Published on the 03/07/2014 | Written by Newsdesk

Gartner has released its quarterly IT spending forecast update and growth expectations for 2014 have been revised downward. Gartner says, however, that it expects the period of 2015 to 2018 will see a return to “normal” spending growth levels as new pricing and purchasing styles become accepted.

Worldwide IT spending is on pace to total $US3.7 trillion in 2014, a 2.1 percent increase from last year, down from earlier projections of 3.2 percent growth. In Australia, total IT spending is forecast to reach $A76 billion, an increase of 2.3 percent over 2013 and New Zealand’s total IT spending is forecast to grow 2 percent to reach $NZ11.3 billion in 2014.

Richard Gordon, managing vice president at Gartner said of the overall global outlook that 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. He added that we can expect a return to ‘normal’ spending growth levels from 2015 through 2018 as pricing and purchasing styles reach a new equilibrium. For example, as lower price points emerge across the mobile phone and tablet category fewer high-end tablets will be sold. Similarly in the data centre market segment lower-cost alternative architectures and cloud-based storage will mean lower IT spending. In the telco segment, voice average revenue per user (ARPU) will decline by about 10 percent annually through to 2018 because of a decline in use of voice services leading to increased price competition.

“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 said.

Table 1. Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Source: Gartner (June 2014)