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Gartner has forecast that IT spending in Europe, the Middle East and Africa (EMEA) will total $1.25-trillion in 2017, a 1.9% increase from 2016. IT spending across all the constituent regions of EMEA will be almost flat in 2016, increasing 0.6% year on year.

Across all the countries of EMEA, spending on devices is expected to decline and to be the main contributor to an overall slowdown in IT spending in 2016. The segments that will contribute most to overall IT spending growth in 2017 are software and IT services.

“Spending on digitalisation is on the rise in EMEA, and we’ll witness some leading organisations modernise their core IT systems and increase spend on software and services in particular, as part of their digital transformation,” says John-David Lovelock, research vice-president at Gartner.

Spending on data centre systems, particularly servers, would normally grow when spending on software increases, but with the growing adoption of software as a service (SaaS) and other cloud offerings, data centre spending will be more muted than usual.
Brexit to Have Most Impact in Western Europe
The Brexit effect that is most pronounced is the decline in the pound sterling. Its decline has caused the prices within the UK for many IT products to increase in 2016.

“When the prices of goods increase, consumers and businesses shift their buying patterns, and the simple reaction is to buy less well-featured products,” says Lovelock. “But now that there are viable cloud offerings in the UK, organisations are also able to shift their spending into different areas — to buy computing as a service, instead of servers. These shifts will play out further in 2017. Banks in France and Germany have increased their spending on software and consulting in 2016 to attract, or at least be ready for, any banking activity shifting away from London.”

IT Spending in Western Europe Will Pick Up in 2017
In Western Europe, IT spending in constant US dollars is forecast to total $803.5-billion in 2017, a 1.6% increase from 2016. IT spending levels in Western Europe are likely to be essentially flat in 2016, with growth of 0.2% year over year.

Devices and Communications Services Spend to Fall in Western Europe
While IT services will remain the largest segment in terms of spending, and will continue to grow in 2017 (by 4.1%), the devices and communications services segments are likely to decline for at least the next three years.

“Mobile phone adoption is nearly at a saturation point — almost all users who want a new phone already have one,” says Lovelock. “The mobile phone market has therefore shifted to a replacement cycle, and mobile phone prices have reached a plateau. This compounds the problems of communications service providers, who are having to compete more directly on price, by providing more services for the same amount and offering discounts on existing plans.”

Gartner forecasts the PC market in Western Europe to total 47.8-million units in 2016 and to decrease by 3% in 2017. Gartner expects PC prices in the UK to increase by less than 10% in 2017 as vendors look to “de-feature” their PCs to keep prices down and take advantage of the single-digit decline in PC component costs in 2016.

Smartphone sales in Western Europe will total 147-million units in 2016, a 1% increase from last year. Gartner projects smartphone sales to increase 4.7% in 2017. Gartner analysts also expect that in 2017 more players (mainly from China) will aggressively target the “affordable” premium range, as well as improve basic smartphones, helping overall smartphone replacement volumes in 2017.