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Worldwide IT spending is forecast to grow 0.6 percent in 2016

January 18, 2016 • Enterprise IT, Top Stories

Gartner Symposium 2015

$216 billion dollars less was spent on IT in 2015 than in 2014 and 2014 spending levels won’t be surpassed until 2019. (Image Credit: Darryl Linington).

Worldwide IT spending is forecast to total $3.54 trillion dollars in 2016, just a 0.6 per cent increase over 2015 spending of $3.52 trillion dollars, according to Gartner, Inc.

2015 saw the largest US dollar drop in IT spending since Gartner began tracking IT spending. $216 billion dollars less was spent on IT in 2015 than in 2014 and 2014 spending levels won’t be surpassed until 2019.

“The rising US dollar is the villain behind 2015 results,” said John-David Lovelock, research vice president at Gartner. “US multinationals’ revenue faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5 per cent growth.”

The Gartner Worldwide IT Spending Forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets. For more than a decade, global IT and business executives have been using these highly anticipated quarterly reports to recognise market opportunities and challenges, and base their critical business decisions on proven methodologies rather than guesswork.

Table 1. Worldwide IT Spending Forecast (Billions of US Dollars)

  2015 Spending 2015 Growth (%) 2016 Spending 2016 Growth (%)
Data Centre Systems 170 1.8 175 3.0
Software 310 -1.4 326 5.3
Devices 653 -5.8 641 -1.9
IT Services 912 -4.5 940 3.1
Communications Services 1,472 -8.3 1,454 -1.2
Overall IT 3,517 -5.8 3,536 0.6

Source: Gartner (January 2016)

The devices market (PCs, ultramobiles, mobile phones, tablets and printers) is forecast to decline 1.9 per cent in 2016. The combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth, together with a shift in phone spending in emerging markets to lower-cost phones, is overlaid with weak tablet adoption in regions where there was an expectation of growth.

Ultramobile premium devices are expected to drive the PC market forward with the move to Windows 10 and Intel Skylake-based PCs. Gartner has slightly reduced the speed of adoption over the forecast period, as buying in Eurasia, Japan, and the Middle East and North Africa moves away from purchasing these relatively more expensive devices in the short term, but expect them to revert back to buying in 2017 as the economic environment stabilises.

Data centre systems’ spending is projected to reach $75 billion in 2016, a 3.0 per cent increase from 2015. The server market is the segment that has seen the largest change since the previous quarter’s forecast. The server market has seen stronger-than-expected demand from the hyperscale sector, which has lasted longer than expected. Typically, this segment has spikey demand which lasts for a couple of quarters before moderating. Demand in this segment is expected to continue to be strong through 2016.

The worsening economic environment in emerging markets has had little effect on the global enterprise software spending forecast for 2016, with IT spending on pace to total $326 billion, a 5.3 per cent increase from 2015. However, key countries in emerging markets, particularly Brazil and Russia, face escalating political and economic challenges. Organisations in those regions must balance cost cutting with growth opportunities during times of economic concern.

Spending in the IT services market is expected to return to growth in 2016, following a decline of 4.5 per cent in 2015. IT services spending is projected to reach 940 billion in 2016, up 3.1 per cent from 2015. This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model.

Telecom services spending is projected to decline 1.2 per cent in 2016, with spending reaching $1,454 trillion. The segment will be impacted by the abolition of roaming charges in the European Union and parts of North America. While this will increase mobile voice and data traffic, it will not be enough to counter the corresponding loss of revenue from lost roaming charges and premiums.

More-detailed analysis on the outlook for the IT industry will be presented in the webinar “IT Spending Forecast, 4Q15 Update: What Will Make Headlines in 2016.” The complimentary webinar will be hosted by Gartner on 19th January at 4:00pm UK time. During the webinar, Gartner analysts will discuss global IT spending from 2013 through 2019, broken out by devices, data centre systems, software, IT services and telecommunication services, before focusing on the near-term opportunities in digital business, the new business models, and the solutions they require.

Gartner’s IT spending forecast methodology relies heavily on rigorous analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

The Gartner quarterly IT spending forecast delivers a unique perspective on IT spending across hardware, software, IT services and telecommunications segments. These reports help Gartner clients understand market opportunities and challenges. The most recent IT spending forecast research is available here.

Staff Writer

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