Gartner Projects Worldwide IT Spending to Reach $3.5 Trillion in 2017

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Worldwide IT spending will increase by 1.4 percent from last year, reaching $3.5 trillion in 2017, according to projections released Monday by Gartner. The growth rate was projected to be 2.7 percent in the previous quarterly forecast, but was hit by the rising U.S. dollar.

“The strong U.S. dollar has cut $67 billion out of our 2017 IT spending forecast,” said John-David Lovelock, research vice president at Gartner. “We expect these currency headwinds to be a drag on earnings of U.S.-based multinational IT vendors through 2017.”

Including the $67 billion cut out by currency fluctuation, the growth rate would be closer to 3.3 percent, suggesting that demand will continue to increase at a healthy rate. The U.S. dollar traded regularly for less than €0.90 a year ago, but closed Monday above €0.94.

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The data center segment is projected to grow only 0.3 percent, after declining by 0.1 percent in 2016, as the server market continues to drag the segment. Equinix chief evangelist Peter Ferris said during his keynote address at Data Center World last week that Microsoft, Google, and Amazon each spend more in two years than the $17 billion Equinix has invested in data centers over its 18 years.

“We are seeing a shift in who is buying servers and who they are buying them from,” Lovelock said in a statement. “Enterprises are moving away from buying servers from the traditional vendors and instead renting server power in the cloud from companies such as Amazon, Google and Microsoft. This has created a reduction in spending on servers which is impacting the overall data center system segment.”

Enterprise software remains the biggest growth segment, and is projected to grow by 5.5 percent to $351 billion in 2017, and by 7.1 percent in 2018, after growing 5.9 percent in 2016. The device segment is projected to swing from a decrease of 2.6 percent in 2016 to a 1.7 percent growth rate, driven by higher average prices for phones in Asia/Pacific and China and iPhone sales. The IT services segment is expected to  grow by 2.3 percent, down from 3.6 percent, to $917 billion, and Gartner expects the segment to see a slight positive impact from increased infrastructure spending by the U.S. government over the next few years.

Communication services spending, which fell by 1.4 percent in 2016, is projected to shrink by 0.3 percent in 2017, though Gartner projects it will recover with 1.3 percent growth in 2018.

Overall, Gartner projects growth in 2018 of 2.9 percent.

A previous version of this article erroneously said that worldwide IT spending would reach $3.5 billion in 2017.