Data centers are still critical. Organizations are finding it difficult to maintain their own data centers. According to John-David Lovelock there will be a significant change in the situation by the year 2018 where digital business will surpass the capacity of traditional data centers.
The data center systems market is going to see its biggest growth since the last quarter. Data centers are projected to grow 3% since 2015.
For the fiscal year 2015, software sales were down by 1.4%. But this year software sales are expected to see a growth of 5.3%. Gartner attributes this growth to “currency headwinds”. Worsening economic conditions in countries like Russia, Japan, Brazil are holding those markets back from stronger growth.
Devices / Hardware
There will be a decline in the devices market (PC, mobile, tablets, printers, etc.). Devices market is projected to decline 1.9% in the year 2016. Gartner further predicts “weak tablet adoption.” Tablets are not gaining popularity as initially expected around the world.
On the other hand, smartphones and PCs will be popular purchases in 2016. The only issue for the devices market is companies will shift their purchases to lower cost products which in turn will reduce revenue.
IT services includes a wide range of things including cloud. Following the decline of 4.5% in 2015, IT services are expected to grow and are projected to reach 930 billion dollars, up by 3% since 2015. As more and more buyers accept the cloud model the accelerated spending in the cloud will grow.
The communications industry is predicted to decline 1.2% in 2016. The segment which will be impacted in telecommunication will be abolishing of roaming charges in European union (EU) and in parts of North America. At the same time, the mobile voice and mobile data traffic will increase, which is going to offset the loss of revenue from roaming charges and premium.
IT operational services
For last four years IT operational services has seen a steady growth but according to a study released by Computer Economics, IT operational budgets appear to be growing at a slower rate for this year. The study based on IT spending plan by various organizations in the US and Canada indicates IT operational budgets will grow about 2%. Though it is slower than the rate of improvement since 2012 it still is an upward trend.
IT spending in fiscal year 2016 is dependent on the size of organization and the industry sector. Small and mid-size businesses especially in financial, professional, and technical services firm will spend more on its IT operations and are planning to increase IT capital budgets by “a substantial margin.” But on other hand large organizations, manufacturing in particular, do not expect to grow their IT budgets.
Impact of currency market trend
As the US dollar rose, currencies around the world were getting devalued, global revenues in terms of dollars went down. But as Gartner states these “headwinds” will cease in 2016.
Understanding emerging markets
The deteriorating economic climate in emerging markets has had little effect on global enterprise software spending.
Although data center still remains a viable option, cloud is the future and MSPs that take a more proactive role in helping customers transform their IT will win.
The “break fix” monetizing model for IT services will decline further. It is getting harder and harder to profit by doing maintenance and upgrades. Packaging solutions and monetizing strategically will be crucial.