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Worldwide IT spending to grow in 2016 – but only just

Just how much will the tech-crazy world blow on IT in 2016? Around US$3.54 trillion…

While that number represents growth, it is only just in the green according to the Gartner Worldwide IT Spending Forecast. At a mere 0.6 percent over 2015 spending, the researcher is anticipating a flat year ahead; it also noted that 2015 saw the largest US dollar drop in IT spending since it began tracking IT spending over a decade ago.

In that nation, said Gartner, $216 billion dollars less was spent on IT in 2015 than in 2014. The researcher also said 2014 spending levels won’t be surpassed until 2019.

“The rising U.S. dollar is the villain behind 2015 results,” said John-David Lovelock, Gartner research VP. “U.S. multinationals’ revenue faced currency headwinds in 2015. However, in 2016 those headwinds go away and they can expect an additional 5 percent growth.”

Closer to home, IT spending in Australia is forecast to grow 2.8 percent to reach A$79.9 billion in 2016, with IT services the largest revenue segment at A$29 billion. Spending on devices (mobile phones, PCs, tablets and printers) is forecast to decline slightly from A$10.7 billion to $10.5 billion, while software is expected to be the fastest growing, increasing 9.6 percent to A$10.3 billion in 2016.

In New Zealand, spending is forecast to grow 2 percent to reach NZ$11.6 billion, with communications services the biggest area of spending, forecast at NZ$4.4 billion for 2016.

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

2015 Spending 2015 Growth (%) 2016 Spending 2016 Growth (%)
Data Center Systems 170 1.8 175 3.0
Software 310 -1.4 326 5.3
Devices 653 -5.8 641 -1.9
IT Services 912 -4.5 940 3.1
Communication Services 1,472 -8.3 1,454 -1.2
Overall IT 3,517 -5.8 3,536 0.6

Source: Gartner (January 2016)

Worldwide, the devices market (PCs, ultramobiles, mobile phones, tablets and printers) is forecast to decline 1.9 percent in 2016. The combination of economic conditions preventing countries such as Russia, Japan and Brazil from returning to stronger growth, together with 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.

Ultramobile 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 centre systems’ spending is projected to reach $75 billion in 2016, a 3.0 percent increase from 2015. The server market is the segment that has seen the largest change since the previous quarter’s forecast, with stronger-than-expected demand from the hyperscale sector, which has lasted longer than expected. Typically, this segment has spikey demand which lasts for a couple of quarters before moderating. Demand in this segment is expected to continue to be strong through 2016.

Spending in the IT services market is expected to return to growth in 2016, following a decline of 4.5 percent in 2015. IT services spending is projected to reach 940 billion in 2016, up 3.1 percent from 2015. This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model.

The most recent IT spending forecast research is available here.