Gartner Says Worldwide IT Spending on Pace to Grow 2.1 Percent in 2014
Source: gartner.com View: 258 Date: 2014-07-04

Worldwide IT spending is on pace to total $3.7 trillion in 2014, a 2.1 percent increase last year, however, this grow rate is down earlier projections of 3.2 percent growth, according to the latest forecast by Gartner, Inc. (see Table 1). The slower outlook for 2014 is attributed to a reduction in growth expectations for devices, data center systems and to some 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. “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 a focus on technology and processes in the past to a focus in the future on new business models enabled by digitalization.”

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 recognize market opportunities and challenges, and base their critical business decisions on proven methodologies rather than guesswork.

 

The devices market (including PCs, ultramobiles, mobile phones, tablets and printers) is forecast to grow in 2014, but not as much as predicted in the previous quarter’s forecast, reaching $685 billion, a 1.2 percent increase 2013. This is due to lower price points expected across mobile phones and tablets. As tablet penetration reaches 50 percent in U.S. households, sales of high-end tablets will decrease, with the next wave of adopters more attracted to lower priced utility tablets. The result is the mix of tablets shifting basic tablets to utility tablets resulting in lower price points. 

Data center systems spending is projected to reach $140 billion in 2014, a 0.4 percent increase 2013. 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 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 high-cost platforms toward lower-cost alternatives. 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 center systems. 

IT services is forecast to total $967 billion in 2014, up 3.8 percent 2013. Following weak vendor performance in 2013 across multiple geographies and segments, modestly improved spending is expected through 2014. IT outsourcing is growing slower than expected as sharply reduced pricing by the largest vendors is impacting the cloud storage services market. In addition, public cloud services are proving increasingly cannibalistic to more traditional data center outsourcing services. Implementation services are also growing slower than expected as risk-averse buyers remain focused on smaller, safer projects and some of the largest sellers remain focused on maintaining margins over growing revenue. 

In the enterprise software market, spending is on pace to total $321 billion, a 6.9 percent increase 2013. Slightly increased growth expectations for infrastructure software are balanced out by slightly lower growth expected for applications software. Within infrastructure, the database management system (DBMS) software market is expected to have strong growth as DBMS adoption is driven by big data and digitalization initiatives. Slower growth is expected in the applications market, specifically office suites and digital content creation (DCC), which are being impacted by slow PC sales and the rapid move to cloud-based offerings by many organizations and professionals. 

Telecom services spending is projected to grow 0.7 percent in 2014, with spending reaching $1,635 trillion. Voice average revenue per user (ARPU) will decline by about 10 percent annually through 2018 because of a decline in consumer use of voice services — particularly among prepaid users. “Increased competition between communication services providers is leading to price competition,” said Mr. Gordon. “Emerging low-cost or free/advertisement-subsidized mobile data services and low-cost services mobile virtual network operators that target less-lucrative segments are impacting ARPU more than initially expected." 

More-detailed analysis on the outlook for the IT industry will be presented in the webinar "IT Spending Forecast, 2Q14 Update: Will Innovation Come ?" The complimentary webinar will be hosted by Gartner on July 8 at 11 a.m. EDT. During the webinar, Gartner analysts will discuss global IT spending 2012 through 2018, broken out by devices, data center systems, software, IT services, and telecommunication services, and they will focus on some of the IT-related innovation expected through 2018. Please visit http://my.gartner.com/portal/serverNaN?open=512&objID=202&mode=2&PageID=5553&resId=2739517&ref=Webinar-Calendar. 

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 upon 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 at http://www.gartner.com/technology/research/it-spending-forecast/. This Quarterly IT Spending Forecast page includes links to the latest IT spending reports, webinars, blog posts and press releases.

 

Contacts

·         Janessa Rivera

·         Gartner

·         janessa.rivera@gartner.com

 

·         Rob van der Meulen

·         Gartner     

·         rob.vandermeulen@gartner.com

 

About Gartner

Gartner, Inc. (NYSE: IT) is the world’s leading information technology research and advisory company. Gartner delivers the technology-related insight necessary for its clients to make the right decisions, every day. CIOs and senior IT leaders in corporations and government agencies, to business leaders in high-tech and telecom enterprises and professional services firms, to technology investors, Gartner is a valuable partner in more than 14,000 distinct organizations. Through the resources of Gartner Research, Gartner Executive Programs, Gartner Consulting and Gartner Events, Gartner works with every client to research, analyze and interpret the business of IT within the context of their individual role. Founded in 1979, Gartner is headquartered in Stamford, Connecticut, USA, and has 6,100 associates, including more than 1,460 research analysts and consultants, and clients in 85 countries. For more information, visitwww.gartner.com.

 

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