 amid the ongoing coronavirus outbreak. Based on data indicators in the first quarter, IDC expects to see a substantial decline in spending on both hardware and software services as companies adjust to a new economic reality.
By the end of 2020, IT spending is likely to grow by about 1%, compared to the original forecast for more than 5% growth worldwide, IDC said.
Before coronavirus began to disrupt supply chains, trade, and business planning, IDC expected to see growth in PC and smartphone sales, as well as strong demand for IT software and services. However, non-essential spending will likely grind to a halt for many businesses as they cope with economic and market uncertainties.
"The situation is extremely fluid," said Stephen Minton, VP in IDC's Customer Insights and Analysis group. "Things are moving so quickly that we need to constantly recalibrate our assumptions and expectations, but the pessimistic scenario reflects an IT market in which weaker economic growth translates into weaker business and consumer spending across all technologies over the next few quarters. Things could get worse, but hopefully not."
Coronavirus -- which causes a respiratory disease known as COVID-19 -- has significantly disrupted the technology industry and led to uncertainty surrounding the broader technology supply chain. A bevy of technology companies have adjusted or downgraded guidance due to the continued impact of the virus.
Apple said the outbreak has hit its iPhone supply chain and lowered demand in China following the temporary closure of its stores in the region. Meanwhile, Microsoft said that its More Personal Computing unit, Surface, and Windows OEM revenue will miss targets, as China's supply chain "is returning to normal operations at a slower pace than anticipated" due to the coronavirus.