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Mixed fortunes for local IT spend in 2017, says Gartner

16 Jan 17

IT spending is expected to increase 2.7% to top US$3.5 trillion globally this year, with New Zealand spend hitting $11.4 billion, and Australian spend up to AU$85 billion.

But while the Australian spend equals the global increase of 2.7%, the New Zealand market will see slower growth at just 2.3% over last year. The global spend of 2.7% is slower than previously forecast by Gartner, which had earlier predicted a growth rate of 3.0%.

Looking ahead to 2018, Gartner is forecasting New Zealand spend to hit $11.6 billion, with Australian spend reaching $87.1 billion.

John-David Lovelock, Gartner research vice president, says 2017 is poised to be a ‘rebound’ year in IT spending globally.

“Some major trends have converged, including cloud, blockchain, digital business and artificial intelligence,” Lovelock says.

“Normally, this would have pushed IT spending much higher than 2.7% growth. However, some of the political uncertainty in global markets has fostered a wait-and-see approach causing many enterprises to forestall IT investments.”

Fixed and mobile communications services will continue to be the biggest spending category of tech spending in New Zealand, accounting for $4.4 billion, while software is the fastest growing category in 2017, up from $1.42 billion in 2016 to $1.54 billion in 2017. The growth is expected to continue through 2018, when software spend is expected to high $1.67 billion.

That growth in software spend is also mirrored in Australia, where it is forecast to grow from $10.59 billion to $11.70 billon.

In Australia, IT services will continue to be the biggest category of spending, accounting for $30.6 billion, up from $29.8 billion in 2016.

The Australian device market, which covers mobile phones, PCs, tablets and printers, is expected to decline over the next two years – from $10.7 billion in 2016 to $10.5 billion in 2017 and $10.2 billion in 2018.

That’s in keeping with a global trend which sees devices spend remaining flat in 2017 before kickstarting again in 2018 as a replacement cycle and predicted strong pricing and functionality of premium ultramobiles help drive growth.

New Zealand bucks that trend with device spend up marginally to $1.57 billion over last year’s $1.54 billion last year, before reducing to $1.56 billion in 2018.

New Zealand’s data centre systems spend – the smallest of the five categories – follows a similar pattern, climbing $2 million to $402 million this year, then declining to $398 million in 2017.

The Kiwi spend on IT services, will however continue its climb, hitting $3.52 billion this year (up from $3.44 billion in 2016), and then $3.60 billion in 2018.

In Australia communications services continues to be the second largest category and will increase from $28.9 billion last year to $29.5 billion in 2017 and up to $29.9 billion in 2018. Data centre system spend is forecast to climb marginally from $2.68 billion to $2.70 billion before declining to $2.65 billion in 2018.

Lovelock says globally the range of spending growth from the high to the low is much larger in 2017 than in past year.

“Normally, the economic environment causes some level of division, however, in 2017 this is compounded by the increased levels of uncertainty,” he says.

“The result of that uncertainty is a division between individuals and corporations that will spend more – due to opportunities arising – and those that will retract or pause IT spending.”

Gartner cites the example of aggressive build out for cloud computing platforms by companies such as Microsoft, Google and Amazon, which is pushing the global server forecast to reach 5.6% grwoth in 2017. That’s a 3% upwards revision from last quarters forecast and is sufficient to overcome an expected 3% decline in externa controller-based storage and allow the global data centre systems segment to grow 2.6% in 2017.

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