Global IT spend to shrink 1.3% in 2015: Gartner

Revised outlook due largely to effects of rising US dollar, research house says

Tags: Gartner Inc. (www.gartner.com/technology/home.jsp)
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Global IT spend to shrink 1.3% in 2015: Gartner Gartner predicted that worldwide IT spending would reach $3.66tr in 2015, down from 2014's spend of $3.71tr
By  Tom Paye Published  April 13, 2015

Global IT spending is set to see a 1.3% decline in 2015, thanks largely to the effects of the rising US dollar, according to the latest report from Gartner.

In its report, Gartner predicted that worldwide IT spending would reach $3.66tr in 2015, down from 2014's spend of $3.71tr. However, the research house was keen to point out that the slowdown would not cause a market crash.

"We forecast US-dollar-valued worldwide IT spending in 2015 to shrink by 1.3%, down from 2.4% growth forecast in last quarter's update," said John-David Lovelock, research vice president at Gartner.

"However, this is not a crash, even if it looks like one. 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%, only off 0.6% from last quarter's update. Such are the illusions that large swings in the value of the dollar versus other currencies can create." 

The US dollar spending on devices (including PCs, ultramobiles, mobile phones, tablets and printers) for 2015 is forecast to decline 1.2% to $685bn, Gartner said. Spending for all devices in 2015 was revised down partly due to a slowdown in PC purchases in Western Europe, Russia and Japan, countries where local currency has devalued against the dollar.

However, Gartner pointed out that the mobile phone market is not as affected by the currency shifts. Substantial change in the phone mix in emerging markets toward lower-priced smartphones negates price increases of premium phones, resulting in flat phone average selling prices between 2014 and 2015, the research house explained.

Meanwhile, Gartner said that data centre system spending is projected to reach $142bn in 2015, an increase of just 0.4% from 2014. External controller-based storage, enterprise network equipment and servers have all been impacted by the depreciation of some local currencies against the US dollar, but the server segment has seen the biggest impact due to the greater pricing pressure that server vendors are exposed to, due to their relatively lower margins.

And spending in the enterprise software market is on pace to total $320bn in 2015, a 2.3% increase from 2014. However, Gartner point out that this is a downward revision from the last forecast and is the result of a substantial reduction in the forecast for office suite spending, reflecting the acceleration of Office 365 adoption. Gartner said that Office 365 is disrupting traditional revenue flows. Its cost is prorated over the life of the subscription, resulting in significantly lower revenue growth as users transition away from the on-premises model.

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