Vendors poised to raise prices as NZ ICT spend stalls

“We want to stress that this is not a market crash.”

The PC and tablet market continues to weaken. The expected 10 per cent increase in average PC pricing in currency-impacted countries is going ahead, delaying purchases even more than expected.

Excessive PC inventory levels, especially in Western Europe, need to be cleared, which will delay Windows 10 inventory in the second half of the year.

Data Centre

Within the data centre systems segment, storage and network markets are both expected to see weaker growth in U.S. dollar terms as a result of the appreciation of the U.S. dollar.

Enterprise budgets for data centre systems in local spending are expected to remain stable for the year, with users expected to extend life cycles and defer replacements as a means of offsetting the price increases.

The overall near-term data centre weakness is slightly offset by a more positive outlook for the server market.

At present, the server market is benefiting from a stronger-than-expected mainframe refresh cycle, as well as increased expectations for hyperscale spending.


Meanwhile, enterprise software spending is forecast to decline 1.2 per cent in 2015, with revenue totalling $654 billion.

As a result, Gartner analysts claim that many software vendors will try not to raise prices because software as a service (SaaS) is about market share, not profitability.

Raising prices could take software vendors out of a sales cycle, and these vendors don't believe they can afford to lose a client.

IT Services

IT services spending in 2015 is projected to decline 4.3 per cent.

Gartner expects modest increased spending on consulting in 2015 and 2016, as vendors have demonstrated their ability to stimulate new demand from buyers looking for help with navigating business and technology complexities, particularly related to building a digital business.

However, the forecast for implementation services has been slightly reduced. Increasingly, buyers prefer solutions that minimise time and cost of implementation, driving demand for more-efficient delivery methods, out-of-the-box implementation, and lower-cost solutions.

“IT activity is stronger than the growth in spending indicates,” Lovelock adds. “Price declines in major markets like communications and IT services, and switching to 'as a service' delivery, mask the increase in activity.”

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