Gartner Worldwide IT Market Report Predicts Fastest Growth in Decade

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Gartner Worldwide IT Market Report Predicts Fastest Growth in Decade

The Global IT Industry is poised for its fastest growth in more than a decade, according to a new Gartner research report. The latest update to Gartner’s Worldwide IT Spending Forecast, shows that revenue will grow in every major IT industry segment in 2018 and 2019. Enterprise software will see the strongest growth and once again, communications services are in high demand. Gartner also said that a declining U.S. dollar could actually prove to be a “tailwind” for the industry, despite the possibility of politics and tariff policies playing a role in how companies buy new products. This eWEEK slideshow will examine Gartner’s latest Worldwide IT Spending Forecast and dissect the areas that are poised to see the strongest growth.

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Overall Performance Is Strong

Gartner estimates that worldwide IT spending will reach $3.7 trillion this year, up 6.2 percent compared to the $3.5 trillion spent last year. Looking ahead to 2019, Gartner expects 2.8 percent year-over-year growth with total spending reaching $3.8 trillion. Gartner said that the 2018 growth is the highest it’s forecast since 2007.

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Data Centers Set for Growth

Data Center Systems spending this year will reach $188 billion, a 3.7 percent growth rate over 2017 when customers spent $181 billion, according to Gartner. In 2019, the company expects total Data Center Systems spending to hit $190 billion, a 1.1 percent growth rate over 2018.

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Component Shortage Causing Data Center Bottleneck

In a deeper dive into data centers, Gartner warned that there appears to be a bottleneck holding the segment back. The company said that there’s a memory component shortage that has pushed prices higher than the company had anticipated. Although it forecast that shortage to dissipate earlier in 2018, it now believes that it’s worse than expected and the industry could see a constrained supply through the end of the year.

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Enterprise Software Spending to Grow Sharply

Enterprise software will grow more than any other industry segment this year, according to Gartner. The company believes total enterprise software spending will hit $391 billion this year, up 11.1 percent compared to the $352 billion companies spent in 2017. In 2019, enterprise software spending will jump another 8.4 percent to $424 billion.

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Devices Continue to Soar

Device spending, which is defined as a wide range of IT computing hardware, is poised for a 6.6 percent year-over-year growth rate in 2018, bringing total spending from $663 billion in 2017 to $706 billion this year. Looking ahead to 2019, Gartner said that it believes Devices spending will jump by 1.3 percent year-over-year to $715 billion.

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Buyers Are Paying High Prices for Devices

In a commentary on the Devices segment, Gartner said that the industry is seeing “dual dynamics.” Some customers aren’t buying at all, preferring instead to keep existing products for longer. Others, however, are buying devices and purchasing at higher price points than before. Therefore, total spending is up over the forecast period, although unit shipments will drop compared to previous estimates, Gartner said.

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IT Services Spending to Break $1 Trillion

For the first time, IT Services spending will exceed $1 trillion in 2018, according to Gartner. The segment is expected to generate $1.003 trillion in revenue, up 7.4 percent compared to the $933 billion companies spent in 2017. Next year, IT Services spending will hit $1.04 trillion, a 4.6 percent growth rate.

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Communications Services Are Still Tops

Communications Services remains the biggest industry segment in the IT industry. Total spending this year will reach $1.5 trillion, according to Gartner, representing a 4.3 percent growth rate over the $1.4 trillion companies spent in 2017. Gartner expects 2019 spending to reach $1.5 trillion, a 1.1 percent growth rate year over year.

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Weak U.S. Dollar to Affect Spending

A weak U.S. dollar will actually promote the predicted IT spending growth, Gartner research vice president John-David Lovelock said in a statement. He noted that the U.S. dollar’s lower value compared to other international currencies is making it more palatable for countries around the world to buy more products. It’s a major contributing factor to the 6.2 percent growth rate, according to Lovelock.

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Politics, Tariffs Increasing Market Uncertainty

Politics could weigh heavily on how closely the IT industry follows Gartner’s forecast. Lovelock noted that there is some uncertainty in how the U.S. will renegotiate the North American Free Trade Agreement (NAFTA) and whether there will be “trade wars” arising from the political decision to impose tariffs on some foreign nations trade goods. How all of that plays out could bring change—up or down—in the IT industry’s forecasts.

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