IT spending to hit $3.7tr in 2014

Forecast growth of 2.1% down from previous prediction of 3.2% growth, says Gartner

Tags: Gartner Inc. (www.gartner.com/technology/home.jsp)
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IT spending to hit $3.7tr in 2014 2015 through 2018 will see a return to 'normal' spending growth, said Gartner
By  Tom Paye Published  July 17, 2014

Worldwide IT spending is on pace to total $3.7 trillion in 2014, a 2.1% increase from last year, according to the latest forecast by Gartner. However, this growth rate is down from earlier projections of 3.2%.

The slower outlook for 2014 is attributed to a reduction in growth expectations for devices, data centre systems and, to some extent, IT services, Gartner said.

"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.

"However, 2015 through 2018 will see a return to ‘normal' spending growth levels as pricing and purchasing styles reach a new equilibrium. IT is entering its third phase of development, moving from a focus on technology and processes in the past to a focus in the future on new business models enabled by digitalisation."

Data centre systems spending is projected to reach $140 billion in 2014, a 0.4% increase from 2013, Gartner said. The research house cautioned that constrained spending levels continue to negatively impact the revenue opportunity for data center systems, particularly with external controller-based (ECB) storage. ECB storage spending is suffering from the combined effects of underutilized systems in the installed base, as well as lower-cost alternative architectures and cloud-based storage.

The server market also shows weakness as enterprises migrate away from high-cost platforms toward lower-cost alternatives, Gartner said. The hyperscale segment, primarily driven by consumer-oriented services, does provide some positive drivers to the market, albeit for very low-cost platforms, which further impacts overall spending levels on data centre systems, the research house added.

Meanwhile, IT services is forecast to total $967 billion in 2014, up 3.8% from 2013. Following weak vendor performance in 2013 across multiple geographies and segments, modestly improved spending is expected through 2014. 

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