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United States Information Technology Report Q4 2011
Business Monitor International, Oct 2011, Pages: 65
Business Monitor International's United States 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 United States's information technology industry.
MARKET OVERVIEW
US spending on IT products and services is forecast to reach US$659bn by 2015. US spending on IT products and services is forecast to reach US$534bn in 2011. PC sales contracted again in H111, after strong growth in the first half of 2010. The commercial segment showed signs of vitality, but consumers were spending less. Overall moderate growth in IT spending is expected in 2011, with the public sector in retrenchment mode and the private sector relatively stronger.
In 2011, an increase in project spending is expected. A major demand driver will be private and public sector organisations looking for help to utilise efficiencies from cloud computing models such as Software-as-a-Service and Infrastructure-as-a-Service. 2010 saw a number of government agencies at federal and local level launch cloud strategies and pilot programs.
Other key market drivers are expected to include:
- Growing fixed and mobile broadband penetration.
- Data centre consolidation and virtualisation.
- Product innovation such as tablets, e-readers and feature-rich netbooks.
- Technology innovation such as GPS and services.
- Economic recovery.
INDUSTRY DEVELOPMENTS
GSA first federal agency to move all email to a cloud-based system
In December 2010, the US General Services Administration (GSA) became the first federal agency to move email to a cloud based system for its entire organisation. As the first transition of its kind, the GSA's move is seen as a landmark that could influence other agencies who have previously held back from similar moves due to security or service concerns.
Despite a drive to cut expenses across government, in 2011 many public sector organisations have appeared willing to continue to spend on IT. The Obama administration has called on federal agencies to develop strategies to simplify and where possible combine often sprawling IT operations so as to reduce costs. Guidelines published in 2010 by the Office of Management and Budget called for agencies to initiate data centre consolidation programs to help cut US$3bn from the federal budget.
COMPETITIVE LANDSCAPE
The US PC competitive landscape is dominated by two large domestic vendors, Dell and HP, which together account for at least 50% of the US market.
Asian PC 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. The divestment of its PC business, which is worth US$41bn, would result in a much smaller and rather different HP. In the event of a sales, there are question-marks about the prospects for HP's successful printer business, in which it is market leader.
2010 saw increasing competition between vendors for a growing number of public sector cloud contracts. The GSA picked web-based Google Apps to replace IBM Lotus Notes as the provider of email and collaboration software for its 17,000 full-time employees and contractors. In October 2010, New York City announced an initiative to bring Microsoft's BPOS (Business Productivity Onine Suite) to around 30,000 city employees.
Computer Sales
The US addressable market for PCs and accessories is estimated by BMI at US$122.5bn in 2011, with single-digit growth compared with 2010.
US PC sales contracted in H111. but BMI estimated that the market was on course for full-year total shipments of around 85mn units. US PC sales had slipped into negative y-o-y growth territory in the final quarter of 2010, dragging down the growth rate for the year as a whole. The commercial refresh segment showed signs of vitality, with steady growth in replacement purchases, but consumers were spending less. One additional driver of increased sales and lower prices is the move of telecoms operators into the PC retail space. Notebooks are the fastest-growing PC market segment and are estimated to have accounted for more than 60% of unit sales in 2010. However, netbooks and notebooks face competition from other formats such as tablets, which appear to have growing traction in the enterprise segment.
Software
The US software market is estimated at US$153.9bn in 2011, with single-digit growth from 2009. Software CAGR for 2011-2015 is projected at around 5.9%, as the addressable market grows to around US$193.4bn. A combination of enterprise objectives such as cost reduction and greater efficiency should combine to encourage the adoption of cloud services in 2011.
Drivers of demand for enterprise software include increasing operational efficiency, coordinating global supply chains and modernising logistics and warehouse functions. More investment can be expected to be in utility software and serviced-oriented architectures rather than traditionally packaged PC software.
IT Services
The US IT services market is forecast at US$236bn in 2011, with vendors reporting a more stable market. IT services spending is expected to grow by 6% in 2011, building on a stabilisation of the market in the previous year. Spending on IT services is quite closely correlated with GDP growth, which is bad news in a recession but better news in a recovery. In 2011, unlike in 2010 when hardware refreshes drove IT spending, services is expected to be the fastest-growing segment.
One opportunity will be organisations looking for help to utilise efficiencies from cloud computing such as SaaS and IaaS, as organisations look to save money on IT investments. National and local government is one vertical where strong interest in cloud services is being expressed.
In H111 Microsoft's dominance with its Windows software appeared to be under threat of erosion from the surge in demand for non-Windows tablets. Analysts have long worried about Microsoft's potential over-reliance on Windows to drive its revenues, and the vendor's Q111 sales of Windows fell short of expectations. However, Microsoft's overall revenues actually rose 13% in Q311, thanks mainly to strong sales of Microsoft Office.
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