Cloud Floats High over 'Rocky' IT Market

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According to the latest edition of IDC’s Worldwide Black Book, the IT market will be a little “rocky” during next 18 months, but the cloud is poised to soar above it all.

This year, total spending on information and communications technology (ICT) among the 89 countries monitored by IDC rise three percent to $3.5 trillion, predicts the research firm. IT spending, not including communications, will also grow by three percent.

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Historically, these gains fall short, noted IDC. Although an improvement over 2016, in which ICT growth notched a two-percent gain, these figures pale in comparison to the five to six percent increases in IT spending experienced in 2012 through 2015.

Fortunately for IT vendors, clouds are gathering.

IDC expects spending on infrastructure-as-a-service (IaaS) solutions to jump 40 percent in 2017, for example. “The Cloud has come to dominate the ICT market outlook in many ways,” said IDC group program vice president Stephen Minton, in a statement.

The cloud’s unstoppable rise will buoy both the hardware and software markets.

“It drives capital spending cycles for hardware manufacturers and represents an increasing proportion of the customer base for server and storage vendors,” continued Minton. “From a software standpoint, software-as-a-service (SaaS) and platform-as-a-service (PaaS) already account for almost 20 percent of all software spending and rising, while cloud adoption is also driving increasing usage of telecom services and investment in network equipment.”

The downside is that the cloud will continue to cannibalize revenues from traditional outsourcing services and legacy client-server solutions, added Minton.

Meanwhile, Brexit will weigh on the European IT market. IDC expects IT spending in the UK to rise a meager one percent in 2017, compared six percent last year. “Europe is a wild card in terms of downside risks. Brexit carries a wide range of potential scenarios, and our current baseline forecasts don’t represent the worst case,” said Minton.

China will also experience an IT spending slowdown, from a nine-percent gain in 2016 to five percent this year. Rebounds are forecast for both Brazil, India and Russia as their economies strengthen.

“In Brazil and Russia, recovery will be gradual, in line with the overall economic cycle. India, meanwhile, will bounce back from a weak finish to 2016, when demonetization had a negative effect on tech spending in the fourth quarter, with a return to double-digit growth in 2017,” Minton explained.

Pedro Hernandez is a contributing editor at Datamation. Follow him on Twitter @ecoINSITE.