Gartner cuts 2017 IT spending forecast

Worldwide IT spending is projected to total US$3.5tn in 2017, a 1.4% increase from 2016, according to Gartner. This growth rate is down from the previous quarter’s forecast of 2.7%, due in part to the rising US dollar.

“The strong dollar has cut $67bn out of our 2017 IT spending forecast,” says John-David Lovelock, research vice president at Gartner. “We expect these currency headwinds to be a drag on earnings of US-based multinational IT vendors through 2017.”

The data centre system segment is expected to grow 0.3 percent in 2017. While this is up from negative growth in 2016, the segment is experiencing a slowdown in the server market. “We are seeing a shift in who is buying servers and who they are buying them from,” its says.

Enterprises are moving away from buying servers from the traditional vendors and instead renting server power in the cloud from companies such as Amazon, Google and Microsoft. This has created a reduction in spending on servers which is impacting the overall data centre system segment.”

Driven by strength in mobile phone sales and smaller improvements in sales of printers, PCs and tablets, worldwide spending on devices (PCs, tablets, ultramobiles and mobile phones) is projected to grow 1.7% in 2017, to reach $645bn. This is up from negative 2.6% growth in 2016. Mobile phone growth in 2017 will be driven by increased average selling prices (ASPs) for phones in emerging Asia/Pacific and China, together with iPhone replacements and the 10th anniversary of the iPhone. The tablet market continues to decline significantly, as replacement cycles remain extended and both sales and ownership of desktop PCs and laptops are negative throughout the forecast. Through 2017, business Windows 10 upgrades should provide underlying growth, although increased component costs will see PC prices increase.

The 2017 worldwide IT services market is forecast to grow 2.3% in 2017, down from 3.6% growth in 2016. The modest changes to the IT services forecast this quarter can be characterised as adjustments to particular geographies as a result of potential changes of direction anticipated regarding US policy — both foreign and domestic.