According to the latest report by Gartner, worldwide IT spending is on pace to total $3.5 trillion in 2015, a 5.5 percent decline from 2014.
Analysts attribute the decline to the rising US dollar. In constant-currency terms, the market is projected to grow 2.5 percent. In Gartner’s previous forecast in April, it had forecast IT spending to decline 1.3 percent in US dollars and grow 3.1 percent in constant currency.
John-David Lovelock, Research Vice President, Gartner, said, “We want to stress that this is not a market crash. Such are the illusions that large swings in the value of the US dollar versus other currencies can create. However, there are secondary effects to the rising US dollar. Vendors have to raise prices to protect costs and margins of their products, and enterprises and consumers will have to make new purchase decisions in light of the new prices.”
The report highlighted that communications services will continue to be the largest IT spending segment in 2015 with spending at nearly $1.5 trillion. However, this segment is also experiencing the strongest decline among the five IT sectors. Price erosion and competitive threats are preventing revenue growth in proportion to increasing use within most national markets.
Table 1. Worldwide IT Spending Forecast by Sector (Billions of U.S. Dollars)
| 2014 Spending | 2014Growth (%) | 2015Spending | 2015Growth (%) | |
| Devices | 693 | 2.4 | 654 | -5.7 |
| Data Centre Systems | 142 | 1.8 | 136 | -3.8 |
| Enterprise Software | 314 | 5.7 | 310 | -1.2 |
| IT Services | 955 | 1.9 | 914 | -4.3 |
| Communications Services | 1,607 | 0.2 | 1,492 | -7.2 |
| Overall IT | 3,711 | 1.6 | 3,507 | -5.5 |
Source: Gartner (June 2015)
In the device market, mobile phones continue to be the leading segment, with growth in Apple phones, especially in China, keeping overall phone spending consistent. However, overall smartphone unit growth will start to flatten. The PC and tablet markets continue to weaken. The expected 10 percent increase in average PC pricing in currency-impacted countries is going ahead, delaying purchases even more than expected. Excessive PC inventory levels, especially in Western Europe, need to be cleared, which will delay Windows 10 inventory in the second half of the year.
Within the data centre systems segment, storage and network markets are both expected to see weaker growth in U.S. dollar terms as a result of the appreciation of the US dollar. Enterprise budgets for data centre systems in local spending are expected to remain stable for the year, with users expected to extend life cycles and defer replacements as a means of offsetting the price increases..
Enterprise software spending is forecast to decline 1.2 percent in 2015, with revenue totaling $654 billion. Gartner analysts said many software vendors will try not to raise prices because software as a service (SaaS) is about market share, not profitability. Raising prices could take software vendors out of a sales cycle, and these vendors don’t believe they can afford to lose a client.
IT services spending in 2015 is projected to decline 4.3 percent. Gartner expects modest increased spending on consulting in 2015 and 2016, as vendors have demonstrated their ability to stimulate new demand from buyers looking for help with navigating business and technology complexities, particularly related to building a digital business. However, the forecast for implementation services has been slightly reduced. Increasingly, buyers prefer solutions that minimise time and cost of implementation, driving demand for more-efficient delivery methods, out-of-the-box implementation, and lower-cost solutions.
“IT activity is stronger than the growth in spending indicates. Price declines in major markets like communications and IT services, and switching to ‘as a service’ delivery, mask the increase in activity,” Mr. Lovelock said.
