IT spending growth to be slower than expected in 2014 due to pricing pressure, Gartner says

Enterprise software revenue will see the most growth, at 6.9 percent, according to the research firm

IT research firm Gartner has cut its forecast for global IT spending by about one-third for this year, blaming a tougher competitive environment and subsequent pressure on vendors to lower prices.

Spending will rise 2.1 percent to US$3.7 trillion in 2014, down from the 3.2 percent growth rate Gartner had predicted for 2014.

The downgraded forecast isn't necessarily a cause for concern, said Gartner managing vice president Richard Gordon in an interview.

"In the context of an improving global economic situation, to have IT spending be anemic, in the low single digits, might be a surprise on the face of it," he said. But customers aren't necessarily cutting back on spending, Gordon said. "They're getting better deals for their money and spending their money carefully."

Data center system spending will be the slowest growing category in 2014, rising only 0.4 percent to $140 billion due to factors such as lower-cost storage options in the cloud and a move away from high-end server systems.

Devices spending will rise just 1.2 percent to $685 billion due to price cuts on mobile phones and tablets, Gartner said.

IT services revenue is expected to jump 3.8 percent this year to $967 billion after "weak vendor performance" in 2013, according to Gartner. Within this category, however, spending on IT outsourcing has been slowed by the ongoing price war between cloud storage vendors. Implementation services revenue is being constrained by customers choosing to conduct smaller projects.

Meanwhile, enterprise software revenue will rise 6.9 percent in 2014 to $321 billion, buoyed by stronger growth in infrastructure software sales but tempered by a slower rise in spending on applications, Gartner said.

The increase in connected devices in the so-called Internet of Things will help push software sales higher in coming years, Gordon said. "With IoT and digital business in general, you've got a lot more data out there that needs to be collected, stored and analyzed."

Finally, telecom services revenue will also see meager growth this year, rising 0.7 percent to $1.635 trillion. Average revenue per user for voice services is expected to decline 10 percent each year through 2018, again due to competitive pressures among carriers as well as emerging free or advertising-supported service offerings, Gartner said.

Chris Kanaracus covers enterprise software and general technology breaking news for The IDG News Service. Chris' email address is Chris_Kanaracus@idg.com

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags IT managementGartnerbusiness issuesservicessoftwarehardware systems

Keep up with the latest tech news, reviews and previews by subscribing to the Good Gear Guide newsletter.

Chris Kanaracus

IDG News Service
Show Comments

Most Popular Reviews

Latest Articles

Resources

PCW Evaluation Team

Cate Bacon

Aruba Instant On AP11D

The strength of the Aruba Instant On AP11D is that the design and feature set support the modern, flexible, and mobile way of working.

Dr Prabigya Shiwakoti

Aruba Instant On AP11D

Aruba backs the AP11D up with a two-year warranty and 24/7 phone support.

Tom Pope

Dynabook Portégé X30L-G

Ultimately this laptop has achieved everything I would hope for in a laptop for work, while fitting that into a form factor and weight that is remarkable.

Tom Sellers

MSI P65

This smart laptop was enjoyable to use and great to work on – creating content was super simple.

Lolita Wang

MSI GT76

It really doesn’t get more “gaming laptop” than this.

Featured Content

Product Launch Showcase

Don’t have an account? Sign up here

Don't have an account? Sign up now

Forgot password?