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Market Forecast Looks Bad For Tech

Marc Ferranti June 18, 2012
IDC says the software market will slow down, as Nokia faces tough times ahead, weak growth in Europe and Asia and the possibility that debt-laden Greece or Spain may leave the euro zone.

With market forecasts looking dour and companies including Nokia and Texas Instruments trimming expectations this week, concerns for the tech sector are mounting.

The causes for anxiety are the usual culprits, including weak growth in Europe and Asia and the possibility that debt-laden Greece or Spain may leave the euro zone. 

IDC's latest Worldwide Software Market Forecaster, released Thursday, offered a disappointing analysis for software, which is usually considered to be a bright spot for tech. While 2011 delivered nearly double-digit growth in the worldwide software market, the highest growth rate since the 2008 implosion of the banking sector, the future looks bleaker, IDC said.

"IDC expects the overall software market to return to more conservative growth in the years to come," said Patrick Melgarejo, director of IDC's software trackers, in the report. "The major driver behind this decelerating growth is the forecast for close to flat performance in EMEA, due to the economic difficulties in that region."

The survey monitors more than 1,000 software vendors in 49 countries. IDC said the fastest growing software applications are enterprise social software, virtual machine software and team collaborative applications.

In 2011, the Asia/Pacific and Japan area experienced the highest growth rate of all regions, as it has over the past three years, expanding from 15 percent share in 2008 to 16.5 percent. However, the region is expect to slow down and more closely match growth in other regions in the next year or so.

The good news for the Western Hemisphere is that North America and Latin America are together expected to maintain a stable market share of almost 53 percent over the next several years.