IT spending growth to slow down to 2.1% to $3.7 trillion in 2014

IT spending will grow 2.1 percent to $3.7 trillion in 2014, said Gartner. This is against an earlier forecast of 3.2 percent.

Gartner said the slower outlook for 2014 is due to a reduction in growth expectations for devices, data center systems and to some extent IT services.

“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 at Gartner.

There are good days ahead because 2015 through 2018 will see a return to normal spending growth levels.

IT spending 2014

Gartner said 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 digitalization.

Devices market

Gartner said the devices market — PCs, ultramobiles, mobile phones, tablets and printers – will grow 1.2 percent to $685 billion in 2014. The marginal growth is due to lower price points expected across mobile phones and tablets.

“As tablet penetration reaches 50 percent in U.S. households, sales of high-end tablets will decrease. New adopters are more attracted to lower priced utility tablets. The result is the mix of tablets shifting from basic tablets to utility tablets resulting in lower price points,” Gartner said.

Data center market

Data center systems spending will increase 0.4 percent to $140 billion in 2014.

Constrained spending levels will negatively impact the revenue opportunity for data center systems, particularly with external controller-based (ECB) storage.

ECB storage spending is suffering from the combined effects of underutilized systems in the installed base, as well as lower-cost alternative architectures and cloud-based storage.

The server market also shows weakness as enterprises migrate away from high-cost platforms toward lower-cost alternatives.

IT services

IT services will grow 3.8 percent to $967 billion in 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 data center outsourcing services.

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.

Enterprise software market 

Enterprise software spending will increase 6.9 percent to $321 billion.

Telecom services

Telecom services will marginally increase 0.7 percent to $1,635 trillion.

Voice average revenue per user (ARPU) will decline by about 10 percent annually through 2018 because of a decline in consumer use of voice services — particularly among prepaid users.