As per the research and analysis firm, Gartner?s latest IT spending outlook report, global IT spending will reach $3.7 trillion in 2014, registering a 2.1 per cent increase from last year. The growth, however, is lower than its earlier projections of 3.2 per cent growth.
The slower growth outlook for 2014 can be largely attributed to a reduction in estimated spending on devices, data centre systems and IT services. Further, price pressure based on increased competition, lack of product differentiation and the increased availability of viable alternative solutions has had a dampening effect on the short-term IT spending outlook.
That said, the spending growth levels are expected to return to normal during 2015 through 2018 as pricing and purchasing styles reach a new equilibrium. IT segment is entering its third phase of development, moving from a focus on technology and processes in the past to a focus in the future on new business models enabled by digitalization.
As per the latest report, data centre systems spending is projected to reach $140 billion in 2014, a 0.4 per cent increase from 2013. Constrained spending levels will continue to negatively impact the revenue opportunity for data centre systems, particularly with external controller-based (ECB) storage. ECB storage spending is suffering from the combined effects of underutilised systems in the installed base, as well as lower-cost alternative architectures and cloud-based storage.
The server market is also showing lower growth as enterprises migrate from high-cost platforms toward lower-cost alternatives. Meanwhile, the hyper-scale segment, primarily driven by consumer-oriented services, is likely to provide some positive drivers to the market. However, this would be for very low-cost platforms, which will further impact the overall spending levels on data centre systems.
IT services is forecast to total $967 billion in 2014, up 3.8 per cent from 2013. Following a weak vendor performance in 2013 across multiple geographies and segments, modestly improved spending is expected through 2014.
IT outsourcing is growing slower than expected as sharply reduced pricing by the large vendors is impacting the cloud storage services market. In addition, public cloud services are proving increasingly cannibalistic to more traditional data centre outsourcing services. Implementation services are also growing slower than expected as risk-averse buyers continue to focus on smaller, safer projects and some of the largest sellers remain focused on maintaining margins over growing revenue.
Further, telecom service spending is projected to grow 0.7 per cent in 2014, with spending reaching $1,635 trillion. The voice average revenue per user (ARPU) will decline by about 10 per cent annually through 2018 because of a decline in consumer use of voice services, particularly among prepaid users.
The enterprise software market, on the other hand, is forecasted to witness a 6.9 per cent increase from 2013, and the spending will reach $321 billion in 2014.
