Gartner IT Spending Report Finds Server Vendors Losing Sales to Cloud

The worldwide IT market is set for growth this year and next after coming off a relatively quiet 2016, according to new data from research firm Gartner. The company, which releases regular updates on the IT market’s status, believes the industry will grow 1.4 percent this year, up from the 0.4 percent growth rate it mustered in 2016. Gartner also predicts the IT industry’s revenue will jump nearly 3 percent year over year in 2018. Still, there are some challenges, including a stronger-than-expected dollar and some weakness in the communications services business. Plus, traditional server vendors are losing ground to major cloud server providers. Read on for more from the latest Gartner Worldwide IT Spending Forecast.

Gartner believes 2017 should be a better year than 2016. The company says total worldwide IT spending this year will reach $3.5 trillion, up 1.4 percent compared to the $3.4 trillion spent in 2016. Communications services will account for about 40 percent of that amount, the biggest of any segment.

Looking ahead to 2018, Gartner expects an even better year. The company says total IT spending in 2018 will reach $3.56 trillion, a 2.9 percent gain over 2017.

While the growth in 2017 and 2018 is expected to be stronger than it was in 2016, it’s not as much as Gartner had anticipated. The company previously forecast a 2017 growth rate of 2.7 percent but, because of the strengthening dollar, Gartner now expects companies worldwide to spend $67 billion less than they had anticipated.

The data center systems segment was down 0.1 percent year over year in 2016. But Gartner believes it will return to growth this year and boost worldwide spending 0.3 percent to $171 billion. Next year, data center systems spending will grow 1.2 percent to $173 billion, according to the research firm.

Enterprise software spending continues to be the best-performing segment. This year, total spending in the segment is expected to grow 5.5 percent to $351 billion and next year, it is expected to jump 7.1 percent to $376 billion. Last year, global enterprise software spending was up 5.9 percent year over year to $332 billion.

The devices industry will see spending rise 1.7 percent this year to $645 billion, and Gartner believes it will maintain the same growth rate next year on revenue of $656 billion. It’s a bit of good news, as the devices segment was down 2.6 percent in 2016.

There’s no stopping IT services. According to Gartner, the segment will see its spending jump 2.3 percent to $917 billion this year and rise 4.7 percent to $961 billion in 2018. IT services spending was up 3.6 percent in 2016 to $897 billion.

The communications services segment is having a rough time. While it’s still the largest segment in the IT sector, total spending there was down 1.4 percent last year to $1.38 trillion. Gartner believes spending will slip by 0.3 percent this year to $1.376 trillion. However, it should stage a comeback in 2018, with $1.39 trillion in total spending.

Big-name companies apparently are stealing significant revenue from traditional server vendors. According to Gartner, companies increasingly are turning to cloud-based server power from Amazon, Google and Microsoft and relying less on on-premises servers. It’s a trend that likely will continue.

The U.S. government might have a positive impact on the broader IT industry. The Trump Administration has what Gartner calls “business-friendly policies” that it believes will have a “slightly positive impact” on implementation service providers in the country. And, the government could increase its spending on IT infrastructure in the coming years.