Aussie IT market to grow 2.8% in 2016: Gartner

Australian technology spending is on track to buck the global trend and grow 2.8% in 2016, reaching $83.3 billion, Gartner predicts.

IT services will remain the biggest-spending category in the Australian market, whereas software is the fastest-growing category, Gartner said. By contrast, spending on devices — including mobile phones, tablets PCs and printers — is forecast to decline in 2016.

Gerard Mansour, head of communications at SIM-only mobile plan provider amaysim, said the projected decline of Australia’s device market reflects consumers’ changing buying behavior.

“Aussies are holding onto their mobile devices for longer, which means BYO plans will become increasingly popular as Australians realise they no longer need to be locked into a contract,” he said.

“The telco industry is responding to the prolonged smartphone upgrade cycle accordingly; the recent Telsyte Australian Digital Consumer Study 2016 found that over half of all mobile phone plans (51.7%) now have no strings attached.”

New Zealand’s IT spending is meanwhile forecast to grow 1.9% to nearly NZ$11.3 billion, but to decline in US dollar terms. Communications services is the biggest segment by revenue and software is the fastest growing.

Globally, Gartner has revised its IT spending forecast up from a 0.5% decline, mainly as a result of currency fluctuations. The research firm now expects spending to remain flat at US$3.41 trillion ($4.54 trillion).

The communications services segment will remain the largest-spending category worldwide, but is expected to contract 1.4% from 2015 to reach US$1.38 trillion. Spending on devices is likewise expected to fall 5.3% to US$627.23 billion as economic woes in Russia, Japan and Brazil mute demand and hold back worldwide PC market recovery.

By contrast, spending on IT services is projected to grow 3.7% to US$897.63 billion, the software segment is forecast to swell 5.8% to $332.2 billion and the data centre systems segment is on track to grow 2% to US$174.58 billion.

But the current forecast was formulated on the assumption that the UK would vote no to a Brexit. Now that Britain has elected to exit the European Union, it is likely to erode business confidence and lead to price increase, Gartner said, noting that this impact will be reflected in next quarter’s forecast.

While the largest impact will be felt in the UK and Europe, the decision is expected to negatively influence spending worldwide.

“[This year] marked the start of an amazing dichotomy. The pace of change in IT will never again be as slow as it is now, but global IT spending growth is best described as lackluster,” Gartner research vice president John-David Lovelock commented.

He noted that this marks the year that business focus turns to digital business, the Internet of Things and algorithmic business.

“To fund these new initiatives, many businesses are turning to cost-optimisation efforts centring around the new digital alternatives (for example, SaaS instead of software licences, Voice over LTE instead of cellular and digital personal assistants instead of people) to save money, simplify operations and speed time to value. It is precisely this new breadth of alternatives to traditional IT that will fundamentally reshape what is bought, who buys it and how much will be spent.”

Image courtesy of Ken Teegardin under CC