Q1 2013 www.businessmonitor.com UNITED STATES INFORMATION TECHNOLOGY REPORT INCLUDES 5-YEAR FORECASTS TO 2017 ISSN 2041-7101 Published by:Business Monitor International United States Information Technology Report Q1 2013 INCLUDES 5-YEAR FORECASTS TO 2017 Part of BMI’s Industry Report & Forecasts Series Published by: Business Monitor International Copy deadline: February 2013 Business Monitor International Senator House 85 Queen Victoria Street London EC4V 4AB United Kingdom Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 Email: subs@businessmonitor.com Web: http://www.businessmonitor.com © 2013 Business Monitor International All rights reserved. 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All information is provided without warranty, and Business Monitor International makes no representation of warranty of any kind as to the accuracy or completeness of any information hereto contained. United States Information Technology Report Q1 2013 CONTENTS BMI Industry View . SWOT Political . 10 Economic . 11 Business Environment 12 Industry Forecast 13 Broadband . 13 Table: Telecoms Sector - Internet - Historical Data & Forecasts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Industry Forecast 14 Table: US IT Industry - Historical Data And Forecasts (US$mn unless otherwise stated) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Industry Risk Reward Ratings 18 Table: Americas IT Risk/Reward Ratings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Market Overview . 21 Hardware . 21 Software . 26 Services 30 Industry Trends And Developments 32 Regulatory Development 34 Table: IT Regulatory Authorities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Competitive Landscape 36 Hardware . 36 Software . 40 IT Services 43 Company Profile 44 Hewlett-Packard . 44 Dell 50 Table: Selected Dell Mergers And Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53 Microsoft Corporation 56 IBM 61 Regional Overview 67 IT Penetration . 67 Market Growth And Drivers . 69 Sectors And Verticals 72 © Business Monitor International Page United States Information Technology Report Q1 2013 Demographic Forecast . 76 United States Demographic Data 76 Table: The United States' Population By Age Group, 1990-2020 ('000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77 Table: The United States' Population By Age Group, 1990-2020 (% of total) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78 Table: The United States' Key Population Ratios, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Table: The United States' Rural And Urban Population, 1990-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79 Methodology 80 How We Generate Our Industry Forecasts . 80 IT Industry 80 IT Ratings - Methodology 81 Table: IT Business Environment Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Weighting . 83 Table: Weighting Of Components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83 Sources 83 © Business Monitor International Page United States Information Technology Report Q1 2013 BMI Industry View BMI View: US IT spending is expected to reach US$586bn in 2013, up 5%, with BMI leaving its 2013-2017 forecast largely unchanged, but extended, this quarter, despite a further contraction in PC sales in Q312. Meanwhile, as political negotiations concerning the 'fiscal cliff' continued in the wake of the November 2012 elections, public IT procurements remained constrained due to the budget constraints faced by many government entities. Overall moderate growth in budgets is expected but much depends on the economic situation. Despite a drive to cut expenses across government, many public sector organisations have appeared willing to continue to spend on IT, but the government hopes to make savings in its US$80bn IT budget. US businesses remain cautious, but there is pent-up demand from projects delayed as a result of the economic situation and cloud computing is expected to be increasingly important. Headline Expenditure Projections ■ Computer Hardware Sales: US$149bn in 2012 to US$154bn in 2013, +3.4% in US dollar terms. Forecast in US dollar terms unchanged but Windows 8-based tablets and notebooks could provide growth areas in 2013. ■ Software Sales: US$163bn in 2012 to US$172bn in 2013, +5.5% in US dollar terms. Forecast in US dollar terms unchanged, but more investment is expected in utility software and serviced-orientated architectures rather than traditionally packaged PC software. ■ IT Services Sales: US$249bn in 2012 to US$2462bn in 2013, +5.2% in US dollar terms. Forecast in US dollar terms unchanged with an increasing share of IT budgets earmarked for newer solutions such as virtualisation and cloud computing. ■ Risk/Reward Ratings: The US's score was 76.3 out of 100.0. The US retains first place in our latest Americas RRR table, ahead of Canada, as well as Latin American giants such as Brazil and Mexico. The country's ranking was secured by its global highest industry rewards score of 82.5, with its rating also boosted by a relatively high country rewards score of 90.0. Key Trends & Developments ■ The US federal government's ambitious Cloud First cloud migration strategy has tasked government agencies with migrating 80 services to the cloud within 18 months. Key government agencies including NASA and the General Services Administration are already using the cloud to collaborate and deliver applications. The government hopes to eventually realise savings of up to US$12bn per year from the move and will seek further savings by closing 472 federal datacentres by the end of 2012. ■ IT vendors will be concerned when it comes to the effect of the ongoing US federal deficit issue and the failure of politicians to agree a deficit reduction programme to avoid the 'fiscal cliff'. If automatic federal spending cuts kick in during the next fiscal year, this could hit IT projects. Given continuing split party control of the legislative branch of government, with Republicans continuing to control Congress, while the Democrats have the majority in the Senate, the November 2012 elections have failed to resolve uncertainty about the trajectory of future government IT spending. © Business Monitor International Page United States Information Technology Report Q1 2013 ■ US PC sales are forecast to report single-digit growth in 2013, after a further annualised contraction in Q112-Q113. In 2012, sales of ultrabooks fell far short of Intel's prediction that ultrabooks would comprise 40% of US notebook sales by the end of 2012. While exact sales figures were hard to arrive at, due to initially high prices, these devices therefore seem unlikely to enjoy hoped-for success, at least initially. In the United States, in H112 the average market price for an ultrabook was upwards of US$900, compared with an average of around US$500 for a Windows notebook. © Business Monitor International Page United States Information Technology Report Q1 2013 SWOT SWOT Analysis Strengths ■ The largest IT market in the world, with spending forecast to pass US$700bn by 2017. ■ Despite the challenging trading conditions, overall IT spending is still expected to remain in positive growth territory. Weaknesses ■ Due to the recession and subsequent slow economic recovery, customers postponed IT investments and reduced short-term spending, particularly in areas such as consulting and software development. ■ PC market appears to be in long-term decline due the preference for mobility and the popularity of alternative connectivity devices such as smartphones. Opportunities ■ As economic woes ease, IT vendors should see more growth from traditional bigspending sectors such as banks, financial services, retail and manufacturing. ■ Cloud computing, with a large number of federal and state cloud computing programmes generating opportunities. ■ The growing popularity of mobile broadband networks in driving notebook and tablet sales. ■ New business models such as SaaS and virtualisation will continue to claim a large share of IT budgets. Threats ■ BMI forecasts that economic recovery could remain anaemic in 2013, in which case spending on technology could have another hard year. ■ The large federal budget deficit could lead to pressures on public sector IT spending. © Business Monitor International Page United States Information Technology Report Q1 2013 Political Political SWOT Analysis Strengths ■ The US is an undisputed superpower, and therefore occupies centre stage in most international diplomacy. ■ A long-standing democracy with vigorous and open political debate, the US continues to attract large numbers of immigrants committed to citizenship and selfadvancement. Weaknesses ■ Political debate between Republicans and Democrats has historically been polarised and divisive. ■ As today's superpower, the US attracts the enmity of a wide range of political groups opposed to the current international status quo. Opportunities ■ The widespread dissatisfaction of the voting public with the performance of Congress may encourage both major parties to experiment with more consensual approaches to certain policy areas. Though we are not optimistic, the ongoing budget debates will provide a pertinent test of the degree to which bipartisan cooperation is possible. Threats ■ The perception of inflexibility and bias in US foreign policy, particularly in the Middle East, may stiffen opposition and at worst provide fertile recruiting ground for radical anti-US groups such as Al Qaeda. Partly as a reaction to foreign policy difficulties, US public opinion may return to an isolationist and protectionist mode. © Business Monitor International Page 10 [...]... subsidies © Business Monitor International Page 34 United States Information Technology Report Q1 2013 The Office of E-Government and Information Technology within the Office of Budget Management is responsible for monitoring federal IT spending across federal departments © Business Monitor International Page 35 United States Information Technology Report Q1 2013 Competitive Landscape Hardware The US PC... International Page 33 United States Information Technology Report Q1 2013 Regulatory Development Table: IT Regulatory Authorities Government Authority National Telecommunications and Information Administration (NTIA), Department of Commerce Assistant Secretary for Communications and Information Lawrence E Strickling BMI The Department of Commerce (DoC) regulates various information technology industry-related... seems irreversible In H112, former netbook leader Toshiba announced that it was following Dell and Lenovo in withdrawing © Business Monitor International Page 23 United States Information Technology Report Q1 2013 from the segment in the United States HP and Asus are still competing in the netbook segment, but Asian giants Sony and Samsung have not released new models in the US market in 2012 Moreover,... 20 United States Information Technology Report Q1 2013 Market Overview Hardware BMI forecasts that the US computer and accessories market value will grow about 3.0% in 2013 We have upwardly revised our figures due to macroeconomic factors and expect solid growth after a disappointing year for PC sales in 2011 was closed out with negative annualised growth in Q411 The computer hardware market's 2013- 2017... tablets In Q411 and Q11 2, vendors reported a further annualised dip in shipments Vendors looked to factors such as the release of Microsoft's Windows 8 Operating System, and the availability of lower-cost ultrabooks based on the Sandy Bridge processor, to drive growth amid difficult trading conditions © Business Monitor International Page 21 United States Information Technology Report Q1 2013 However, the... government's Cloud First initiative is one of a number of federal and local government agency cloud migrations and pilot programmes © Business Monitor International Page 14 United States Information Technology Report Q1 2013 Market Trends In 2013, IT vendors will be concerned when it comes to the effect of the ongoing US federal deficit issue and the failure of politicians to agree a deficit reduction programme... 29 United States Information Technology Report Q1 2013 them to compete and offer better service BMI estimates that spending on SaaS applications by smaller companies could make up around 2% of US software spending by 2014 A survey by market research firm Gartner found that 95% of companies that use SaaS applications were planning to expand their use in 2010 Larger companies, particularly in the technology. .. substantially in the past decade © Business Monitor International Page 31 United States Information Technology Report Q1 2013 Industry Trends And Developments Government Cloud Strategies The US federal government has launched two initiatives that have had a significant impact on the development of the public cloud Firstly, former US Chief Information Officer Vivek Kundra introduced the ambitious Cloud First... growth booms, and sectors ranging from biotechnology to alternative energy are being discussed as possible catalysts Threats ■ The US's fiscal crisis may force the federal government to find ways to raise effective corporate tax rates, following a multi-decade downtrend © Business Monitor International Page 11 United States Information Technology Report Q1 2013 Business Environment Economic SWOT Analysis... eventually forcing more restrictive monetary policy and slower growth © Business Monitor International Page 12 United States Information Technology Report Q1 2013 Industry Forecast Broadband Table: Telecoms Sector - Internet - Historical Data & Forecasts 2010 No of internet users ('000) 2011 2012f 2013f 2014f 2015f 2016f 2017f 239,893 255,318 265,851 272,097 276,422 278,769 283,924 292,014 77.3 81.5 84.2 . Verticals 72 United States Information Technology Report Q1 2013 © Business Monitor International Page 4 Demographic Forecast 76 United States Demographic Data 76 Table: The United States& apos;. Q1 2013 www.businessmonitor.com UNITED STATES INFORMATION TECHNOLOGY REPORT INCLUDES 5-YEAR FORECASTS TO 2017 ISSN 2041-7101 Published by:Business Monitor International United States Information Technology. government IT spending. United States Information Technology Report Q1 2013 © Business Monitor International Page 7 ■ US PC sales are forecast to report single-digit growth in 2013, after a further