IT spending 2016: The cloud drives software and data center increases

Gartner's tech spending predictions show how the cloud is changing procurement choices.
Written by Steve Ranger, Global News Director

Worldwide IT spending is forecast to total $3.54 trillion in 2016, with software and data centers the big winners, while hardware spending will slump.

Analyst Gartner is predicting just a 0.6 percent spending increase this year compared with 2015, to $3.52 trillion. And if that sounds modest-but-OK, it's worth remembering that in 2015 IT spending fell $216bn from the previous year -- and Gartner says the levels of spending seen in 2014 won't be beaten again until 2019.


Gartner said the devices market -- which includes PCs, ultramobiles, mobile phones, tablets, and printers -- will decline 1.9 percent in 2016. There are a few reasons for this, said the analyst firm, including weaker economic conditions in Brazil, Japan, and Russia; weak demand for tablets; and a shift in phone spending in emerging markets to lower-cost devices.

Data center systems spending is expected to reach $75bn in 2016, up three percent on last year. Gartner said the server market has seen stronger-than-expected demand from the hyperscale sector, which has also lasted longer than expected. Typically, this segment has spiky demand that lasts for a couple of quarters before trailing off, said Gartner, but demand in this segment is expected to continue to be strong through 2016.

Software remains the big growth area, hitting $326bn this year -- a 5.3 percent increase from 2015. The IT services market will also return to growth in 2016, following a decline of 4.5 percent in 2015. IT services spending is projected to reach $940bn in 2016, up 3.1 percent from 2015, thanks to accelerating momentum in cloud infrastructure adoption.

Telecom services spending is projected to decline 1.2 percent in 2016, thanks to the abolition of roaming charges in the European Union and parts of North America.

Gartner's take is broadly in line with, if more pessimistic than, predictions from rival analyst Forrester published earlier this month. But both sets of numbers reflect the growing impact that the rise of the cloud is having on IT spending decisions: with more spending on software and the data center infrastructure to support those cloud applications, businesses see less need to invest in local processing power on PCs.

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