The Gartner Group released its third-quarter 2015 update, and you can access the full report here: https://www.gartner.com/doc/3142129?refval=&pcp=mpe
For those looking for a quick summary of Gartner’s findings, we’ll be happy to provide you with a few highlights. Overall, the forecast coming in to 2015 pointed toward decreased spending, and in Q2 Gartner tabbed that growth for the year at negative 5.5%. With the data in for Q3, however, Gartner has revised the number for the year to negative 4.9%.
Why this slight uptick during the last quarter? The chief reason for this change is due to currency fluctuations, in that the rapid rise in the value of the U.S. dollar against most currencies has put a currency shock into the global IT market.
It should be noted here that one has to look at the difference between current dollars versus constant dollars. Current dollars represent the dollar revenue that IT vendors can expect to realize from IT spending, given projected exchange rates. Constant dollars, meanwhile, represent dollar-equivalent IT spending—assuming exchange rates fixed at a level in a given year, where that year is referred to as the base year for the resulting constant dollars.
The bottom line is that Gartner has pegged overall IT spending growth—measured in constant currency—at 2.5% for the year, unchanged since its forecast following Q2. Measured in current dollars, however, the new number provided by Gartner is negative 4.9%
Data Center Spending Leads The Way
The other principal reason for the slight uptick has been growth in the data center systems category, whose constant-currency growth rate in 2015 has increased from 3.6% to 8% (in current dollar terms, that forecast for the year has risen from negative 3.8% to 0.9 %).
Why this change? It would appear that the enterprise network equipment (ENE) segment of data center systems has seen stronger-than-expected growth as a result of network refreshes. This effect, especially pronounced in North America, is expected to continue for the balance of 2015, resulting in the full-year expectation increase.
Move beyond the data center systems category, however, and the numbers are muted. In each of the other segments covered—including software, devices, IT services and communications services—the forecast for the year remains largely unchanged, with all reporting negative growth in current dollars ranging from -0.7% to as low a -6.9%, thus accounting for the overall -4.9% forecast for 2015. When measured in constant currency, these figures all skew slightly positive, with an unchanged overall growth forecast of 2.5% for the year.
North America Leads; Europe Lags
From a regional perspective, North America will lead the way with the highest IT spending for the year at approximately $1.1 trillion. The fastest-growing regions in the world are the Middle East and Africa—with a constant-currency growth of 5.8%—followed by Asia/Pacific and Latin America.
The slowest-growing region in the world is Europe, with the Central and Eastern Europe region lagging the most. Gartner forecasts this geography to post a constant-currency growth of negative 3.2%. The biggest laggard of all is Russia, where IT spending has dropped to -16.4% for 2015, due to economic uncertainty, trade embargos and a rise in the price of foreign-produced goods.
So much for 2015. Looking ahead for the year, Garter projects an overall growth of 1.8% in constant currency, and a very similar 1.7% increase in current dollars. And when examining the compounded annual growth rate (CAGR) for the six-year period covering 2014-2019, Garnter projects a constant currency CAGR of 2.7%.
To summarize, it would appear that IT spending in 2015 is generally down compared to the preceding years and lower than what likely lies ahead. Once we move further into Q1 2016 and beyond, growth should again resume, but at a very modest pace.