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January 18, 2016updated 31 Aug 2016 10:00am

Cloud & data centre to drive IT spending bounce back despite device decline

News: Gartner report reveals what will drive worldwide IT spending in 2016.

By Alexander Sword

Device spending worldwide is set to decline in 2016 as software, data centres and IT services become the fastest-growing segments of IT expenditure.

IT spending will hit $3.54 trillion this year, representing a 0.6 percent increase over 2015’s spending, according to the Gartner Worldwide IT Spending Forecast.

The largest growth in spending will be on software, at 5.3 percent, with IT services and data centre systems following at 3.1 percent and 3 percent respectively. The software market’s return to strong growth, with total spending of $326 billion anticipated for the year, would not be hampered by the troubled condition of many emerging markets.

Gartner attributed the growth in IT services largely to growth in the cloud market.

"[Growth is] due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model," Gartner’s statement said.

Gartner upped its forecast for growth in data centre spending, projected to reach $75 billion this year, due to stronger-than-expected demand in the hyperscale sector.

Meanwhile, device spending is set to drop 1.9 percent to $653 billion and communications services to drop 1.2 percent to $1.454 trillion.

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The big drop in devices, including PCs, ultramobiles, mobile phones, tablets and printers, would be driven by poor economic conditions in countries including Russia, Japan and Brazil.

Gartner also noted that spending on phones in emerging markets would shift towards lower cost phones and see weaker tablet adoption than was hoped for.

Alongside this trend, ultramobile premium devices were expected to be the main drivers of the device market.

Communications services, which as a segment accounts for by far the largest proportion of total spending, were still set to see a decline, although to a lesser extent than 2015’s drop of 8.3 percent.

"The segment will be impacted by the abolition of roaming charges in the European Union and parts of North America," said Gartner’s accompanying statement. "While this will increase mobile voice and data traffic, it will not be enough to counter the corresponding loss of revenue from lost roaming charges and premiums."

The return to growth represents a reversal from last year’s dramatic drop; in 2015, IT spending contracted 5.8 percent. In 2014, it saw growth of 1.9 percent.

As the figures are denominated in dollars, Gartner suggests that last year’s results were an aberration due to currency fluctuations; relative to other currencies, the US dollar has gained in value dramatically.

"The rising US dollar is the villain behind 2015 results," said John-David Lovelock, research vice president at Gartner. "US multinationals’ revenue faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5 per cent growth."

However, Gartner claimed that 2014 spending levels would not be surpassed until 2019.


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