IT Spending to Drop Nearly 6% Worldwide Says Gartner30 Jun, 2015
Spending on IT worldwide will drop by nearly 6 percent this year, Gartner reported, adding to the concerns of many IT leaders that the tech industry is not as healthy as many would otherwise believe, indicates writer David Weldon, FierceCIO. According to Weldon:
Research firm Gartner revised its annual IT spending forecast yesterday, stating that overall IT spending will decline 5.8 percent in 2015. Some organizations will benefit from lower prices on communications and IT services, but others will pay more for hardware this year.
The drop isn't as straightforward as it may seem, however. "We want to stress that this is not a market crash," wrote John David-Lovelock, research vice president at Gartner, in a press release about the report. For instance, declining growth in communications services reflects greater competition and price erosion despite increasing use in most markets, Gartner reported.
Another major factor in the revised forecast is the impact of the strong U.S. dollar against many foreign markets. That is causing price hikes on many hardware items, which is in turn impacting spending in those markets.
Other trends cited by Gartner include deferred data center upgrades due to rising prices; stronger-than-expected spending on mainframe upgrades; and increased spending on hyper-scale servers that are used to power both public and private cloud computing.
Despite the new Gartner numbers, there is some disagreement on the health of the tech industry overall right now. An article at Business Insider noted that we are in a "tech boom". But FierceCIO has reported on the doubts that many CIOs have about that claim. And a number of the industry's largest players have reported revenue numbers this year that were short of analyst expectations.
The Business Insider article did temper its claim somewhat, however, noting that tech booms do go in cycles, and those cycles can be short-lived and end for a variety of reasons. As evidence of a current boom, there are currently at least 114 privately held companies with valuations of at least $1 billion or more. Some well-known businesses such as Uber and Airbnb are now valued at over $10 billion.
But a tech boom could end in one of three ways, the article noted:
- The sharing-economy business model could be disrupted
- Public market investors could get spooked by a broad-scale event or economic downturn
- So-called "unicorns" (high-flyer tech firms) could run into trouble and cause a loss of public confidence
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