Growth Returns to Tech, but Profits Will Not Be So Easy The good news for the information technology business is that in 2014 it should start growing at a significant rate again. The bad news? It may be less profitable. That is according to a close read of information in Gartner's forecast of worldwide I.T. spending, which was released Monday. The analysis company said global I.T. spending this year is expected to be $3.8 trillion, a rise of 3.1 percent from $3.7 trillion in 2013. Last year, the I.T. market was basically flat, growing 0.4 percent, Gartner said. That welcome news was tempered, however, by concern that the big profits to which the tech industry is accustomed are slowly fading. In addition, Gartner's relatively rosy forecast is not quite as rosy as it was three months ago, when the company forecast that I.T. spending would grow 3.6 percent. Blame telecom services, the largest segment of I.T. spending, for the downward change. Telecom services was forecast to grow just 1.2 percent, to $1.65 billion. Gartner earlier had thought telecommunications spending would grow 1.9 percent. The downward revision in the overall number was largely due to the telecom cut. Apparently, more homes are moving off their landlines and going cellular-only just as voice rates are dropping in China. While an improvement from a 0.5 percent drop in 2013, telecom spending is well below Gartner's overall average. With much of telecom moving from proprietary networks to cheaper Internet connections, the higher spending could still mean a decline in profitability. The enterprise software segment is projected to have the highest growth, 6.8 percent to $320 billion. Even here, however, there is reason to think profits will be troubled. Gartner said the biggest growth would be in customer relationship software and supply chain management software. Both of those areas are rapidly moving to cloud computing systems, which often have gross profit margins half that of packaged enterprise software. Gartner also suggested there would be greater interest in data analytics. Other areas include I.T. services, which Gartner said would grow 4.5 percent, to $963 billion. Device sales are expected to be up 4.3 percent, to $697 billion, while data center systems are projected to rise 2.6 percent, to $143 billion. The data center business had been projected to grow by 2.9 percent, but Gartner cut the forecast because of lower spending by companies, which are moving quickly into public cloud systems offered by Amazon, Google, Microsoft and others. This also led to a modest drop in projected I.T. services spending. Gartner predicts a convergence of personal computers, tablets and smartphones over the year in the devices category, which would erode margins in the device segment as well. Like data analytics, however, there may be new areas in which consumer spending on information technology can grow. On Monday, Accenture published a report that showed significant consumer interest worldwide in wearable computing, such as health monitoring technology.