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New Zealand IT spending to reach $13.7B in 2019

Gartner's revised forecast sees a 2.2 per cent increase in NZ IT spending
Inventory management SaaS developer Unleashed wins Series C investment.

Inventory management SaaS developer Unleashed wins Series C investment.

New Zealand spending on IT products and services is expected to increase 2.2 per cent reaching $13.7 billion in 2019, according to Gartner's revised forecast.

Analyst firm Gartner has published its quarterly IT spending forecast, which shows a decline in device spending from $1.87 billion in 2018 to $1.78 billion in 2019. The decline is expected to continue all the way to 2022.

Also dropping is data centre systems, which will go from $402 million in 2018 down to $386 million in 2019, which is also expected to continue its slow decline all the way to 2022.

On the other hand, spending on software will see an increase of $191 million, reaching $2 billion in 2019. IT services will go from $4.3 billion to $4.5 billion in 2019 and communications services will see a small increase reaching $5 billion in 2019.

All three segments are forecast to continue to rise all the way to 2022 when total IT spending in New Zealand is expected to reach $15.2 billion.

Worldwide IT spending is expected to total US$3.79 trillion in 2019, an increase of 1.1 per cent from 2018.

"Currency headwinds fuelled by the strengthening US dollar have caused us to revise our 2019 IT spending forecast down from the previous quarter," said John-David Lovelock, research vice president at Gartner. "Through the remainder of 2019, the US dollar is expected to trend stronger, while enduring tremendous volatility due to uncertain economic and political environments and trade wars.

“In 2019, technology product managers will have to get more strategic with their portfolio mix by balancing products and services that will post growth in 2019 with those larger markets that will trend flat to down,” said Lovelock.

Globally, the data centre systems segment will experience the largest decline in 2019 with a decrease of 2.8 per cent, which is mainly due to expected lower average selling prices in the server market driven by adjustments in the pattern of expected component costs.

Meanwhile, cloud-based alternatives are continuing to drive growth in the enterprise software market, with the forecast for 2019 to reach US$427 billion, up 7.1 per cent from US$399 billion in 2018.

The largest cloud shift has so far occurred in application software. However, Gartner expects increased growth for the infrastructure software segment in the near-term, particularly in integration platform as a service (iPaaS) and application platform as a service (aPaaS).

Gartner’s IT spending forecast methodology relies on rigorous 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.