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Kiwi IT spending set to smash $11 billion mark

08 Jan 2014

IT spending in the New Zealand is forecast to reach $11.1 billion in 2014, up 2.2 percent from 2013.

Led in part by an increased spend on devices such as PCs, ultramobiles, mobile phones and tablets, the latest forecast by global analyst firm Gartner also claims spending across the Tasman will reach A$76.9bn, an increase of 2.54 percent over 2013.

Worldwide IT spending is projected to total $3.8 trillion in 2014, a 3.1 percent increase from 2013 spending of $3.7 trillion, with the market experiencing flat growth last year, growing 0.4 percent year over year.

Spending on devices contracted 1.2 percent in 2013, but it will grow 4.3 percent in 2014 according to findings from the Gartner Worldwide IT Spending Forecast.

Gartner analysts claim convergence of the PC, ultramobiles, including tablets, and mobile phone segments, as well as erosion of margins, will take place as differentiation will soon be based primarily on price instead of devices' orientation to specific tasks.

Enterprise software spending growth continues to be the strongest throughout the forecast period, with the 2014 annual growth rate expected to grow 6.8 percent. Customer relationship management and supply chain management (SCM) also experienced a period of strong growth.

“Investment is coming from exploiting analytics to make B2C processes more efficient and improve customer marketing efforts,” says Richard Gordon, managing vice president, Gartner.

“Investment will also be aligned to B2B analytics, particularly in the SCM space, where annual spending is expected to grow 10.6 percent in 2014.

“The focus is on enhancing the customer experience throughout the presales, sales and post sales processes.”

2014 Worldwide IT Spending Forecast (US$):

1. Devices - US$697bn2. Data Centre Systems - $143bn3. Enterprise Software - $320bn4. IT Services - $963bn5. Telecom Services - $1,653bn

Last quarter, Gartner's forecast for 2014 IT spending growth in US dollars was 3.6 percent, a 0.5 percentage points higher than the current forecast.

"A downward revision of the 2014 forecast growth in spending for telecom services — a segment that accounts for more than 40 percent of total IT spending — from 1.9 percent to 1.2 percent is the main reason behind this overall IT spending growth reduction," Gordon adds.

"A number of factors are involved, including the faster-than-expected growth of wireless-only households, declining voice rates in China and a more frugal usage pattern among European customers.

“The latter coincides in Western Europe with a breakout of fierce price competition among communications service providers to retain customers and attract new ones."

Data Centre…

The data centre systems spending growth outlook for 2014 has been cut from 2.9 percent in Gartner’s previous forecast to 2.6 percent.

“This is mainly due to a reduction in the forecast for external controller-based storage and enterprise communications applications,” Gordon adds.

“These segments represent 32 percent of total data centre system end-user spending.”

Gartner has also slightly revised downward the IT services compound annual growth rate between 2012 and 2017. The largest contributor to this revision comes from reductions in IT outsourcing — specifically, in colocation, hosting and data centre outsourcing growth rates.

"We are seeing CIOs increasingly reconsidering data centre build-out and instead planning faster-than-expected moves to cloud computing,” Gordon adds.

“Despite these small reductions, we continue to anticipate consistent four to five percent annual growth through 2017.”

The Gartner Worldwide IT Spending Forecast is the leading indicator of major technology trends across the hardware, software, IT services and telecom markets, relying heavily on analysis of sales by thousands of vendors across the entire range of IT products and services.

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