ChannelLife New Zealand logo
Industry insider news for New Zealand's technology resellers
Story image

IT spending set for major slowdown in 2016

By Shannon Williams
Thu 18 Feb 2016
FYI, this story is more than a year old

While still increasing, worldwide IT spending is set to majorly slowdown during 2016, according to the latest reports from IDC.

The analyst firm says the combination of economic weakness in emerging markets and saturation of the smartphone market will result in a “significantly slower pace” of tech spending growth compared to the past six years.

Having posted annual growth of 5-6% in constant currency terms since recovery from the financial crisis in 2010, IDC says the global IT market is expected to increase by just 2% this year.

Total IT spending on hardware, software and services will reach $2.3 trillion in 2016. Including telecom services, total ICT spending will increase by 2% to $3.8 trillion.

IDC says IT spending was relatively stable in 2015, in spite of the volatile economy, propelled by another strong year for smartphone shipments, which compensated for a weakening PC market throughout the year.

Smartphones accounted for half of the overall industry growth rate of 6% in 2015. Spending on cloud infrastructure was also strong throughout the year, resulting in growth of 16% for the server market and 10% for storage systems.

Enterprise spending on software, including SaaS, posted healthy growth of 7% with strong investment in analytics, security, and collaborative applications.

"Aside from exchange rate volatility, IT spending has been relatively stable for the past five years," explains Stephen Minton, vice president with IDC's Customer Insights and Analysis group.

"Excluding mobile phones, overall tech spending has continued to grow at 3-4% each year in constant currency terms since we recovered from the disruption of the financial crisis,” Minton says.

“A solid PC upgrade cycle in 2014 was followed by a major cycle of infrastructure spending in 2015, mostly driven by cloud,” he says.

“IT buyers continue to prioritise software investments like data analytics and enterprise mobility, and have increasingly leveraged the service provider model in order to increase the effectiveness of their IT budgets,” says Minton.

“Underlying buyer sentiment is strong."

Minton says IT spending in China has been a growing source of revenue for tech vendors in recent years, and the market grew by 11% in constant currency terms last year, driven by strong growth in smartphones and cloud infrastructure.

“However, we now see signs of increasing maturity in the smartphone market after the phenomenal growth of the past seven years, and this is now expected to result in overall IT spending posting its first -ever decline (of -0.3%),” says Minton.

“While the smartphone slowdown is more heavily related to market maturity than economic weakness, we also forecast a decline in PC sales, and softening growth of spending on servers, storage, and peripherals compared to last year,” he explains.

Minton says the software market in China has so far remained relatively stable, but accounts for only 5% of overall IT spending (compared to 30% in the United States). As a result, China is more exposed to volatile swings in capital spending, with hardware markets tending to be more sensitive to economic disruption.

"The slowdown in China is largely connected to increasing rates of market penetration and price competition, but the current economic uncertainty also represents a significant downside risk for the rest of 2016," Minton explains.

"Emerging markets in general are fragile, and weaker growth in China has already had a negative impact on countries such as Brazil. Mature markets like the US and Europe have been somewhat more stable over the past 12 months, but the downside risks have now increased across all geographies, and the likelihood of a more widespread slowdown in IT spending is now higher than three months ago,” he says.

Minton says the Asia Pacific region will post growth of less than 2% in 2016, compared to 7% in 2015, largely due to the overall slowdown in China.

“While a slowdown in PC revenues and more difficult year-on-year comparisons for cloud infrastructure spending will result in weaker overall IT spending growth of 8% in 2016, underlying sentiment remains strong and we forecast accelerating growth in software and services,” says Minton.

He says India will rebound to double-digit growth in 2017, and will represent an increasingly vital source of growth for global IT suppliers over the next five years.

"India is a vital market for tech companies in 2016, representing a market that still has huge room and potential for growth across many sectors," says Minton. "India's current importance to many IT vendors in some ways mirrors the importance of China a decade ago.

“Although the overall market is still much smaller than China, India's expected rate of growth will see it overtake Australia and Canada to enter the top 10 largest IT markets by 2020."

Minton adds growth in other emerging markets will be more volatile however, as economic weakness inhibits IT spending.

Related stories
Top stories
Story image
Employment
Tech job moves - Forcepoint, Malwarebytes, SolarWinds & VMware
We round up all job appointments from May 13-20, 2022, in one place to keep you updated with the latest from across the tech industries.
Story image
Vectra AI
Understanding the weight on security leader’s shoulders, and how to shift it
Millions of dollars of government funding and internal budgets are being funnelled into cybersecurity to build resilience against sophisticated threats, indicating how serious this issue has become.
Story image
SaaS
Maintaining secure systems with expectations of flexible work
Most office workers feel they've proved they can work successfully from home, and as much as employers try, things aren't going back to the way they were anytime soon.
Story image
Ransomware
Alarming surge in Conti Ransomware Group activity - report
A new report has identified a 7.6 per cent increase in the number of vulnerabilities tied to ransomware in Q1 2022.
Story image
Phishing
KnowBe4 celebrates reaching 50,000 customers worldwide
KnowBe4 has reached the milestone of 50,000 customers, adding nearly 2,500 in the first quarter of 2022 alone.
Story image
Cybersecurity
Managed service providers: effective scoping to avoid costly vendor pitfalls
Managed security services are outsourced services focusing on the security and resilience of business networks.
Story image
Digital Transformation
Pluralsight and Ingram Micro Cloud team up on cloud initiative
Pluralsight has teamed with Ingram Micro Cloud to build upon cloud competence and maturity internally, and externally support partners’ capabilities.
Story image
Artificial Intelligence
SAS announces new products amid cloud portfolio success
Analytics and AI company SAS is deepening its broad industry portfolio with offerings that support life sciences, energy, and martech.
Story image
Vodafone
Vodafone NZ buys remaining stake in retail joint venture
Vodafone New Zealand has purchased the remaining 50% stake in the specialist joint venture (JV) with private equity company Millennium Corp.
Story image
Fonterra
Fonterra to use automated guided vehicles by Dematic
New Zealand's dairy giant Fonterra is upgrading its manufacturing facility in Edendale with new automated guided vehicles (AGVs) from Dematic.
Story image
Cybersecurity
NCSC advisory highlights poor security configurations
The GCSB's National Cyber Security Centre (NCSC) has released a cyber security advisory identifying commonly exploited controls and practices.
Story image
Application Performance Monitoring / APM
Why SolarWinds Partners will have big wins in 2022
We summarise the key recent changes that the monitoring software vendor has made to accelerate its channel business.
Story image
Ransomware
Cybersecurity starts with education
In 2021, 80% of Australian organisations responding to the Sophos State of Ransomware study reported being hit by ransomware. 
Story image
Cybersecurity
Noname Security partners with Netpoleon to target API issues
Specialist API security firm Noname Security has appointed Netpoleon as its distributor in Australia and New Zealand.
Story image
Remote Working
How zero trust and SD-WANs can support productive remote working
The way people connect with applications and data has changed, users are remotely accessing resources that could be stored anywhere from a corporate data center to the cloud.
Story image
Wireless
Hands-on review: Technics EAH-A800 Noise Cancelling Wireless Headphones
Designed in Osaka, Japan, these headphones just exude quality. They aren’t heavy, but they feel well built and solid.
Story image
Mobility
Tyson Beckford partners with Element Case on new AppleWatch band
Celebrity Tyson Beckford has collaborated with STM Brands' Element Case brand to create a rugged new accessory.
Story image
Commerce Commission
ComCom welcomes new marketing codes for the telecom industry
The Commerce Commission is welcoming the creation of new marketing codes for the telecommunications industry.
Story image
Artificial Intelligence
SAS launches human-focused responsible innovation initiative
SAS has launched a responsible innovation initiative, furthering its commitment to equity and putting people first.
Booster
Booster Innovation Fund. A fund of Kiwi ingenuity – for Kiwi investors.
Link image
Story image
Artificial Intelligence
SAS unveils AI experience to improve kids' batting abilities
SAS has created The Batting Lab, an interactive experience using AI, computer vision and IoT analytics to help kids improve their baseball and softball swings.
Story image
Lightspeed
Lightspeed launches all-in-one marketing platform in A/NZ
ECommerce provider, Lightspeed has launched a new all-in-one marketing solution, Lightspeed Marketing & Loyalty in Australia and New Zealand.
Story image
Gaming
PNY launches XLR8 Gaming EPIX memory products in A/NZ
PNY has launched its XLR8 Gaming EPIC-X RGB™ DDR4 Silver 3200MHz and 3600MHz memory products in Australia and New Zealand.
Story image
Cybersecurity
BlackBerry offers Kaspersky replacement cybersecurity for the channel
BlackBerry advises that users of Kaspersky software in Australia and New Zealand undertake a rigorous risk analysis of their current security posture.
Story image
Ransomware
A third of companies paying ransom don’t recover data - report
Veeam's report finds 76% of businesses who are victims of cyberattacks paid the ransom to recover data, but a third were still unable to get their information back.
Story image
Data Protection
Barracuda launches new capabilities for API Protection
"Every business needs this type of critical protection against API vulnerabilities and automated bot attacks," Barracuda says.
Story image
Sustainability
Legrand unveils Nexpand, a data center cabinet platform
Legrand has unveiled a new data center cabinet platform, Nexpand, to offer the necessary scalability and future-proof architecture for digital transformation.
Story image
Artificial Intelligence
AI-based email security platform Abnormal Security valued at $4B
"A new breed of cybersecurity solutions that leverage AI is required to change the game and stop the rising threat of sophisticated and targeted email attacks."
Story image
Gaming
Hands-on review: WD_Black SN770 NVMe SSD Game Drive
Western Digital expands its WD_Black range of NVMe solid-state drives with the WD_Black SN770 Game Drive.
Story image
Collaboration
Meadows exits Ingram Micro New Zealand on a good note
We look at the resignation of Danny Meadows from Ingram Micro's New Zealand Unified Communications & Collaboration business unit.
Story image
PaaS
New digital traffic light system to tackle construction defects
Smarter Defects Management launches its PaaS digital system and says it will revolutionise managing defects in the construction industry.
Story image
Microsoft
New Relic enters multi-year partnership with Microsoft Azure
New Relic has announced a strategic partnership with Microsoft to help enterprises accelerate cloud migration and multi-cloud initiatives. 
Story image
Cybersecurity
Hard numbers: Why ambiguity in cybersecurity no longer adds up
As cybersecurity costs and risks continue to escalate, CEOs continue to struggle with what their investment in cyber protection buys. Getting rid of ambiguity becomes necessary.
Story image
Commerce Commission
ComCom appeals $2.25 million fine in Vodafone FibreX case
The Commerce Commission has filed an appeal in the High Court against a $2.25 million fine imposed on Vodafone NZ for its offending under the Fair Trading Act.
Story image
Amazon Web Services / AWS
RedShield leverages AWS to scale cybersecurity services
"Working with AWS gives RedShield the ability to mitigate significant application layer DDoS attacks, helping leaders adopt best practices and security architectures."
Story image
Application Security
What are the DDoS attack trend predictions for 2022?
Mitigation and recovery are vital to ensuring brand reputation remains solid in the face of a Distributed Denial of Service (DDoS) attack and that business growth and innovation can continue.
Story image
Cloud Security
Aqua Security createa unified scanner for cloud native security
“By integrating more cloud native scanning targets into Trivy, such as Kubernetes, we are simplifying cloud native security."
Story image
Fortinet
Fortinet's Security Fabric hits new record for integrations
The Fortinet Security Fabric has surpassed 500 technology integrations with more than 300 Fabric-Ready Technology Alliance Partners.
Story image
WolfVision
WolfVision announces new range of visualisers
WolfVision has announced a new range of visualisers to help meet multiple industry demands for remote learning and educational solutions.
Story image
Nozomi Networks
Nozomi Networks, Siemens reveal software integration
Nozomi Networks and Siemens have extended their partnership by embedding Nozomi Networks’ software into the Siemens Scalance LPE local processing engine.
Story image
Sift
Sift shares crucial advice for preventing serious ATO breaches
Are you or your business struggling with Account Takeover Fraud (ATO)? One of the latest ebooks from Sift can provide readers with the tools and expertise to help launch them into the new era of account security.
Story image
Surveillance
Motorola Solutions acquires Videotec S.p.A for security portfolio
Motorola Solutions has acquired Italian ruggedised video security company Videotec S.p.A, along with its portfolio of highly versatile cameras.
Story image
Apple
Apple previews new features for users with disabilities
Apple says new software features that offer users with disabilities new tools for navigation, health and communication, are set to come out later this year.
Story image
Cybersecurity
The 'A-B-C' of effective application security
Software applications have been a key tool for businesses for decades, but the way they are designed and operated has changed during the past few years.