STAMFORD, CT – Gartner lowered its worldwide IT spending outlook for the year to $3.74 trillion, citing a host of reasons for uncertainty. The research firm now expects sales to increase 0.6% from 2018. down slightly from the previous quarter’s forecast of 1.1% growth.
“Despite uncertainty fueled by recession rumors, Brexit, trade wars and tariffs, we expect IT spending to remain flat in 2019,” said John-David Lovelock, research vice president at Gartner. “While there is great variation in growth rates at the country level, virtually all countries tracked by Gartner will see growth in 2019. Despite the ongoing tariff war, North America IT spending is forecast to grow 3.7% in 2019, and IT spending in China is expected to grow 2.8%.”
“Although an economic downturn is not the likely scenario for either 2019 or 2020, the risk is currently high enough to warrant preparation and planning. Technology general managers and product managers should plan out product mix and operational models that will optimally position product portfolios in a downturn should one occur.”
The enterprise software market will experience the strongest growth in 2019, reaching $457 billion, up 9% from 2018. CIOs are continuing to rebalance their technology portfolios, shifting investments from on-premises to off-premises capabilities, says the research firm.
As cloud becomes increasingly mainstream over the next few years, it will influence greater portions of enterprise IT decisions, in particular system infrastructure. Prior to 2018, more of the cloud opportunity had been in application software and business process outsourcing. Over this forecast period, it will expand to cover
additional application software segments, including office suites, content services and collaboration services.
“Spending in old technology segments, like data center, will only continue to be dropped,” said Lovelock.
Globally, consumer spending as a percentage of total spend is dropping every year in every region due to saturation and commoditization, especially with PC, laptops and tablet devices. Cloud applications allow these devices to have an extended life, with less powerful equipment needed to run new software. The devices market will experience the strongest decline in 2019, down 4.3% to $682 billion.
“There are hardly any ‘new’ buyers in the devices market, meaning the market is now being driven by replacements and upgrades. Add in their extended lifetimes, along with the introduction of smart home technologies and IoT, and consumer technology spending only continues to drop.”