IT Spends for 2016: 0.6 pc up, and how?

|January 25, 2016 0
Watch out for dollar-relief, hyperscale data centers, Windows 10 and Skylake PCs for spending pattern shifts ahead

MUMBAI, INDIA: IT spending on a global level is forecast to total $3.54 trillion dollars in 2016, just a 0.6 per cent increase over 2015 spending of $3.52 trillion dollars.

As Gartner, Inc. notes, 2015 saw the largest U.S. dollar drop in IT spending since Gartner began tracking IT spending. $216 billion dollars less was spent on IT in 2015 than in 2014 and 2014 spending levels won’t be surpassed until 2019.

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

The devices market (PCs, ultramobiles, mobile phones, tablets and printers) is forecast to decline 1.9 per cent 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 center systems’ spending is projected to reach $75 billion in 2016, a 3.0 per cent increase from 2015. The server market is the segment that has seen the largest change since the previous quarter’s forecast. The server market has seen 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.

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. However, key countries in emerging markets, particularly Brazil and Russia, face escalating political and economic challenges. Organizations in those regions must balance cost cutting with growth opportunities during times of economic concern.

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 percent from 2015. This is due to accelerating momentum in cloud infrastructure adoption and buyer acceptance of the cloud model.

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