Rising Dollar Cuts IT Spending

Worldwide IT spending will fall 5.5% YoY in 2015, says Gartner, due solely to the strength of the US dollar. Spending will reach $3.5 trillion – a 2.5% rise in constant currency terms. The new forecast is down from Gartner’s previous prediction, in April, of a 1.3% decline and 3.1% rise in constant currency.

“We want to stress that this is not a market crash”, said John-David Lovelock, research VP at Gartner. “However, there are secondary effects to the rising US dollar. Vendors do have to raise prices to protect costs and margins of their products, and enterprises and consumers will have to make new purchase decisions in light of the new prices”.

Communications will remain the world’s largest IT spending segment, at nearly $1.5 trillion. However, the segment is also experiencing the strongest decline of the top five sectors. Revenue growth – in proportion to increasing use in most national markets – is being prevented by price erosion and competitive threats.

Mobile phones remain the leader in the device segment. iPhone growth, especially in China, is keeping overall phone spending consistent. Gartner expects overall smartphone unit growth to flatten, however. The PC and tablet markets are weakening. PC sales are being constrained by an ongoing 10% rise in prices in currency-impacted countries. Excessive inventory levels, especially in Western Europe, need to be cleared; this will delay Windows 10 launches later in the year.

The other top five sectors and data centre systems; enterprise software; and IT services. These are all forecast to see weaker growth (data centre systems) or declines of 1.2% (enterprise software) or 4.3% (IT services). However, Lovelock noted that “IT activity is stronger than the growth in spending indicates. 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)
Segment 2014 Spending 2015 Spending 2014 Growth 2015 Growth
Communication 1,607 1,492 0.2% -7.2%
Devices 693 654 2.4% -5.7%
Data Centre Systems 142 136 1.8% -3.8%
Enterprise Software 314 310 5.7% -1.2%
IT Services 955 914 1.9% -4.3%
Total 3,711 3,507 1.6% -5.5%
Source: Gartner