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Despite global dip in 2016 IT spending, Malaysia's will actually increase 7.8 percent, Gartner forecasts

AvantiKumar | April 12, 2016
The worldwide IT spending decline of 0.5 percent in 2016 is attributed mainly to currency fluctuations, said Gartner's John-David Lovelock.

(Below) Table 2: Worldwide IT Spending Forecast (Billions of U.S. Dollars)

Worldwide IT Spending (Gartner 2016)

Lovelock said the smartphone market was approaching global saturation, slowing growth. The PC and ultramobile markets are also expected to decline. The underlying reasons are a combination of factors and are geography-specific, and the worsening economic conditions in many countries only serve to amplify the impact of these factors.

 Gartner commentary added that data centre systems' global spending should reach US$175 billion in 2016, a 2.1 percent increase from 2015.  Enterprise network equipment had a stronger-than-anticipated 2015 as a result of network upgrades, and this is expected to carry on into 2016. The external-controller-based storage segment continued to suffer from ongoing challenges. In the server segment, demand from hyperscale buyers was expected to reduce in 2016, particularly in regions that are suffering from economic challenges, such as Eurasia.

The mainframe refresh, which benefited the market in 2015, will abate in 2016, also inhibiting the overall growth figures.
Global enterprise software spending remained on pace to total US$321 billion, a 4.2 percent increase from 2015. The operating system forecast has been downgraded, reflecting Gartner's expectation for further delays in the adoption of Windows 10 and Windows Server 2016.

However, it is the key emerging markets, particularly Latin America, which face escalating political and economic challenges that are responsible for the slow growth. Organisations in those regions must balance cost cutting with growth opportunities during times of economic concern.
Spending in the IT services market should return to growth in 2016, totalling US$929 billion, up 2.1 percent from 2015. A stronger outlook for Japan and India is nearly balanced by a weaker outlook in Brazil, China and South Korea, based on challenging economic and political conditions in Brazil; and government actions and weakening economic conditions in China and South Korea.
Telecom service spending will decline 2.0 percent in 2016, with spending reaching $1.4 trillion. Continuing economic downturns in major markets such as Russia and Brazil are dampening spending in both fixed and mobile voice, and a slight slowdown in China's growth is affecting consumer confidence and eroding spend in fixed voice services.

 In enterprise services, conditions in these same three major markets are leading to consolidation among businesses (reducing connections and spend), however, mobile data spending is a bright spot with accelerating growth driven by improved pricing on bandwidth, mobile app and 4G/LTE network availability.
Gartner's IT spending forecast methodology relies on analysis of sales by thousands of vendors across the entire range of IT products and services. Gartner uses primary research techniques, complemented by secondary research sources, to build a comprehensive database of market size data on which to base its forecast.


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