Data center market suffers as more organizations opt for the cloud

Sector to see tiny growth in 2017, as Amazon, Google and Microsoft provide more server power.

Cloud computing continues to take a bite out of the data center market, as new projections from Gartner Inc. show barely any spending growth for the year.

Worldwide IT spending on the data center system segment is expected to grow by only 0.3 percent this year, Gartner says. Despite that low number, it is better news that last year, which actually saw negative growth.

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“We are seeing a shift in who is buying servers and who they are buying them from,” explained John-David Lovelock, research vice president at Gartner. “Enterprises are moving away from buying servers from the traditional vendors and instead renting server power in the cloud from companies such as Amazon, Google and Microsoft. This has created a reduction in spending on servers which is impacting the overall data center system segment.”

Of the five spending areas studied by Gartner, only communication services had a lower projection for 2017, at negative 0.3 percent growth. Spending on devices is projected to see a 1.7 percent increase and enterprise software is expected to lead at a 5.5 percent increase.

Worldwide IT spending is projected to total $3.5 trillion in 2017, which represents a 1.4 percent increase from 2016, according to Gartner. Heading into 2017 Gartner had originally projected a 2.7 percent spending increase. The research firm adjusted its projection down due to the rising value of the U.S. dollar against foreign currencies.

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