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US$973 billion - EMEA's projected IT spend in 2019

US3 billion - EMEA's projected IT spend in 2019

IT spending in EMEA is projected to total US$973 billion in 2019, an increase of 2% from the estimated spending of US$954 billion in 2018, according to the latest forecast by Gartner.

"2018 is not a good year for IT spending in EMEA," said John Lovelock, research vice president at Gartner. The 5.8 percent growth witnessed in 2018 includes a 4 percent currency tailwind driven by the Euro's increase in value against the US Dollar."

"IT spending in EMEA has been stuck and will remain stuck until the unknowns surrounding Brexit are resolved," Lovelock added.

Until then, the slow growth of the overall EMEA market is masking the divergent growth rates across the segments in the region, according to Gartner.

Consumer PC spending declined 9.1% in 2018 and demand for business Windows 10 PCs will pass its peak in 2019, with business PCs' unit growth at 1%. Similarly, mobile phones' unit growth, especially in Western Europe, will start to decline from a 4.7% growth in 2018 to -1.1% in 2019 as replacements cycles peak and then fall in 2019.

After achieving growth in 2018, spending on datacentre systems is set to be flat or decline in 2019 and beyond.

Table 1. EMEA IT Spending Forecast (Millions of US Dollars)

 

2018 Spending

2018 Growth (%)

2019 Spending

2019 Growth (%)

Data Centre Systems

46,330

5.4

46,545

0.5

Enterprise Software

108,832

12.7

116,751

7.3

Devices

155,685

2.1

153,909

-1.1

IT Services

286,717

8.9

299,414

4.4

Communications Services

356,028

3.2

356,408

0.1

Overall IT

953,592

5.8

973,023

2.0

Source: Gartner (November 2018)

"The brief uptick in spending caused by a bump in upgrade spending and early replacements as a precaution against CPU security issues has abated," reads a statement from Gartner.

"The largest single market - communications services - has become commoditised and is set to show flat growth in 2019. The enterprise software market continues to have a positive effect on the overall spending growth in EMEA. This is largely due to the increasing availability and acceptance of cloud software," the company added.

In 2019, Gartner expects cloud, security and the move to digital business to bolster growth in EMEA. End-user spending on public cloud services in EMEA will grow 15 per cent in 2019 to total $38.5 billion. In terms of security, with the GDPR in place, penalties for data violations could be as high as 4 per cent of revenue.

"The enforcement of GDPR has moved security to a board-level priority. Organisations that are not protecting their customers' privacy are not protecting their brand," said Lovelock. "Global spending on IT security will surpass $133 billion in 2019 and in EMEA it will reach $40 billion in 2019, up 7.8 percent from 2018."

Brexit impact

According to Gartner, with an expected 2% growth in IT spending in 2019, EMEA is ranked as the third slowest growing region for IT spending, ahead of Eurasia (+0.5%) and Latin America (+1.7%).

Brexit is having a dampening effect on IT spending across the region. IT spending in the UK is set to total $204 billion in 2019, a 1.9% decline from 2018. "The UK is not expected to exhibit growth above 2 per cent until 2020, which is having a downward effect on the EMEA IT spending average throughout the forecast period," said Lovelock.

Israel and Saudi Arabia are leading the overall IT spending growth rate in EMEA in 2019, with each country set to achieve a 5.3 and 4.2% increase in IT spending, respectively.

In September 2018 the research and market analysis firm listed autonomous things, augmented analytics, AI-driven development and digital twin as among its top ten strategic technology trends for 2019.

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