Gartner recalibrates global IT spending for 2015 downward

Research firm Gartner has recalibrated its forecast for worldwide IT spend from a projected growth of 3.9 percent down to 2.4 percent to the tune of US$3.8 trillion.  Thanks in part to a stronger US dollar and modest reduction in growth expectations for devices, IT services and telecom services.
"The change in forecast is less dramatic than it might at first seem. The rising U.S. dollar is chiefly responsible for the change — in constant currency terms the downward revision is only 0.1 percent," said John-David Lovelock, research vice president at Gartner. "Stripping out the impact of exchange rate movements, the corresponding constant-currency growth figure is 3.7 percent, which compares with 3.8 percent in the previous quarter's forecast."
Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

  2014 Spending 2014 Growth (%) 2015 Spending 2015 Growth (%)
Devices 696 3.8 732 5.1
Data Centre Systems 141 0.8 143 1.8
Enterprise Software 317 5.8 335 5.5
IT Services 956 2.7 981 2.5
Telecom Services 1,626 -0.1 1,638 0.7
Overall IT 3,737 1.0 3,828 2.4

Source: Gartner (January 2015)
Data centre systems spending is projected to reach US$143 billion in 2015, a 1.8 percent increase from 2014. Gartner up its estimates for spending on enterprise communications applications and enterprise network equipment; it also lowered its growth targets for the servers and external controller-based storage. Gartner says these fluctuations are due to extensions in replacement life cycles and a higher than previously anticipated switch to cloud-based services.
Spending on enterprise software will record the highest spend, US$335 billion up 5.5 percent from 2014. Gartner says to expect continued price erosion and vendor consolidation in 2015 as fierce competition between cloud and on-premises software providers continues to escalate.
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 percent through 2018. This will be caused by incumbent on-premises vendors discounting their cloud offerings heavily to try and maintain their customer base.
The other area we can expect stiff pricing competition is on database management system (DBMS) and application infrastructure and middleware, albeit at a somewhat slower and weaker pace than for CRM.
One of the notable drops in the analysts’ predictions is on IT services from 4.1 percent earlier to 2.5 percent. Gartner blames this partly on reductions to software support services contributing disproportionately to a lower outlook through 2018, because of lower growth rates expected for enterprise software.
Modest growth in telecom services of 0.7 percent even as spending reaches US$$1.638 trillion. 

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