Business software spending will grow faster than gadgets, says analyst
The world will spend $3.7 billion (£2.3bn) on information technology in 2014 – an increase of 3.1 percent over 2013 – according to Gartner.
The analyst firm believes that tech will grow faster than inflation this year, having been pretty much level in 2013. Business software will grow fastest, but even the device market – which other analysts expect to decline – will make solid growth this year, having shrunk last year, Gartner predicts.
Back in the money
“Three percent growth is pretty healthy,” Gartner’s vice president Richard Gordon told TechWeekEurope, escpecially compared with a negligible increase of 0.4 percent in 2013. Much of the growth will come from business software, which is being shaken up by what Gartner calls the “nexus of forces” – and everyone else calls the usual suspects: mobile, social and analytics or Big Data.
Devices will grow by 4.3 percent (to a value of $697 million), having contracted by 1.2 percent last year, said Gordon – a prediction which might surprise some, given a Financial Times report today that the Consumer Electronics Association is opening the CES show in Las Vegas, expecting that this year the technology product market will decline by one percent.
The CEA says that smartphones and tablets have begun to saturate, and the industry is “floundering”, looking for new growth sectors such as the much-hyped wearable computing market. Gordon agrees with this – pointing out that the margins in ultramobiles and mobile phones have been eroded and they now compete solely on price. Gartner’s figures are more upbeat than the CEA’s because the consumer group includes home electronics, such as TVs, Gordon explains. “The devices we track – PCs, tablets and mobile phones – are increasing,” he told us. “But the only real growth is coming from tablets and ultrabooks, which are cannibalising the traditional markets.”
The big changes – consumerisation, the shift to smart mobile devices, and the rise of the cloud – mean that Gartner is having to struggle to sort expenditure into neat and continuous sectors – and in the future will have to include new factors such as mobile apps.
In Gartner’s comfort zone of enterprise tech, Gordon is predicting 6.8 percent growth for enterprise software, to $320 million, as companies get to grips with “digitising” their business, but that growth comes while some traditional vendors are struggling with the shift to cloud computing. “All the big traditional software vendors are facing a challenge because the models are changing,” he said.
Far bigger than software, however, is IT services (a category which might, or might not, include some cloud offerings) at $963 billion, and telecoms at $1.653 billion. According to Gordon, services will grow fast, at 4.5 percent, as some discretionary spending which has been delayed during the lean recessionary times will be unlocked. Telecoms, however, is only growing at 1.2 percent: it’s just a cost of doing business, rather than a source of interesting trends, Gordon concluded.
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