Global IT spending grows, while data centre growth slows

The latest projections from Gartner Research, Inc. show that global IT spending is expected to reach $3.7 trillion (approx. £2.61 trillion) in 2018. This number represents an increase of 6.2% over last year and the highest projected spend since 2007.

However, the report projects a slower growth in data centre spending over 2017, down from 6.3% last year to 3.7% in 2018.

Gartner research vice president John-David Lovelock said in an interview that the long-term outlook for data centre systems includes challenges, especially in storage.

The decline in growth in data centre spending is not purely based on a reduced demand for equipment, however. It may appear more significant due to a 2017 tax change that propelled sales of data centre equipment in the U.S. last year. This tax change allowed companies to offset the cost of data centre equipment purchases which, combined with attractive pricing, led to an increase in sales growth in the fourth quarter.

Lovelock said, “There was a brief period when I could buy a server and put the depreciation in 2017, which gave an extra tax write-off.”

This jump in server sales boosted numbers for large manufacturers such as HP, Dell and Lenovo; however, in the new year, without the tax breaks, growth in equipment purchases is expected to slow.

Shortages in component supply may lead to higher prices in 2018, further contributing to slow growth in the data centre systems industry. However, the report forecasts that the market will settle down the following year, with a 1.1% growth rate projected for 2019.

The overall increase in global IT spending is fueled by the enterprise software market, which is anticipated to have the highest growth level this year, at 11.1%. Spending on application software and infrastructure is expected to grow as well, as enterprises modernize legacy systems to take advantage of advancements in cloud and IoT.

Spending on devices, such as tablets, smartphones, and PCs is expected to grow at 6.6% over 2017, with a total market of over $700 billion USD. Although the number of new purchases may be in decline, customers are purchasing more expensive units, leading to an overall increase in spending.