Shulou(Shulou.com)11/24 Report--

In the digital age, "Shangyun" has become an important breakthrough for enterprises to carry out digital and intelligent transformation. In order to remain competitive in the digital economy, the importance of cloud services is highlighted, and the strong IT expenditure related to cloud services has led to the continued growth of overall IT spending.

According to the latest forecast released by Gartner, global IT spending is expected to reach $5.1 trillion in 2024, an increase of 8 per cent over 2023. Among them, expenditure on software and information technology services is the main factor driving IT expenditure, while the growth of the former is mainly driven by cloud expenditure.

As we all know, computing and storage are the key to cloud deployment, and Lenovo has an advantage in this area: it is the third largest server manufacturer in the world and the fourth largest storage equipment manufacturer in the world. Under the general trend of global IT expenditure growth, Lenovo Group actively cards the cloud development dividend, deeply ploughs the cloud service market, and relies on "Puhui" computing power to provide products and solutions across public cloud, private cloud and hybrid cloud delivery capabilities, building the core competitiveness.

Accelerated release of cloud dividends, driving continued growth in global IT spending

In recent years, global IT spending has continued to rise with steady growth. Gartner data show that IT spending is $4.5 trillion in 2022, a growth rate of 2.9 per cent, and is expected to grow slightly to 3.5 per cent in 2023 and reach $5.1 trillion by 8 per cent in 2024.

Behind Gartner's forecast for a sharp increase in IT spending in 2024 is a recovery in demand for IT devices such as PC and strong growth in global cloud spending. According to the Gartner report, global IT expenditure includes data center systems, equipment, software, IT services and communications services. Among them, equipment expenditure grew negatively in 2022 and 2023, but is expected to rebound by 2024 and reach a growth rate of 4.8%.

This is in line with the expected recovery in the PC market. PC, as one of the core IT devices, demand has been weak in the past two years, and shipments have declined for several consecutive quarters. According to Gartner's previous statistics for the PC market, global PC shipments fell 9% in the third quarter of this year, but it believes that the decline in the PC market has hit bottom and is expected to begin to recover in the fourth quarter of this year. The global PC market is expected to achieve positive growth of 4.9% in 2024.

This will mean that smart device manufacturers are expected to resume performance growth in the new phase. According to Gartner, as the world's leading ICT technology company and smart device manufacturer, Lenovo continued to rank first in PC shipments and market share in the third quarter of this year, but the company has not yet returned to positive growth, and Lenovo is expected to take advantage of the full recovery of the global PC market in 2024.

Another driver of global IT spending growth in 2024 is double-digit growth in software and IT services. According to Gartner, growth in software and IT services is mainly driven by cloud spending, which is expected to grow by 20.4% in 2024, driven by higher prices and higher utilization of cloud providers.

In other words, cloud infrastructure services are still releasing cloud development dividends with strong growth momentum. Global cloud infrastructure spending is expected to grow 10.6% from 2022 to $101.4 billion in 2023, reach $156.7 billion by 2027, and grow at a compound annual growth rate of 69.4% from 2022 to 2027, according to a report by IDC, another well-known data company. From the perspective of the Chinese market, data from the Ministry of Industry and Information Technology show that China's cloud computing market exceeded 260 billion yuan in the first half of this year, an increase of more than 40 percent over the same period last year.

The current global cloud infrastructure market is characterized by a decline in unit demand and an increase in average selling price (ASPs). IDC pointed out that this is mainly related to the higher-than-usual shipments of GPU servers. However, in order to adapt to more complex workloads and match AI growth needs, cloud infrastructure spending is becoming one of the enterprise's robust configuration expenses.

"Puhui" leads the calculation, prying up the growth opportunity of cloud expenditure.

With the tide of AI, cloud infrastructure services, as an important foundation of digital transformation, are playing a key role with the continuous promotion of digitalization and intelligence. therefore, cloud and cloud have become an important demand of the market, thus promoting enterprises to invest more in cloud services. This also makes the ICT technology enterprises represented by Lenovo Group have a bright future.

At present, with the support of the new IT architecture of "end-side-Cloud-Network-Intelligence", Lenovo Group has formed the "Puhui" computing base based on the terminal devices in the hands of users, providing extensive cloud computing capabilities with products and services such as servers and storage, and approaching the edge devices and high-speed networks from which the data is generated.

On the one hand, servers and storage, as computing infrastructure, are not only the key components of deploying cloud infrastructure, but also the core competitive advantage of Lenovo Group, which not only enhances the market competitiveness of Lenovo Group in the field of cloud services, but also lays a solid foundation for the development of ISG, one of its three pillar businesses. Lenovo's storage business in its ISG business grew by 120%, ranking fourth in the world in terms of market share, and its high-performance server business grew 45%, according to Lenovo's data for the first quarter of fiscal year 2023.

On the other hand, based on the advantage of "Puhui" computing power and the support of the new IT technology, Lenovo Group provides the power source for the growth of its SSG business with the "Optimus" engine characterized by cloud native-Zhongtai, AI intelligence and ESG. With the support of the "giant" architecture, Lenovo can provide customers with products and services across public, private and hybrid cloud delivery capabilities. Especially in hybrid cloud, Lenovo can provide cloud native, intelligent operation and maintenance, private cloud and multi-cloud management products, covering all scenarios of "building cloud, going up cloud, using cloud and managing cloud".

Lenovo's SSG business is the key to the revenue growth and profit source of Lenovo Group, which is divided into three categories: IT support service, intelligent operation and maintenance business and intelligent solution business. In the latest quarter, Lenovo's SSG business achieved $1.713 billion in revenue and $360 million in operating profit, creating an operating margin of 21% with 12% of revenue. The smart solutions business, relying on the "giant" architecture, has achieved a revenue growth rate of 9% by providing full-cycle solutions.

On the whole, the continuous growth of global IT expenditure not only brings optimistic growth to Lenovo's PC business, but also provides development opportunities and potential for its ISG business and SSG business.

With the continuous evolution of new technology, the digital transformation of thousands of industries continues to deepen, and the expenditure of IT, which is an important component of cloud services, will also increase steadily, which brings a good opportunity for the development of ICT technology enterprises that provide all kinds of IT services. As a leader in ICT, Lenovo Group, with its "Puhui" products and services, will not only efficiently enable the digital transformation of thousands of industries, but also benefit from the industry dividend.

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