Gartner revises global IT spend forecast

Although spending is set to increase, analyst revises figure down slightly due to reduction in growth expectations for 2014

Global IT spending is set to hit $3.7tn (£2.2tn) this year, up 2.1 per cent from last year, according to analyst giant Gartner.

However, the number cruncher has revised the figure down from 3.2 per cent, and the main reason for this is the reduction in growth expectations for devices, datacentre systems, and to some extent IT services.

But the analyst has hinted at better times to come for the coming years as IT enters its third phase of development.

Richard Gordon, managing vice president at Gartner, explained: “Price pressure based on increased competition, lack of product differentiation and the increased availability of viable alternative solutions has had a dampening effect on the short-term IT spending outlook.

“However, 2015 through 2018 will see a return to ‘normal’ spending growth levels as pricing and purchasing styles reach a new equilibrium. IT is entering its third phase of development, moving from a focus on technology and processes in the past to a focus in the future on new business models enabled by digitalisation.”

Breaking the figures down, the device market (including PCs, ultramobiles, mobile phones, tablets and printers) is forecast to grow this year by 1.2 per cent to $685bn. In the US as tablet penetration reaches 50 per cent into households, sales of high-end tablets are set to decrease, with the next wave of adopters more attracted to lower-priced utility tablets.

Datacentre spending is expected to reach $140bn this year, up 0.4 per cent from last year, mainly down to constrained spending levels. Finally, and most importantly for the channel, IT services are set to grow 3.8 per cent to $967bn. Due to weak vendor performance across multiple geographies and segments, the analyst said modestly improved spending is expected for the rest of the year.

Gartner also said IT outsourcing is growing slower than expected due to sharply reduced pricing by the largest vendors affecting the cloud storage services market. In addition, public cloud services are proving increasingly cannibalistic to more traditional datacentre outsourcing services.

Implementation services are also growing slower than expected as risk-averse buyers remain focused on smaller, safer projects and some of the largest sellers remain focused on maintaining margins over growing revenue.

Looking at the enterprise software market, spending is set to total $321bn, up 6.9 per cent on 2013. The database management system software market is expected to have strong growth, with slower growth expected in the applications market, which is being affected by slow PC sales and the rapid move to cloud-based offerings by many organisations and professionals.

In the telecoms space, spending will reach $1.6tn, Gartner predicted, although voice average revenue per user (ARPU) will decline by about 10 per cent through to 2018, due to a decline in consumer voice services.

Gordon added: “Emerging low-cost or free/advertisement-subsidised mobile data services and low-cost services from mobile virtual network operators that target less-lucrative segments are impacting ARPU more than initially expected.”