Gartner slashes IT spending forecast despite soaring software

Currency changes and lower-than-first-expected demand for devices behind the 1.5 point forecast slash

Gartner has slashed this year's growth forecast for IT spending but pointed to enterprise software as a market set for big things in 2015.

This year, Gartner expects global IT spending to grow annually by 2.4 per cent to $3.8tn (£2.52tn), but this forecast is down from its earlier projection of 3.9 per cent.

The less-optimistic forecast was mainly down to currency fluctuations – in constant currency the downward revision is only 0.1 per cent. But downward revisions in the devices and IT services markets also contributed to the projected spending slump.

Worldwide devices spending was on track for a 6.4 per cent annual boost this year, but Gartner cut this to just 5.1 per cent – which would take spending to $696bn – in today's forecast.

"The smartphone market is becoming polarised between the high- and low-end market price points," it said. "On one hand, growth in premium phones with an average selling price of $478 in 2014 was dominated by iOS. At the other end of the spectrum, growth in Android and other open OS phones is in the basic phone segment, where in 2014 the average phone cost less than $100. As a result, the market opportunity is becoming increasingly limited for mid-range smartphones."

It was a similarly disappointing picture for the IT services market, where expected spending growth was reduced from 4.1 per cent to just 2.5 per cent, which will take spending to $956bn.

"Globally, reductions to software support services contributed disproportionately to a lower outlook through 2018, because of lower growth rates expected for enterprise software. Regionally, short-term growth rates were lowered slightly in Russia and Brazil, due to declining economic conditions and political uncertainty in both countries."

Enterprise software is tipped to see the highest growth in spending this year out of the markets analysed by Gartner, which predicts the segment will grow 5.5 per cent annually to $317bn.

"More price erosion and vendor consolidation is expected in 2015 because of fierce competition between cloud and on-premises software providers," it said.

"In particular, in the customer relationship management (CRM) market, a key cloud battleground, seat prices for segments such as sales force automation (SFA) are expected to decline by 25 per cent through 2018."

Predicted growth in the datacentre systems and telecoms services markets were pegged at 1.8 per cent and 0.7 per cent respectively, taking spending to $141bn and $1.63tn.