Gartner, the leading organisation for IT and business development, recently announced that Worldwide spending in the IT sector would increase by around 1.4% from 2016, reaching a level of around $3.5 trillion by the end of 2017. These new projections are a slight disappointment compared to previous growth rates of 2.7% predicted during the last quarterly forecast. However, the new projection takes into account the hit on the rising U.S. dollar.
According to research vice president for Gartner, John-David Lovelock, the strength of the U.S. dollar has cut around $67 billion out of their forecast, and the expectation is that those currency headwinds will continue to weigh down earnings for U.S based multi-national vendors of IT equipment through 2017.
The Current Projections
If we were to include the $67 billion that has been cut out of the recent projections due to currency fluctuations, then the growth rate would be much closer to around 3.3%, suggesting that demand would continue to increase at a normal and healthy rate. The U.S. dollar traded as usual for less than €0.90 a year ago, but it’s now at a rate closer to €0.94.
The segment for data centres is also projected to see growth, but only of around 0.3% after a decline of 0.1% during 2016, as the market for servers continues to drag the segment down. According to chief evangelist for Equinix, Peter Ferris, during a keynote address at Data Centre World, Amazon, Google, and Microsoft each spend more in two years than the $17 billion spent by Equinix over eighteen years.
In simple terms, we’re seeing a change in the people who are buying servers, and who they’re buying them from. Enterprises are moving further away from the server buying process when it comes to dealing with traditional vendors, and are instead borrowing their server power in the cloud from companies like Microsoft, Google, and Amazon. This reduction in spending has impacted the overall data centre segment.
Enterprise Still the Biggest Segment
So far, enterprise software continues to be the biggest growth segment, and it’s projected to grow by a further 5.5% into a $351 billion market during 2017. In 2018, the growth is expected to develop by around 7.1%, after a powerful growth of 5.9% during 2016. Additionally, the device segment is predicted to see a swing from a decrease of 2.6% during 2016, to a significant growth of 1.7% during 2017, driven by the higher prices for phones in China and the Asia/Pacific segment.
The segment for IT services is projected to grow by around 2.3%, a number that’s down from 3.6%, to around $917 billion, and Gartner believes that the segment should see something of a positive impact from an increased level of infrastructure spending from the U.S. government in the next few years. Additionally, communication services spending, which dropped by around 1.4% during 2016, should shrink by around 0.3% in 2017, although Gartner predicts it will recover with a growth of 1.3% during 2018.
