Global IT Spending Slows

News Article - Tuesday, 01 July 2014 09:43

By: Kerry Butters Category: Hosting

Global IT spending is set to reach $3.7 trillion this year, showing a 2.1% increase on 2013. However, the growth rate is less than the anticipated 3.2% that the research firm initially predicted.

This "slower outlook for 2014” is thought to have been affected by a reduction in growth rate expectations for devices, data centre equipment and to a lesser extent, IT services.

"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,” said Richard Gordon , managing vice president at Gartner.

He went on to say that we should expect to see things return to "normal” from 2015 to 2018 "as prices and purchasing styles reach a new equilibrium” as IT shifts focus on technology and processes to new business models in the future which will be enabled by digitalisation.

Whilst the devices market will experience growth of 1.2% in 2014, it’s thought that this will reach a lower figure than predicted last quarter, thanks to new entrants into the market choosing lower priced tablets.

Data centre systems will see some growth this year and the market is expected to reach $140 bn, up 0.4% on last year. However, "constrained spending” continues to negatively impact the market in 2014, especially with external controller-based (ECB) systems. The server market is also suffering thanks to businesses choosing to move away from high-cost systems to lower cost alternatives. Gartner say that the hyperscale segment does offer some positive drivers to the market but this is likely to be for very low-cost platforms which will further impact data centre spending levels.

When it comes to the services market, this is expected to total around $967bn, with an improvement of 3.8% on 2013. Whilst last year saw weak spending, this is expected to improve overall this year. The services market has been impacted by the entry of bigger vendors offering lower priced cloud storage services.

When it comes to the software market, Gartner say that "spending is on pace to total” $321bn, up 6.9% on 2013 with marginally better than expected growth being seen in infrastructure software, which balanced out an overall minor dip. It’s thought that this will continue and we will see less growth in the office suites market due to the impact of slow PC sales and the rapid movement of enterprise to cloud-based applications.

Gartner will hold a webinar, IT Spending Forecast, 2Q14 Update: Where Will Innovation Come From , to provide a more detailed analysis on July 8 at 11am EDT. During the webinar, Gartner analysts will discuss IT spending from 2012 to 2018 in devices, data centres, software, services and more.

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