Fall in IT spending 'not a crash, even if it looks like one', says Gartner

26 April 2015

Worldwide spending on IT will shrink by 1.3 per cent this year, according to figures.

IT research firm Gartner predicts that the rising dollar will be the main cause of the slowdown, which will see spending fall to $3.66 trillion (£2.5 trillion) in 2015. This is down from a 2.4 per cent increase forecast last quarter.

But Gartner said this was “not a crash, even if it looks like one”, and that taking out the impact of exchange rate movements, the corresponding constant-currency growth figure was 3.1 per cent.

Research vice president John-David Lovelock, said: “The recent rapid rise in the value of the US dollar against most currencies has put a currency shock into the global IT market.”

He added: “Such are the illusions that large swings in the value of the dollar versus other currencies can create.”

Spending on IT devices is forecast to decline 1.2 per cent to $685 billion (£470 billion) this year. This 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.

Data centre system spending is projected to reach $142 billion (£97 billion) in 2015, an increase of 0.4 per cent on last year.

Spending in the enterprise software market is also forecast to rise this year, with a 2.3 per cent increase on 2014, although this is a downward revision from the last forecast.

IT services spending will contract slightly to $942 billion (£646 billion) in 2015, down from $948 billion (£650 billion) in 2014.

Growth in spending on telecom services is predicted to shrink by 2.6 per cent this year, to total $1.57trillion (£1.1 trillion).

Lovelock added the figures masked a bigger issue. “Every product or service that has a US dollar-based component must have those costs covered at the lower exchange rate,” he said. “The simple implication is that there will be price rises. However, there are many other market forces at work - protecting US dollar profits will require a nuanced and multifaceted approach involving pricing, partners and product management.”

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