Canada Information Technology Report Q4 2011
Business Monitor International, October 2011, Pages: 53
Business Monitor International's Canada Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada's information technology industry.
Market Overview:
The Canadian addressable domestic market for IT products and services is projected by BMI to reach US$45.2bn in 2011 and US$51.3bn by 2015. Canadian IT spending is expected to report 7% growth in 2011, with drivers including hardware refreshes, datacentre consolidation and growing interest in cloud computing.
In BMIs core IT forecast scenario, IT market growth will advance at a compound annual growth rate (CAGR) of 3.3% over their five-year forecast period. Government spending in 2011 will be constrained by a focus on cutting costs, with Toronto and Ontario authorities conducting spending reviews, but new outsourcing contracts in both public and private sectors in 2010 pointed to the underlying demand potential.
The government's digital economic strategy provides a framework for IT market growth, with a number of two-year programmes having been confirmed in the federal 2010 budget. Meanwhile, the consumer segment remains a bright spot, with a steadily improving unemployment situation supportive of consumer confidence, despite some concerns of a dip in 2011.
Industry Developments:
In its 2010 budget, delivered in March, the Canadian government confirmed plans to launch a digital economy strategy. The government had previously announced several two-year programmes and much of the 2010 budget was focused on the rollout of these existing plans rather than new funding initiatives. Among the initiatives confirmed from 2009 was Broadband Canada, which received US$225mn of funding over three years.
Previously the government had also introduced a subsidy for business computer hardware purchasing, a measure that proposed a 100% capital cost allowance rate for computer hardware and systems software acquired between January 27 2009 and February 1 2011. It has been estimated the measure could have provided a US$700mn boost to the information and communication technology (ICT) market.
Competitive Landscape:
International vendors dominate the Canadian PC market, with HP, Acer and Dell the leading vendors, along with Apple and Toshiba. However, Asian vendors such as Lenovo could receive a boost as a result of HP's recently announced plans to sell all or part of its PC division. Following the path of IBM seven years ago, HP apparently plans to reduce its exposure to the increasingly competitive PC business, to focus more on higher-value services.
Demand for hosted software is expected to grow, as vendors and service providers team up to launch more services. In June 2011, Microsoft Canada announced that partners WatServ and Tectura Corporation would provide cloud computing services based on Microsoft's new enterprise resource planning (ERP) in the cloud initiative. Microsoft will promote the solution, which is aimed at local manufacturers, with the partners providing sales and implementation.
Meanwhile, local vendors are also targeting a share of cloud business. In July 2011, Ottawa's Gridiron Software revealed that it had received an estimated US$5mn in new funding to help it begin marketing a cloud computing product.
Computer Sales
BMI forecasts that Canada's addressable computer hardware market will be worth around US$15.5bn in 2011, up from an estimated US$14.6bn in 2010. In 2011, BMI expects more restraint in the consumer segment due to intensifying competition for PCs from tablets and smartphones, the slackening of the netbook trend and price erosion.
BMI projects that tablet sales could be equivalent to around 20% of the PC market in 2011. Notebooks accounted for around 60% of PC sales in the first half of 2010, but desktop sales rebounded in H210.
Software
In 2011 Canadian market software sales are projected by BMI at US$8.9bn and revenues are expected to rise to US$10.6bn in 2015. Software CAGR for 2011-2015 should be in the region of 4.5%. Exportfocused Canadian companies are looking for integrated tools that enable them to share critical sales and operations data and reduce costs.
Given the large deficits faced by the Ontario government, vendors will need to provide clients with ways to reduce costs by increasing efficiency. At the same time, the software market will be influenced by a continued move towards distributed computing, software-as-a-service (SaaS) and service-oriented architectures. Governments at all levels are also expected to be a growing market for cloud computing services.
Services
Canadian IT services spending is forecast to reach around US$20.7bn in 2011, up from US$19.0bn in 2010. The market stabilised in 2010, after the economic crisis and political uncertainty had an impact on services spending in 2009, with projects being put on hold. The market is projected to pass US$24.1bn by 2015.
One demand driver will be organisations looking for help to utilise efficiencies from cloud computing such as SaaS and infrastructure-as-a-service. Government agencies at all levels are expected to be a growing market for cloud computing services as small towns and cities strive to cut costs and raise efficiency.
E-Readiness
Canada's penetration rate for mobile services remains well below that of comparable developed markets, and this is expected to remain the case for at least the next five years, even taking into the account increased competition as new players finally enter the market. However, 3G mobile services have been available in some form for several years. Faster speeds and more bandwidth-heavy applications mean operators must move quickly to roll out platforms that offer high-speed connectivity in line with demand from subscribers.
The Canadian broadband market appeared unaffected by the recession and strong growth was recorded by most service providers in 2009. There remains a considerable number of fixed lines in service and fixedline operators are deploying fibre and WiMAX platforms. However, many operators baulk at the cost of building out infrastructure to under-served areas.
Executive Summary
SWOT Analysis
Canada IT Sector SWOT
Canada Political SWOT
Canada Economic SWOT
IT Business Environment Ratings
Regional IT Business Environment Ratings
America Markets Overview
IT Penetration
Market Growth And Drivers
Sectors And Verticals
Canada Market Overview
Government Authority
Background
Hardware
Software
Services
Industry Developments
Industry Forecast
Table: Canada IT Industry – Historical Data And Forecasts (US$mn Unless Otherwise Stated)
Industry Forecast Internet
Table: Telecoms Sector -- Internet -- Historical Data & Forecasts
Macroeconomic Forecast
Table: Canada – GDP Contribution To Growth
Competitive Landscape
Hardware
Software
Services
Country Snapshot: Canada Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2000-2003
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Manufacturing Wages, 2000-2012
BMI Methodology
How We Generate Our Industry Forecasts
Transport Industry
Sources
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