Gartner has warned that currency headwinds will cause the market some major headaches and have already reduced IT spending forecasts
Gartner’s analysis of IT spending this year has been downgraded as a result of the position of the dollar. The analyst house is still expecting things to be up on 2016 but only by 1.4 percent instead of the previously expected 2.7 percent .
There should be about $3.5 trillion spent on IT this year but billions have been shaved off the potential amount because of ongoing issues around the dollar.
John-David Lovelock, research vice president at Gartner said that the strong US dollar has cut $67 billion out of his 2017 IT spending forecast.
“We expect these currency headwinds to be a drag on earnings of U.S.-based multinational IT vendors through 2017.”
The big US firms have already been forced to react to exchange rates with price rises and the chance of more problems will not be welcome to resellers or users.
Gartner is hoping that with the benefit of its warnings the industry can deal with the challenges and try to mitigate some of the impact.
The other headache that the analyst house has identified is the move away from physical servers towards hosted cloud services. The trend is helping the data centre market return to growth after being in a negative position in 2016, but it is hitting some of the established hardware brands.
“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,” said Lovelock.
Breaking down the forecast further there will be a dip in IT services, coming in at 2.3 percent in 2017, compared to 3.6 percent a year earlier.
On the hardware front the tablet demand will continue to wane but those selling Windows 10 business PCs will continue to enjoy growth as more customers invest in that technology.
Alphabet has written a cheque for a UK startup that provides technology to enable businesses to provide cross-border payments services to its customers.
Currencycloud has received more than $25 million in an investment round in Currencycloud alongside existing investors Notion Capital, Sapphire Ventures, Rakuten and venture capital firm Anthemis Group.
The cash injection, which brings the total raised by Currencycloud to $61 million, will be used to support the company’s global expansion plans, the company said.
Mike Laven, Currencycloud’s chief executive officer said his outfit had just opened in the US and required a lot more development.
Launched in 2012 Currencycloud’s platform allows companies ranging from banks to payments startups to offer international payments services without having to set up complex and costly cross-border infrastructure.
Its clients include Swedish payments business Klarna, Standard Bank Group, Travelex and startups Azimo and Revolut. Around $25 billion has been sent through the company’s infrastructure to more than 200 countries.
Laven said Google was attracted to Currencycloud because it saw it as a company that provided computer developers tools to add cross-border payment functionality to their services.
“Google looked at us as a tool that is used in globalising domestic businesses,” Laven said.
The funding round is a surprise as there had been a noted drop in venture capital investments in UK financial technology startups since Brexit.
Samsung Electronics has announced that it will start trading the Chinese currency directly with the South Korean won.
The news came as the South Korean government announced that it hoped to sign a final free trade agreement with China within the first half of the year, in a further sign of strengthening relations between the countries.
South Korea is the third country in the world to begin direct trading of the yuan for a local currency in December under the aim of grabbing a larger share of the growing business opportunities involving the yuan outside China.
With a big player like Samsung taking part, the thought is that other big companies will join in.
Samsung said in a statement it was “looking into starting won-yuan direct trading”. It did not elaborate, but traders said such a move would be a big boost for the market, which until now has been in operation led by banks.
“The fact that there’s real demand and supply for commercial purposes carries a big significance even though the amount is small,” said one currency dealer at a local bank.
South Korea has been encouraging companies trading with China to settle transactions with the yuan or the won instead of the US dollar, but actual use of the local currencies in trade deals remains very low.
Samsung uses the currency market to settle direct transactions between its headquarters and its foreign subsidiaries, and it is not clear how much influence it can make on the market on its own.
The cocaine nose jobs of Wall Street clutched the spaces where their hearts should be after the search engine Google announced that its revenue growth had been stalled by the strong US dollar.
Google’s revenue grew 15 percent in the fourth quarter but fell short of Wall Street’s target thanks to declining online ad prices and unfavorable foreign exchange rates.
The outfit appears to be losing ground to Facebook on the advertising front. Facebook reported on Wednesday that mobile ads on its network doubled year-over-year during the fourth quarter.
Google said the “cost per click,” decreased 3 percent year-over-year in the fourth quarter, while the number of consumer clicks on its ads increased 14 percent.
Analysts had expected gains in cost-per-click and they are now saying that Google’s business is slowing and it is going to look worse as the dollar strengthens.
Consolidated revenue in the three months ended Dec. 31 totalled $18.10 billion, compared to $15.71 billion in the year-ago period. Wall Street expected revenue of $18.46 billon.
Chief Financial Officer Patrick Pichette said in a statement that revenue grew “despite strong currency headwinds”.
Net income rose to $4.76 billion from $3.38 billion a year earlier.