by Divina Paredes

NZ total IT spend to reach $11.3 billion in 2014: Gartner

Jul 01, 20143 mins
Cloud ComputingMobileSmall and Medium Business

New Zealand’s total IT spend is forecast to grow 2 per cent to reach $11.3 billion in 2014, Gartner has reported.

Across the globe, worldwide IT spending is on track to total US$3.7 trillion in 2014, a 2.1 per cent increase from last year.

However, this growth rate is down from earlier projections of 3.2 per cent growth, according to the latest Gartner Worldwide IT Spending Forecast.

The slower outlook this year is attributed to a reduction in growth expectations for devices, datacentre systems and to some extent, IT services.

IT spending in the Asia Pacific region is forecast to reach US$746 billion in 2014, up 3 per cent from 2013, revised downward from 4.4 per cent in the previous forecast.

“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, 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.”

The devices market (including PCs, ultra-mobiles, mobile phones, tablets and printers) is forecast to grow in 2014, but not as much as predicted in the previous quarter’s forecast, reaching $685 billion, a 1.2 per cent increase from 2013. This is due to lower price points expected across mobile phones and tablets.

We will see a return to ‘normal’ spending growth levels from 2015 to 2018 as pricing and purchasing styles reach a new equilibrium. Richard Gordon, Gartner

Datacentre 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 datacentre systems, particularly with external controller-based (ECB) storage.

IT services, meanwhile, are forecast to total $967 billion this year, up 3.8 per cent from 2013. Following 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 datacentre outsourcing services.

Gartner said 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. Slightly increased growth expectations for infrastructure software is balanced out by slightly lower growth expected for applications software.

In the infrastructure space, the database management system (DBMS) software market is expected to have strong growth as DBMS adoption is driven by big data and digitalisation initiatives.

Slower growth is expected in the applications market, specifically office suites and digital content creation (DCC), which are being impacted by slow PC sales and the rapid move to cloud-based offerings by many organisations and professionals.