Analysts predict hardware spend will fall as cloud computing dominates

Research firm Gartner has revealed that IT budgets will become increasingly focused on cloud computing, open source projects and virtualisation, creating a vacuum in the hardware market as demand falls.

The arrival of Windows 7 last year will have helped the hardware industry slightly as firms move to upgrade systems in 2010. However, it is believed that this year many larger projects revolving around in-house infrastructure changes will be dropped by some businesses as they look to alternative options.

In a recent report Gartner suggested that some 2.1 trillion will be spent on IT this year, which is up over five per cent compared to 2009. In 2011 it predicts even greater budgetary increases, with 2.3 trillion or more potentially being spent.

It is believed that spending on storage will increase as firms look to expand their data capacity, which is constantly being stretched as data requirements grow. However, over the next four years the forecast for most hardware spending looks to be on a downward trend.

Interestingly most firms upgrading server hardware are opting for entry level solutions as stop-gap solutions in order to tide them over until they are ready to make the leap to cloud computing and virtualisation of their systems.

The arrival of Windows 7 is expected to account for 1 per cent of the market growth in 2010 as firms commit to an upgrade cycle. Small and medium sized businesses are switching to the new Microsoft operating system because most believe that it offers better usability and heightened performance.

Gartner says that current IT spending is still being driven by improving efficiency whilst cutting costs, as the global recession is still biting hard in many industries. This is causing many firms to seek out services that can automate essential processes.

The result is that open source projects and virtualisation of data storage will become far more commonplace. This will be good news for vendors in these areas and it is believed that the competition this will generate will continue to ensure that such services are cost effective.

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