This is not a market crash: Gartner reassures IT industry as it forecasts 5.5% drop in global spending

Worldwide IT spending is on pace to total $3.5 trillion in 2015, a 5.5% decline from 2014, according to the latest forecast by Gartner.

Analysts attribute the decline to the rising US dollar. In constant-currency terms, the market is projected to grow 2.5%. In Gartner’s previous forecast in April, it had forecast IT spending to decline 1.3% in US dollars and grow 3.1% in constant currency.

“We want to stress that this is not a market crash,” said John-David Lovelock, research VP at Gartner. “Such are the illusions that large swings in the value of the US dollar versus other currencies can create.

“However, there are secondary effects to the rising US dollar. Vendors have to raise prices to protect costs and margins of their products, [and] organisations and consumers will have to make new purchase decisions in light of the new prices.”

>See also: CIOs: don’t declare war on business unit spending

Communications services will continue to be the largest IT spending segment in 2015, according to Gartner’s research – with spending at nearly $1.5 trillion.

However, this segment is also experiencing the strongest decline among the five IT sectors. Price erosion and competitive threats are preventing revenue growth in proportion to increasing use within most national markets.

In the device market, mobile phones continue to be the leading segment, with growth in Apple phones, especially in China, keeping overall phone spending consistent. But overall smartphone unit growth will start to flatten.

The PC and tablet markets continue to weaken. The expected 10% increase in average PC pricing in currency-impacted countries is going ahead, delaying purchases even more than expected.

Excessive PC inventory levels, especially in Western Europe, need to be cleared, which will delay Windows 10 inventory in the second half of the year.

Within the data centre systems segment, storage and network markets are both expected to see weaker growth in US dollar terms as a result of the appreciation of the US dollar.

Enterprise budgets for data centre systems in local spending are expected to remain stable for the year, with users expected to extend life cycles and defer replacements as a means of offsetting the price increases.

The overall near-term data centre weakness is slightly offset by a more positive outlook for the server market, which is benefiting from a stronger-than-expected mainframe refresh cycle, as well as increased expectations for hyperscale spending.

Enterprise software spending is forecast to decline 1.2% in 2015, with revenue totalling $654 billion. Gartner analysts said many software vendors will try not to raise prices because software-as-a-service (SaaS) is about market share, not profitability. Raising prices could take software vendors out of a sales cycle, and these vendors don’t believe they can afford to lose a client.

IT services spending in 2015 is projected to decline 4.3%. Gartner expects modest increased spending on consulting in 2015 and 2016. Vendors have demonstrated their ability to stimulate new demand from buyers looking for help with navigating business and technology complexities, particularly related to building a digital business.

>See also: 5 common mistakes in selecting business systems

However, the forecast for implementation services has been slightly reduced. Increasingly, buyers prefer solutions that minimise time and cost of implementation, driving demand for more-efficient delivery methods, out-of-the-box implementation, and lower-cost solutions.

“IT activity is stronger than the growth in spending indicates,” said Lovelock. “Price declines in major markets like communications and IT services, and switching to ‘as a service’ delivery, mask the increase in activity.”

Worldwide IT spending forecast by sector (billions of US dollars)




growth (%)




growth (%)

Devices 693 2.4 654 -5.7
Data centre systems 142 1.8 136 -3.8
Enterprise software 314 5.7 310 -1.2
IT services 955 1.9 914 -4.3
Communications services 1,607 0.2 1,492 -7.2
Overall IT 3,711 1.6 3,507 -5.5


Avatar photo

Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

Related Topics

IT Spending