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Researchers Predict Slow Cloud Growth in 2014 Led by Software Sales

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A new report from Forrester Research has good news and bad news for cloud service providers. On the one hand, recovering world economies have money to spend on mobile, cloud, and smart technology. On the other hand, economic uncertainty, conservative buying practices, and cloud pricing models make for slow adoption in 2014.

The Forrester report “A Better But Still Subpar Global Tech Market In 2014 and 2015” predicts that the market will struggle to achieve 6 percent growth in 2014. It notes, however, that prospects look better for 2015.

According to a blog post by Andrew Bartels, a member of Forrester’s Business Technology Futures team, the US is still the main driver of cloud revenue, making up 40 percent of all purchases. This could postpone the effect of foreign distrust of US cloud providers in the wake of the NSA surveillance scandals.

Bartels told CIO Journal that the fear and uncertainty caused by Eric Snowden’s disclosures about the NSA’s surveillance practices could actually boost sales of on-premises software 5 to 6 percent in 2014. Companies would rather have data on-premises rather in the cloud where they think it is less safe (although that may not always be the case).

Software will be a main driver of revenues – particularly analytics and Software-as-a-Service applications. Communications equipment sales will be relatively strong due to mobile-related investments, and computer equipment spending will be weak except for tablet sales. IT outsourcing spending will also grow more slowly than the overall tech market.

In terms of purchasers of software, business and government will post the fastest 2014 growth, followed by IT consulting and systems integration services.

While 2014 might disappoint many, Forrester is predicting that a strengthening global economy in 2015 will boost global tech market growth across the board. Bartels notes that 2015 could see software, in particular, experience double-digit growth rates for the first time in years.

About the Author

David Hamilton is a Toronto-based technology journalist who has written for the National Post and other news outlets. He has covered the hosting industry internationally for the Web Host Industry Review with particular attention to innovative hosting solutions and the issues facing the industry. David is a graduate of Queen’s University and the Humber College School of Media Studies.

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