Global IT Spending ‘Set To Fall Dramatically’ In 2015

The rise of the US dollar will mean that global spending on IT is set for a significant fall this year, new figures have claimed.

A Gartner study has predicted that $3.5 trillion (£2.2 trillion) will be spent on IT this year, a 5.5 percent drop from 2014, a trend that for many industries would signal a potential crash.

However, the analyst firm is keen to stress this is not an alarming trend.

Rise and fall

“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,” said John-David Lovelock, research vice president at Gartner.

“However, there are secondary effects to the rising US dollar. Vendors have to raise prices to protect costs and margins of their products, organisations and consumers will have to make new purchase decisions in light of the new prices.”

Overall, communication services are expected to be the largest IT spending segment in 2015 with spending at nearly $1.5 trillion (£952m).

However, this segment is also experiencing the strongest decline among the five IT sectors, as increased competition and lowering prices stop revenue growth in many markets, despite increased use nearly everywhere in the world.

The devices market also recorded steady performance, as customers looking for the latest smartphones, particularly Chinese shoppers keen for the iPhone 6 and 6 Plus, kept spending consistent.

Gartner expects this to flatten out, however, in a similar way to the PC and tablet markets, as device adoption becomes commonplace.

As for PCs, a market expected to grow following Microsoft’s launch of Windows 10 next month, the study notes that ‘excessive inventory levels’, especially in Western Europe, will first need to be cleared to make space for Windows 10 inventory, which will be delayed until the second half of the year.

Time to refresh?

The stronger dollar is also expected to affect the data centre, storage and network markets, although budgets are forecast to stay strong as users expected to extend life cycles and defer replacements as a means of offsetting the price increases.

This trend is also being seen in the server market, which is benefiting from a stronger-than-expected mainframe refresh cycle, as well as increased expectations for hyperscale spending.

Finally, spending on enterprise software is forecast to decline 1.2 per cent in 2015, as many software vendors refuse to raise prices in an attempt to maintain market share, as Gartner notes that 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 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,” added Lovelock.

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