Stabilization late in 2023 will be followed by quarterly acceleration of gains though 2024
CHICAGO, July 10, 2023– U.S. B2B technology sales performance is expected to stabilize in the second half of 2023 and return to growth in 2024 as economic conditions improve. Late demand improvements in 2023 will not be enough to offset earlier contraction in IT spending and declines in average selling prices (ASP), resulting in a forecast annual sales revenue decline of 7%. However, growth overall will likely see modest gains in the first quarter of 2024, accelerating throughout next year, resulting in 3% revenue growth, according to the latest Future of B2B Technology Forecast from Circana, formerly IRI and The NPD Group.
“This has been a particularly challenging year for B2B technology following peak performance in 2022 when a return to the office spurred additional demand and pull-forward of device purchasing, but growth is on the horizon,” said Mike Crosby, executive director and B2B technology industry advisor for Circana. “Digital transformation is further contributing to a shift in the mix of IT growth drivers, as software and services have been capturing an increasing share of spending, and this strong demand is expected to continue.”
By the end of 2023, sales of hardware is expected to represent 58% of B2B revenue, hitting its lowest point since 2019 when it accounted for 67% of annual B2B technology spending. Computers will drive the largest revenue declines, followed by multimedia and storage hardware, but these losses are offset by $1.4 billion growth in commercial software projected in 2023. B2B technology industry growth in 2024 will be supported by a return to positive performance of desktop and notebook computer sales, as well as the continued adoption and sales growth of commercial software and cloud services.
“Improving economic conditions, strong demand for software and cloud-based infrastructure, and momentum coming from pandemic-deployed devices entering a refresh cycle, compounded by Windows 10 sunsetting will all be contributors to the expected growth over the next two years,” noted Crosby. “Businesses have been forced to prioritize spending, but declining inflation will allow more financial focus on addressing the evolving commercial needs and new technology requirements for higher performance devices that are fast becoming a reality.”