Market Trends

Report: Worldwide IT Spending Forecast to Grow 1.4% in 2017

gartner

Worldwide IT spending is projected to total $3.5 trillion in 2017, a 1.4 percent increase from 2016, according to market research firm Gartner, Inc. This growth rate is down from the previous quarter’s forecast of 2.7 percent, due in part to the rising United States dollar.

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

The data center 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,” Lovelock said in his statement. “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 center 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 percent in 2017, to reach $645 billion. This is up from negative 2.6 percent growth in 2016, according to the report.  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 percent in 2017, down from 3.6 percent growth in 2016. The modest changes to the IT services forecast this quarter can be characterized as adjustments to particular geographies as a result of potential changes of direction anticipated regarding United States policy — both foreign and domestic. The business friendly policies of the new U.S. administration are expected to have a slightly positive impact on the U.S. implementation service market, as the U.S. government is expected to significantly increase its infrastructure spending during the next few years.

Gartner’s IT spending forecast methodology relies heavily on analysis of sales by thousands of vendors across the entire range of IT products and services, the firm said. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.

To learn more about Gartner’s latest IT spending forecast, or to obtain a copy of the entire report, visit this Gartner site.

About the Author

Richard Chang is associate editor of THE Journal. He can be reached at rchang@1105media.com.

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