Published on the 11/04/2017 | Written by Newsdesk

Rising USD puts a damper on tech investments…

Market watcher Gartner Inc is expecting worldwide IT spending to total US$3.5 trillion in 2017. That reflects a modest increase of 1.4 percent over the numbers hit in 2016 and is down from the previous quarter’s forecast of 2.7 percent, due in part to the rising U.S. dollar.

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

The Gartner Worldwide IT Spending Forecast is an indicator of major technology trends across the hardware, software, IT services and telecom markets.

Though modern data centres power multiple aspects of modern life, infrastructure remains a stodgy beast. Gartner said the data centre system segment is expected to grow just 0.3 percent in 2017.

While 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,” said Lovelock. “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.”

In pure hardware terms, this probably also confirms that it is more efficient to rent than it is to own, cost calculations aside.

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

	2016 Spending	2016 Growth (%)	2017 Spending	2017 Growth (%)	2018 Spending	2018 Growth (%)
Data Center Systems	171	-0.1	171	0.3	173	1.2
Enterprise Software	332	5.9	351	5.5	376	7.1
Devices	634	-2.6	645	1.7	656	1.7
IT Services	897	3.6	917	2.3	961	4.7
Communications Services	1,380	-1.4	1,376	-0.3	1,394	1.3
Overall IT	3,414	0.4	3,460	1.4	3,559	2.9

Source: Gartner (April 2017)

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 a 2.6 percent shrinkage in 2016.

Gartner said 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, the analysts said 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 in 2016.

Gartner said 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. The business-friendly policies of the new US administration are expected to have a slightly positive impact on the US implementation service market as the US government is expected to significantly increase its infrastructure spending during the next few years.