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IT spending to slump

by on30 June 2015


Oracle from Gartner predicts 

Oracles from Gartner groups prophercy and divination department have been reading the tea leaves and come to the concluding that IT spending is going to take a dive by 5.5 percent this yea

Enterprises will benefit from lower prices on communications and IT services but will have to shell out more for hardware in some parts of the world.

Gartner revised its spending forecast downward on Tuesday: In April, it said IT spending in 2015 would decline 1.3 percent compared to last year.

However Big G said that the numbers are a little disceptive as IT activity is stronger than the spending indicates.

Gartner vice president and Chief Auger John-David Lovelock, said that price declines in segments like communications and IT services, and the move to cloud-based services, mask an increase in activity, he said.

However, the strong dollar is resulting in price hikes on hardware, which is having a negative affect on spending.

For example, PC vendors selling to Europe and Japan, where local currencies have fallen since the start of the year, have little choice but to raise prices to preserve profits, according to Gartner. As a result, large organizations will keep their PCs longer rather than buy less expensive models or remove requirements for key features, Gartner said earlier this year.

Overall smartphone unit growth will start to flatten, as well. Things would have been worse if it weren't for sales of Apple's iPhones, especially in China.

IT departments that aren't dead-set on getting iPhones can benefit from the increasing power of mid-range Android-based smartphones: Buying high-end smartphones is no longer necessary to get performance that's good enough for most users.

In the datacenter, enterprises are also expected to defer upgrades as a means of offsetting price increases, according to Gartner. That development is offset by stronger-than-expected mainframe upgrades, as well as increased expectations for spending on hyperscale server infrastructures that power public and private clouds.

On the software side, increasing software-as-a-service (SaaS) competition is providing IT buyers with the upper hand. Vendors aren't likely to raise prices because SaaS is about market share, not profitability. Raising prices could take them out of a sales cycle, and these vendors don't believe they can afford to lose a client, according to Gartner.

All this means worldwide IT spending is now on pace to total US$3.5 trillion this year, the company said.

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