IT spending still in the doledrums

quicksand1Worldwide IT spending is only going to increase by a miserable 0.6 per cent, according to beancounters at Gartner.

According to Big G fortune tellers, worldwide IT spending is forecast to total US$3.54 trillion in 2016, just a 0.6% increase over 2015 spending of US$3.52 trillion.

Last year saw the largest US dollar drop in IT spending since Gartner began tracking IT spending.  $216 billion less was spent on IT in 2015 than in 2014.  Gartner predicts that 2014 spending levels will not be surpassed until 2019.

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

PCs, ultra-mobiles, mobile phones, tablets and printers are forecast to decline 1.9 per cent in 2016. This is because of a combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth. There is also 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, Big G wrote.

Ultra-mobile 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 stabilizes.

Data center systems’ spending is projected to reach $75 billion in 2016, a 3 per cent  increase from 2015. 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. Key emerging markets, particularly Brazil and Russia, face escalating political and economic challenges.

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 service spending is projected to decline 1.2 per cent in 2016, with spending reaching $1.45 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 revenues from lost roaming charges and premiums.