Cloud To Spur IT Spending In The Enterprise By 2017-End
Increased adoption of cloud based services, along with stronger upgrade cycles for mobile devices will lead to the improvement in the global IT spending in the second half of the year, according to analyst and research firms IDC and Gartner.
According to the latest IDC report, worldwide IT spending is expected to increase by 4.5% in 2017 in constant currency terms, a significant improvement on last year’s growth of 2.5%, which forecasts total IT spending this year to reach $2.1 trillion and will increase by another 4% in 2018 as positive momentum continues into next year. Including telecom services, which will increase by just over 2% in constant currency terms this year, the overall ICT market will reach $3.5 trillion in 2017.
A recent report by Gartner also indicates that global IT spending is projected to total $3.5 trillion in 2017, a 2.4 percent increase from 2016, according to Gartner, Inc. This growth rate is up from the previous quarter’s forecast of 1.4 percent, due to the U.S. dollar decline against many foreign currencies.
Cloud Is Still Leading the Way
IDC predicts that the strongest growth this year will come from infrastructure hardware, enterprise software, and mobile devices. With cloud service providers expected to accelerate their datacenter investments in order to keep pace with growing demand for cloud services, total server spending will increase by 4% this year and 5% in 2018.
Enterprise spending on server and storage infrastructure will also pick up in the second half of 2017, driven by product refresh cycles. Meanwhile, demand for Infrastructure as a Service (IaaS) will remain robust, with spending set to exceed $25 billion this year and more than $50 billion by 2020, said IDC.
Gartner too sees a similar trend with busiesses’ increased focus on the cloud. John-David Lovelock, vice president and distinguished analyst at Gartner. ”With the increased adoption of SaaS-based enterprise applications, there also comes an increase in acceptance of IT operations management (ITOM) tools that are also delivered from the cloud,” said he. “These cloud-based tools allow infrastructure and operations (I&O) organizations to more rapidly add functionality and adopt newer technologies to help them manage faster application release cycles.
Smartphone Sales Will Improve
Last year saw a significant slowdown in the smartphone market, as increasing maturity and price competition affected many markets. Stronger growth is expected in the second half of 2017, as premium vendors launch significant new products while smartphone penetration and value continues to grow steadily in key emerging markets including China. Overall smartphone spending will increase by 7% this year to $439 billion, a big improvement on last year’s 1% growth.
“Cloud and mobile are still the big drivers for IT spending, despite the attention devoted to new technologies like augmented reality, artificial intelligence, and robotics,” said Stephen Minton, vice president, Customer Insights & Analysis at IDC ”New technologies will drive a larger share of market growth in the next 5-10 years, but the short term will also see a resurgence of growth in markets tied to 3rd Platform opportunities, including cloud services, mobility, and big data.”
Asia/Pacific (excluding Japan) will post the strongest regional growth in IT spending this year, set to increase by 8% in constant currency terms, followed by the United States (4%). China and India are both expected to post overall IT spending growth of 10% in constant currency terms this year, although China is likely to see a moderating pace of growth in the next few years as the economy begins to slow.
IT spending growth will be weaker but stable in Western Europe (3%), Canada (2%), and Japan (2%) as mature economies continue to face headwinds including Brexit and demographic challenges, the research firm said.
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