IT spending set to fall 7 per cent in 2020
New Zealand’s spending on information technology is set to drop by 7.3 per cent when compared with 2019. Gartner, a research firm, forecasts IT spending will be less than NZ$12.6 billion. This is a billion dollars less than last year.
While the drop is significant, New Zealand will fare slightly better than most of the world. Gartner forecasts the worldwide spend will drop eight per cent. Australia faces a six per cent fall.
The drop is a direct result of the Covid–19 pandemic and the expected international recession that will follow.
Critical IT a priority
Gartner says companies around the world are prioritising spending on mission critical technologies and services. For now they are shelving their growth or digital transformation projects.
Analyst John-David Lovelock says the bright spot in the international forecast is spending on public cloud services. This includes messaging, telephony and conferencing. This is not forecast to do as well in New Zealand.
The sharpest drop in New Zealand is expected in purchases of digital devices. Gartner forecasts a massive 15.6 per cent fall in spending down to $1.6 billion. Last year it was the only sector to show negative growth. The fall is in line with the worldwide trend.
Gartner forecasts an equally steep 14.3 per cent drop in spending on data centres, although the absolute value of the segment is far lower. This year it will fall from $405 million to $347 million.
Communications
Communications services will fall 7.2 per cent according to Gartner. This is well ahead of the 4.5 per cent worldwide figure.
Lovelock says he doesn’t see a recovery until the third quarter of 2021. Moreover he says it will take until 2024 for the economy to get back on its long term track.
He says: “Recovery will not follow previous patterns as the forces behind this recession will create both supply side and demand side shocks as the public health, social and commercial restrictions begin to lessen.”
Lovelock also warns not to expect a V shaped recover. Which also means it isn’t going to be quick. IT may be in better shape than many other sectors but we’re in for a bumpy ride.
| New Zealand shipments forecast by device type (thousands of units) | ||
|---|---|---|
| Device Type | 2019 | 2020 |
| Traditional PCs (Desk-Based and Notebook) | 439 | 396 |
| Ultramobiles (Premium) | 199 | 190 |
| Total PC Market | 637 | 585 |
| Ultramobiles (Basic and Utility) | 538 | 474 |
| Computing Device Market | 1,176 | 1,059 |
| Mobile Phones | 1,325 | 1,077 |
| Total Device Market | 2,500 | 2,136 |
| Due to rounding, some figures may not add up precisely to the totals shown. | ||
| Thin and light notebooks are listed under premium ultramobiles | ||
| Tablets and Chromebooks are listed under basic ultramobiles | ||
| Source: May (2020) |
Analyst John-David Lovelock says the bright spot in the international forecast is spending on public cloud services. This includes messaging, telephony and conferencing. This is not forecast to do as well in New Zealand.
The sharpest drop in New Zealand is expected in purchases of digital devices. Gartner forecasts a massive 15.6 per cent fall in spending down to $1.6 billion. Last year it was the only sector to show negative growth. The fall is in line with the worldwide trend.
Gartner forecasts an equally steep 14.3 per cent drop in spending on data centres, although the absolute value of the segment is far lower. This year it will fall from $405 million to $347 million.
Communications
Communications services will fall 7.2 per cent according to Gartner. This is well ahead of the 4.5 per cent worldwide figure.
Lovelock says he doesn’t see a recovery until the third quarter of 2021. Moreover he says it will take until 2024 for the economy to get back on its long term track.
He says: “Recovery will not follow previous patterns as the forces behind this recession will create both supply side and demand side shocks as the public health, social and commercial restrictions begin to lessen.”
Lovelock also warns not to expect a V shaped recovery. Which also means it isn’t going to be quick. IT may be in better shape than many other sectors but we’re in for a bumpy ride.
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