The slower outlook for 2014 is attributed to a reduction in growth expectations for devices, data centre systems and to some extent IT services, according to a forecast by research and analysis firm Gartner.
“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,” said Richard Gordon, Managing Vice-President at Gartner.
“However, 2015 through 2018 will see a return to ‘normal’ spending growth levels as pricing and purchasing styles reach a new equilibrium. It 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 digitalisation,” Gordon added.
The global IT spending forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets.
Data centre systems spending is projected to reach $140 billion in 2014, a 0.4 per cent increase from 2013. Constrained spending levels continue to negatively impact the revenue opportunity for data centre systems, particularly with external controller-based (ECB) storage. ECB storage spending suffers 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 also shows weakness as enterprises migrate away from high-cost platforms toward lower-cost alternatives. The hyper-scale segment, primarily driven by consumer-oriented services, does provide some positive drivers to the market, albeit for very low-cost platforms, which further impacts 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 largest 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 remain focused on smaller, safer projects and some of the largest sellers remain focused on maintaining margins over growing revenue.
In the enterprise software market, spending is on pace to total $321 billion, a 6.9 per cent increase from 2013. Telecom services 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.