Worldwide IT spending is on pace to total $3.8 trillion in 2015, a 2.4 percent increase from 2014, according to analysts at Gartner. However, this growth rate is down from the research firm's earlier projections of 3.9 percent.
Projected growth for IT services in 2015 has been downgraded to 2.5 percent from the 4.1 percent annual gain forecast in the previous quarter.
Globally, reductions to software support services contributed disproportionately to a lower outlook through 2018 because of lower growth rates expected for enterprise software.
"The rise in spending is stronger than last year. We are seeing optimism for growth returning, and with it, an increase in IT activity," John-David Lovelock, research vice president at Gartner, told eWEEK. "While there is good growth in 2015 overall IT spending, the increase in activity has been masked by price reductions in many markets—storage is cheaper, servers are cheaper, mobile phone services are cheaper and, in particular, in the CRM market, a key cloud battleground, we expect to see seat prices for segments such as sales force automation (SFA) decline by 25 percent through 2018."
In the enterprise software market, spending is on pace to total $335 billion, a 5.5 percent increase from 2014.
Gartner analysts expect more price erosion and vendor consolidation in 2015 because of fierce competition between cloud and on-premises software providers.
There will also be increased price competition from cloud offerings in other areas (such as database management systems and application infrastructure and middleware, albeit at a somewhat slower and weaker pace than for CRM.
Data center systems spending is projected to reach $143 billion in 2015, a 1.8 percent increase from 2014.
Growth projections for the enterprise communications applications and enterprise network equipment markets have been increased from the previous quarter's forecast, while growth projections for the server and external controller-based storage segments has been lowered.
The smartphone market is becoming polarized between the high- and low-end market price points.
On one hand, growth in premium phones with an average selling price of $478 was dominated by iOS in 2014. At the other end of the spectrum, growth in Android and other open OS phones is in the basic phone segment, which had an average cost of less than $100 in 2014.
As a result, the market opportunity is becoming increasingly limited for midrange smartphones.
"CES has several announcements that only compound the problems for the midmarket," Lovelock said. "Twenty-nine dollar mobile phones are now available in the low end, and there were several new high-end phones that are not iOS-based. BYOD may be the key for the mid end of the phone market. It's the high-end market that is most commonly supported by the enterprises. Employees can only choose a phone approved by their employers. Midrange phones will have broader appeal if they can become approved for use by a wider range of employers."