IT spending may be up, but Gartner vice president Richard Gordon sees a big shift in where the money goes
IT spending is set to grow this year, according to Gartner. But the global trends show some big changes happening, according to Richard Gordon, a vice president at the analyst firm.
In fact, although revenues continue to grow slightly, the IT market is now mature. While new technologies such as the cloud, and new devices such as tablets, may change the make up of the revenues, the biggest changes in future are likely to be driven by geopolitical factors which change who is doing the purchasing buying, Gordon said in an interview with TechWeekEurope.
IT spending is holding up well
“You have to be careful with the figures,” Gordon told us. “We had similar figures in 2012, but in constant currency the dollar exchange rate pulled it down in 2011. In fact, we are seeing a steady state, with stable, low growth. The IT industry is holding up pretty well.”
But surely, we should be seeing growth and innovation in IT if, as some say, it is the key to getting out of the recession?
“It is true that difficult times can fuel innovation,” agrees Gordon, “but it is not somethign that happens overnight.” In fact, he says, with the IT market maturing, we shouldn’t expect the sort of “stellar” growth rates
we saw when new technologies arrived like the PC.
Also, at the moment, the US dominates the world’s IT spending so, while there is very fast growth in developing economies, this doesn’t boost the overall figure by much.
Growth areas bring lower spending
The pockets of innovation that are going on, are in the cloud, he says, and outsourcing. Both of these are to do with end user enterprises shifting their expenses away from capital investments. The industry is moving to the cloud faster than it would if there were not a recession – but the overall effect is simply to shift the responsibility for hardware, data and security away from the end user companies: “Capital risk is being taken on by service providers and cloud providers,” he said.
The change in client devices is also a double edged sword – tablets tend to be cheaper than PCs, and that drags revenues down: “The new devices tend to be low end entry-level devices,” he pointed out. “They are increasing share and taking it away from PCs faster than we thought. A lot of dollar value is being sucked out. Old fashioned desktops and notebooks are in decline, and the slack is being taken up by cheaper, new-fangled devices.”
The only place where he sees real innovation happening is the “Internet of things”. Here there are vast numbers of device that are not yet connected to the Internet, and ideas such as smart cities and smart transport rely on getting them online. Markets like health monitoring are going to be huge – as they meet a real-world need and address a real problem of the shortage of medical resources, he said.
Globally, there will be a shift towards IT spending in the developing markets – but this is really in its early stages, he said. China is in the process of changing from only being a factory to one which consumes its own goods, and so far the US still dominates in the consumption of IT,.
The world spends $3.7 trillion on IT, and around $1 trillion of that is spent int he US, nearly another $1 trillion is spent in Europe, and the developed economies of the Asia-Pacific region make up around $700 million. The other $1 trillion is spread more thinly across the vast majority of the world’s population, in China, India, Latin America and Africa, in economies that are still gearing up.
These economies are often touted as the solution to resuming growth, but don’t hold your breath, says Gordon.
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