UPDATED 20:46 EDT / APRIL 17 2019

INFRA

Revising its IT spending forecast, Gartner warns of slower growth across all segments

Analysts at Gartner Inc. today refreshed their worldwide information technology spending forecast for 2019 and the upshot is that slower times are ahead — especially for data center systems.

The research firm says total spend is likely to be more or less the same as it said in its earlier forecast at roughly $3.79 trillion, but it expects the money to be distributed somewhat differently to what it had predicted in January.

In its original spending forecast, Gartner said the enterprise software, IT services and data center segments would see the highest growth, at 8.5%, 4.7% and 4.2%, respectively. But three months on, those numbers have shifted as Gartner now expects companies to take a more conservative stance over their IT spending.

For example, while enterprise software spending will still grow, it will do so at the more humble rate of just 7.1% year-over-year, to a total of $427 billion. IT services is a similar story, with growth revised to just 3.5% for a total spend of $1.016 trillion.

There’s greater trauma in store for sellers of data center systems, though, as this category is now projected to shrink by 2.8% to $204 billion. Gartner’s researchers said data center gear will be less profitable due to lower average selling prices for many components this year. For example, prices for NAND flash memory and Dynamic Random Access Memory are expected to fall significantly this year due to oversupply issues.

Spending on other segments is also expected to fall. The communications services market will shrink by 0.1%, to $1.487 trillion, for example, while the devices market will pull in 1.9% less revenue at $655 billion.

Gartner also explained the discrepancy in its numbers between this quarter’s forecast and the last. It said the new numbers are based on revised spending data for 2018, to which $97 billion was added. That explains why every single category is showing less growth even though the overall predicted spend remains the same.

Gartner also warned of the continuing threat of a downturn in the U.S. economy. “Through the remainder of 2019, the U.S. dollar is expected to trend stronger, while enduring tremendous volatility due to uncertain economic and political environments and trade wars,” John-David Lovelock, research vice president at Gartner, said in a statement.

Image: Gartner

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