Gartner warns IT prices will definitely rise

We will all be paying more for our IT goods and services as vendors mitigate against the strengthening dollar, analyst warns

The soaring US dollar will spark further price rises in IT products and services this year, Gartner has warned.

With the dollar having risen sharply against most other currencies, including the euro, IT vendors that have products or services with a US dollar-based component must now cover those costs at the lower exchange rate, Gartner research vice president John-David Lovelock said.

The euro-dollar exchange rate currently stands at 0.93, compared with 0.72 a year ago.

"The simple implication is that there will be price rises," Lovelock cautioned.

Lovelock's warning came as Gartner slashed its IT market growth forecast for 2015 on the back of the rising dollar.

It now expects US dollar-valued global IT spending this year to shrivel 1.3 per cent to $3.66tn (£2.47tn), compared with the 2.4 per cent growth it predicted just three months ago.

"However, this is not a crash, even if it looks like one," Lovelock said.

"The recent rapid rise in the value of the US dollar against most currencies has put a currency shock into the global IT market. Taking out the impact of exchange rate movements, the corresponding constant-currency growth figure is 3.1 per cent, only off 0.6 per cent from last quarter's update. Such are the illusions that large swings in the value of the dollar versus other currencies can create."

That said, the skyrocketing dollar has "real implications", Lovelock said, including the price rises it will spark, the effects of which have already been felt in the UK.

"However, there are many other market forces at work – protecting US dollar profits will require a nuanced and multifaceted approach involving pricing, partners and product management," Lovelock said.

Breaking it down by sub-sector, Gartner now predicts that US dollar spending on devices will fall 1.2 per cent to $685bn. The figure was revised downwards partly due to a slowdown in PC purchases in countries where the local currency has devalued against the dollar, including across western Europe.

Datacentre system spending is now forecast to rise by 0.4 per cent on 2014 to $142bn, while spending in the enterprise software market is now on course to total $320bn, up 2.3 per cent annually.

IT services spending, meanwhile, is now forecast to drop from $948bn to $942bn year on year, while telecoms spending is set to shrink by 2.6 per cent to $1.57tn, Gartner said.