Q4 2011 www.businessmonitor.com UNIteD StateS information technology Report INCLUDES BMI'S FORECASTS ISSN 2041-7101 Published by Business Monitor International Ltd. UNITED STATES INFORMATION TECHNOLOGY REPORT Q4 2011 INCLUDES 5-YEAR FORECASTS TO 2015 Part of BMI's Industry Report & Forecasts Series Published by: Business Monitor International Copy deadline: October 2011 Business Monitor International 85 Queen Victoria Street London EC4V 4AB UK Tel: +44 (0) 20 7248 0468 Fax: +44 (0) 20 7248 0467 email: subs@businessmonitor.com web: http://www.businessmonitor.com © 2011 Business Monitor International. All rights reserved. All information contained in this publication is copyrighted in the name of Business Monitor International, and as such no part of this publication may be reproduced, repackaged, redistributed, resold in whole or in any part, or used in any form or by any means graphic, electronic or mechanical, including photocopying, recording, taping, or by information storage or retrieval, or by any other means, without the express written consent of the publisher. DISCLAIMER All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor International accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the publication. 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 Q4 2011 © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 CONTENTS Executive Summary . Market Overview . Industry Developments Competitive Landscape SWOT Analysis . US IT Sector SWOT . US Political SWOT US Economic SWOT US Business Environment SWOT . IT Business Environment Ratings 10 Regional IT Business Environment Ratings . 10 America Markets Overview . 14 IT Penetration 14 Market Growth And Drivers 16 Sectors And Verticals . 18 United States Market Overview . 22 Government Authority 22 Overview 23 Industry Developments 34 Industry Forecast . 36 Table: US IT Sector Overview, 2008-2015 38 Industry Forecast Internet . 39 Table: Telecoms Sector – Internet – Historical Data & Forecasts 39 Macroeconomic Forecast 41 Table: United States – Economic Activity 43 Competitive Landscape . 44 Hardware . 44 Software . 47 IT Services . 51 Company Profiles . 53 HP 53 Dell 55 Microsoft 57 IBM 59 Country Snapshot: US Demographic Data 60 Section 1: Population . 60 Table: Demographic Indicators, 2005-2030 60 Table: Rural/Urban Breakdown, 2005-2030 . 61 Section 2: Education And Healthcare 61 Table: Education, 2002-2005 61 Table: Vital Statistics, 2005-2030 61 Section 3: Labour Market And Spending Power 62 Table: Employment Indicators, 2001-2006 62 © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 Table: Consumer Expenditure, 2000-2012 (US$) 62 Table: Average Annual Wages, 2000-2012 (US$) . 63 BMI Methodology . 64 How We Generate Our Industry Forecasts 64 Transport Industry . 64 Sources . 65 © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 Executive Summary 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. © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 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. © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 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 © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 SWOT Analysis US IT Sector SWOT Strengths The largest IT market in the world, with spending forecast to pass US$552bn in 2011. Despite the challenging trading conditions, overall IT spending is still expected to remain in positive growth territory. Weaknesses During the recession in 2009, customers postponed projects and reduced short-term spending, particularly in areas such as consulting and software development. Opportunities Demand for new IT strategies to take advantage of innovations such as virtualisation, data centre consolidation, and cloud computing As economic woes ease, IT vendors should see more growth from traditional bigspending sectors such as banks, financial services, retail and manufacturing. The growing popularity of mobile broadband networks is driving netbook sales. New business models such as SaaS and virtualisation will continue to make progress. Threats There is a risk that recovery could be anaemic in 2011, in which case spending on technology could have another hard year. A large federal budget deficit could lead to pressures on public sector IT spending. US Political SWOT Strengths The US is an undisputed superpower, and therefore occupies centre stage in most international diplomacy. Long-standing democracy with vigorous and open political debate; the US continues to attract large numbers of immigrants committed to citizenship and self-advancement. Weaknesses Political debate between Republicans and Democrats has historically shown a tendency to become more 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 changing political mood (as evidenced by the popularity of unconventional candidates in the 2008 presidential election, including Obama's), and the widespread dissatisfaction of the voting public, may encourage both major parties to experiment with more consensual approaches to certain policy areas. The current 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 isolationist and protectionist modes. © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 US Economic SWOT Strengths The world's largest economy with an impressive record of entrepreneurial dynamism, innovation and a high research and development spend. Despite some threats to its reserve status, the US dollar is treated as an international currency, meaning that investors around the world are prepared to hold US debt. Because of this, the US is uniquely able to run large fiscal and current account deficits. Weaknesses Despite the dollar's role as an international currency, excessive US debt levels are a risk. A decision by Japanese and Chinese central banks to reduce their larger dollar holdings could cause sharp falls in the value of the US currency. Low savings rate by US households on a historic basis, although this has begun to reverse. Opportunities Further liberalisation of international trade through the WTO, coupled with a more competitive dollar exchange rate, could boost export growth and help restore balance to the US's external imbalances. Threats Intensified competition from China and other low-wage economies could accelerate the loss of manufacturing jobs. Large growth in public spending, coupled with tax cuts, will worsen the fiscal deficit, eventually forcing more restrictive monetary policy and slower growth. US Business Environment SWOT Strengths Weaknesses Opportunities Threats The US boasts the world's largest single internal consumer market, which presents tremendous opportunities for businesses of all types and sizes. Few countries offer better environments for entrepreneurial activity, with a highly flexible labour force, a legal system that is friendly to business and significant centres of technological innovation (such as California's Silicon Valley). Much of the country's physical infrastructure is in need of improvement, with congested roads and airways. US corporate tax is, on average, among the highest in the OECD. The Obama administration is committed to improving the nation's infrastructure, with stimulus package funds being dedicated to that purpose. The US has often been the origin of new drivers of economic growth booms, and sectors ranging from biotechnology to alternative energy are being discussed as possible catalysts. Government intervention in the economy puts the country's reputation for free enterprise at risk. © Business Monitor International Ltd Page United States Information Technology Report Q4 2011 IT Services The US IT services market is relatively fragmented with potential for consolidation. IT services vendors such as Accenture reported new revenues momentum in 2010 after a sharp deceleration in the previous year. Accenture reported growth in both consulting and outsourcing across a broad base of clients and industries. Consulting revenues, which had been most affected by the recession, bounced back in 2010, with companies looking for IT strategies around datacentre consolidation, virtualisation and cloud computing, that could help them to reduce costs. Most IT vendors anticipated improved revenues in 2010 as clients ramped up spending. HP reported Q110 revenues for the Americas region of US$13.6bn, up 9% on the same period of 2009. In the second half of 2009, the market had picked up, and HP reported solid fiscal Q409 results on the back of its services business. The company said that services had generated revenues of US$8.9bn for the quarter, up 8% on the same period of the previous year. Meanwhile, European IT services giant Cap Gemini reported 4% growth for its operations in North America in 2010. This was despite the fact that outsourcing, which comprises 43% of the company's local business, was down 20%, due in part to reductions of scope on many contracts. Cap Gemini remained optimistic, describing cyclical activities as very good and showing the rebound of the market. The global financial crisis had a sharp impact on IT services vendors in 2009. However, the impact seemed to have been relatively greater on Indian vendors such as Infosys and Tata Consulting Services (TCS), due to their generally greater proportionate exposure to the US financial services industry. The fall of Lehman Brothers and Merrill Lynch was ominous for Indian outsourcers that were highly exposed to the US market and financial services. Share of these companies had fallen by more than half by mid2009. US segment leaders such as Accenture and IBM generally saw revenues down between 10-15% in the first half of the year compared with 2008. The industry was looking to diversify away from financial services into more focus on opportunities in other sectors such as telecoms, healthcare, utilities and manufacturing. Globally, financial services accounts for about 20% of IT services spending, ahead of government, which is about 18%, and similar to manufacturing at around 22% according to market research firm IDC. In the last few years there have been a number of acquisitions and merger deals. According to IDC there were about 230 such deals globally in 2007 in the software and IT services space. In October 2009, a computer hardware leader Dell made a US$3.9bn purchase of Perot Systems, while Xerox followed later in the month with its US$6.4bn acquisition of Affiliated Computer Services. One year into its Perot acquisition, Dell claimed that things were going well, with Dell's overall strength complementing Perot's specialisation in particular verticals. Key vertical targets for the combined business include healthcare, © Business Monitor International Ltd Page 51 United States Information Technology Report Q4 2011 where Perot had 15 years of experience. The acquisition has resulted in Dell becoming one of the biggest global providers of healthcare IT, and Dell has subsequently moved to consolidate this position with some additive acquisitions. Dell is also targeting Education, where it sees strong growth potential, and in February 2011 the company reported an outsourcing deal with the Keller Independent School District. Meanwhile, HP has announced plans to divest all or part of its PC unit, in order to scale up its competition with IBM in software and technology services. After subtracting US$40.7bn in PC sales during 2010, HP reported revenues of US$85bn from its other segments in that year. This compared with US$99bn for IBM, but would have ranked HP above such rivals as Dell, which had US$61.5bn, and Oracle, with US$35.6bn. In its most recent quarter, HP reported US$9bn in revenues from its services division, almost as much as the PC division's US$9.6bn. Despite HP's ambitions, the services business has struggled to grow. In September 2009 HP changed the name of the EDS unit to HP Enterprise Services, and following the integration of the companies, sought to cut costs by slashing 19,000 jobs. The company said that the integration was ahead of schedule. However, the basic outsourcing services that EDS specialised in, is a flat area of the market, and there have been concerns that HP is missing out to rivals like IBM and Accenture on more profitable contracts. However, In the month of the name change, HP's EDS unit won a US$30mn contract from the US Department of the Treasury's Office of the Comptroller of the Currency to provide and maintain end-user computing resources and mobility services. Another factor set to shape the IT services market over BMI's five-year forecast period is the trend for leading niche IT market players to seek to evolve into full IT service companies such as HP and IBM. Business software major Oracle and networking equipment leader Cisco are moving on separate but parallel paths towards this end. © Business Monitor International Ltd Page 52 United States Information Technology Report Q4 2011 Company Profiles HP Services Technology services, consulting and integration. HP is organised into three main divisions: Personal Systems Group (PSG): Business and consumer PCs, mobile computing devices and workstations. Recent Developments Printing and Imaging Devices; Inkjet, Laser Jet and commercial printing. Technology Solutions: Software and managed services, EDS, storage and servers. In August 2011, HP announced plans to sell all of part of its PC division, to focus more on higher-value services. The divestment of its PC business 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. Printer sales are often bundled together with PC procurements. However, the objective is to compete head on with IBM in software and technology services, which are seen as strategic growth areas. Despite its ambitions for its services business, growth has been relatively slow. In September 2009 HP changed the name of its EDS unit, created following the acquisition of fellow IT services leader EDS, to HP Enterprise Services. In the same month, the EDS unit won a US$30mn contract from the US Department of the Treasury. However, In FY10 most PC vendors saw shipments increase, as consumers and businesses proceeded with purchases delayed from 2009. HP exemplified the recovery trend experienced by most vendors, with a 12% rise in revenues from its Americas region in Q310 to US$14.2bn. However HP has struggled to compete with the all conquering iPad. In 2011, the company said that it had cancelled its short-lived TouchPad tablet following disappointing sales. Future Plans The basic outsourcing services that EDS specialised in, is a flat area of the market, and there have been concerns that HP is missing out to rivals like IBM and Accenture on more profitable contracts. This explains HP plan to focus more on services. The company has said that it sees significant opportunities to invest in innovation and sales to expand its portfolio and market coverage. HP also plans to improve margins in 2010 and to increase margins by leveraging a leaner cost structure, while continuing to invest for growth. Revenues After subtracting US$40.7bn in PC sales in 2010, HP reported revenues of US$85bn from its other segments in that year. In its most recent quarter, HP reported US$9bn in revenues from its services division, almost as much as the PC division's US$9.6bn. In 2010 HP reported net revenues of US$126.3bn, up 10% on the previous year. Presence 321,000 employees worldwide by 2008. © Business Monitor International Ltd Page 53 United States Information Technology Report Q4 2011 Sectors In 2010 HP reported US$40.7bn in revenues from its PC division. Revenues from other divisions were US$85bn. © Business Monitor International Ltd Page 54 United States Information Technology Report Q4 2011 Dell Services Manufacture, marketing and sales of computer systems and services worldwide. In December 2008, Dell announced that it was reorganising itself into four global business units: Recent Developments Large Enterprise. Public. SMEs. Consumer. In October 2009, Dell made an offer to acquire IT services company Perot Systems. Dell expected the acquisition to close in Q409. The purchase should position Dell to grow by expanding its offering of IT services and solutions. Perot Systems will in effect become Dell's IT services unit. In Q309, Dell narrowly pipped HP for the market leader position, according to market research firm Gartner, taking 26.2% of the market to HP's 25.7%. In Q209, Dell beat HP into the US PC market leader position, according to market research firm IDC, taking 26.3% of the market to HP's 26.0%. However, Dell reported disappointing profits in Q309 of US$727mn, down from US$15.2bn in the same period of the previous year as margins came under pressure. Globally Dell has suffered in the US downturn from the deep cuts in corporate spending, as well as the transition away from desktops. Dell Americas revenues from the corporate segment declined 17% in value terms (and 23% in units) in fiscal 2009. These trends have reinforced the logic of the company's largely successful global transition towards a more retailfocused approach. In Q209, IDC reported that Dell achieved negative 18.9% shipments growth in the US market, compared with just -2.3% for major domestic rival HP. Dell has mounted a strong global comeback in the past couple of years, from declining unit sales, by moving aggressively into the retail segment. The company has thus moved away from its 'direct Dell' strategy of selling direct to customers. In the US the company has done this by developing partnerships with leading retailers such as Best Buy. This strategy has provided with a fresh source of growth during a slowing market, enabling it to recover some of the market share that it had lost to HP, as well as Asian challengers such as Acer, Lenovo and Toshiba. Revenues Dell reported revenues of US$61.6bn for FY09, unchanged from 2008. Net income, however, was US$2.5bn, down 16% from US$2.9bn in the previous year. Presence 76,500 employees. © Business Monitor International Ltd Page 55 United States Information Technology Report Q4 2011 Sectors Dell's commercial business serves large corporations, public customers such as government, education, healthcare and SMEs. In Q309, Dell continued to report a slowdown in most business segments. In Q309, Dell's global consumer business reported a 10% y-o-y increase in revenues on a 32% increase in shipments. © Business Monitor International Ltd Page 56 United States Information Technology Report Q4 2011 Microsoft Services Software licences, support and services. Microsoft has five major business divisions: Recent Developments Client, which includes the Windows product family. Server and tools, which includes software server products, services and solutions. Online business services. Microsoft Business Division, which includes Microsoft Office and Microsoft Dynamics. Entertainment and Devices, which includes the Xbox video game system. Microsoft suffered a deceleration in sales of PCs bundled with its software in H109 owing to the economic slowdown. In July 2009, Microsoft posted declines in profits and sales for the fourth 2009 fiscal quarter, blaming the weakness in global PC and server sales. However, the fourth quarter brought some significant product milestones including the release of Windows Server 2008 R2, and the search engine Bing. BMI projects that the release of Windows will provide a boost to Microsoft. The launch of Microsoft's Windows operating system was the most significant event for Microsoft since the launch of Windows 95. Microsoft has a lot riding on the new operating release, given perceived problems with its previous operating system Windows Vista, and also because of the continuing global challenge from open source. Windows Vista ran into problems when business users found that many of their business applications could not run on the Vista operating system. Microsoft has taken a couple of steps to fix perceived problems with Vista. Regarding the compatibility problem, Microsoft has tackled this with a free extension to Windows called XP Mode. This allows users to run Windows XP applications on Windows 7. Secondly, Windows will use less processing power and memory than Windows Vista. Revenues Microsoft's Q409 revenues were down by 17% y-o-y to US$13.1bn. In the fiscal year ending June 2009, Microsoft reported net revenues of US$58.44bn, down by 3% y-o-y. Presence As of June 2009, Microsoft had 92,736 employees, with 55,843 working in the US. Sectors Microsoft dominates the operating system segment but was threatened in 2007 with the emergence of the popularity of netbook computers. Most netbook computers originally came with open source Linux operating systems due to the heavy systems requirement of Windows Vista. Netbooks were therefore seen as a threat to Microsoft's revenues. However, Microsoft has fought back by allowing netbooks to ship Windows XP, bringing its market share back up. In the enterprise software segment, Microsoft competes with its Microsoft Dynamics suite of products. In April 2009, a survey by Panorama Consulting Group ranked Microsoft third in the © Business Monitor International Ltd Page 57 United States Information Technology Report Q4 2011 manufacturing and distribution industry's ERP segment, with a market share of around 14%. © Business Monitor International Ltd Page 58 United States Information Technology Report Q4 2011 IBM Services Manufacturer, distributor and provider of advanced IT solutions including hardware, software, peripherals and data processing equipment. IBM has three main business segments: Recent Developments Global Technology Services. Global Business Services. Software. In 2008, IBM reported revenues growth of 5%, despite the economic slowdown, while pre-tax income also rose. Over 90% of segment profits in 2008 came from software, services and financing. Around 65% of IBM's 2008 revenues were generated outside the US. In 2008 the company invested US$6.3bn for 15 acquisitions, 10 of them in software. IBM also invested US$6.3bn in R&D. In 2009, IBM said that it had prioritised strategic investments in service-oriented architectures, business analytics and next generation datacentres, relying on these areas to drive growth in 2010. IBM expected 2009 pre-tax income for its software segment to grow at a double-digit rate to around US$8bn. Future Plans The company's goal is earnings per share of US$10-11 in 2010. Revenues In the second quarter of 2010, IBM reported total revenues of US$23.7bn, up by 2% y-o-y. Revenus for the Americas region, which includes the US, were up by 3% y-o-y. Presence 410,097 employees. Sectors In 2008, IBM reported the following results by division: Technology services revenues were up by 9% (6% adjusting for currency), pre-tax income up by 30%. Global business services revenues up by 9% (5% adjusting for currency), pre-tax income up by 30%. Software revenues up by 11% (8% adjusting for currency), pre-tax income up by 18%. Software pre-tax profits doubled over the five years to 2008, when they were US$7bn. © Business Monitor International Ltd Page 59 United States Information Technology Report Q4 2011 Country Snapshot: US Demographic Data Section 1: Population Population By Age, 2005 And 2030 (mn, total) Population By Age, 2005 (mn) 70-74 70-74 60-64 60-64 50-54 50-54 40-44 40-44 30-34 30-34 20-24 20-24 10-14 10-14 0-4 0-4 -15.0 -10.0 -5.0 0.0 Male 5.0 10.0 15.0 -30.0 -20.0 -10.0 0.0 2030 Female 10.0 20.0 30.0 40.0 2005 Source: UN Population Division Table: Demographic Indicators, 2005-2030 2005 2010e 2020f 2030f Dependent population, % of total 33.0 33.0 35.2 37.5 Dependent population, total, ‘000 97,335 101,433 120,863 137,659 Active population, % of total 67.0 66.9 64.7 62.4 Active population, total, ‘000 197,593 205,284 221,682 228,530 Youth population*, % of total 20.7 20.3 19.4 18.1 Youth population*, total, ‘000 61,255 62,348 66,606 66,599 Pensionable population, % of total 12.2 12.7 15.8 19.4 Pensionable population, total, ‘000 36,080 39,085 54,257 71,060 e/f = estimate/forecast. * Youth = under 15. Source: UN Population Division © Business Monitor International Ltd Page 60 United States Information Technology Report Q4 2011 Table: Rural/Urban Breakdown, 2005-2030 2005 2010e 2020f 2030f Urban population, % of total 80.8 82.2 84.9 87.0 Rural population, % of total 19.2 17.8 15.1 13.0 Urban population, total, ‘000 240,831 256,822 290,729 318,454 Rural population, total, ‘000 57,382 55,431 51,818 47,733 298,213 312,253 342,547 366,187 Total population, '000 e/f = estimate/forecast. Source: UN Population Division Section 2: Education And Healthcare Table: Education, 2002-2005 2002/03 2004/05 Gross enrolment, primary 99 98 Gross enrolment, secondary 95 94 Gross enrolment, tertiary 82 82 Gross enrolment is the number of pupils enrolled in a given level of education regardless of age expressed as a percentage of the population in the theoretical age group for that level of education. Source: UNESCO Table: Vital Statistics, 2005-2030 2005 2010f 2020f 2030f Life expectancy at birth, males (years) 74.6 75.2 76.8 77.9 Life expectancy at birth, females (years) 80.0 80.6 82.1 83.3 Life expectancy estimated at 2005. f = forecast. Source: UNESCO © Business Monitor International Ltd Page 61 United States Information Technology Report Q4 2011 Section 3: Labour Market And Spending Power Table: Employment Indicators, 2001-2006 2001 2002 2003 2004 2005 2006 141,815 144,863 146,510 147,401 149,320 151,428 0.6 2.1 1.1 0.6 1.3 1.4 49.8 50.4 50.5 50.3 50.5 50.7 Employment, '000 135,073 136,485 137,736 139,252 141,730 144,427 – % change y-o-y -0.1 1.0 0.9 1.1 1.7 1.9 – male 72,080 72,903 73,332 74,524 75,973 77,502 – female 62,992 63,582 64,404 64,728 65,757 66,925 — female, % of total 46.6 46.5 46.7 46.4 46.4 46.3 Total employment, % of labour force 95.2 94.2 94.0 94.4 94.9 95.3 Unemployment, '000 6,742 8,378 8,774 8,149 7,591 7,001 – male 3,663 4,597 4,906 4,456 4,059 3,753 – female 3,079 3,781 3,868 3,694 3,531 3,247 4.8 5.8 6.0 5.5 5.1 4.6 2000 2007e 2008e 2009e 2010e 2012f 23,888 32,357 33,389 34,759 36,121 38,841 Poorest 20%, expenditure per capita 6,450 8,736 9,015 9,385 9,753 10,487 Richest 20%, expenditure per capita 54,703 74,097 76,461 79,598 82,716 88,946 Richest 10%, expenditure per capita 71,425 96,746 99,834 103,929 108,001 116,135 Middle 60%, expenditure per capita 19,429 26,317 27,157 28,271 29,378 31,591 Economically active population, '000 – % change y-o-y – % of total population – unemployment rate, % Source: ILO Table: Consumer Expenditure, 2000-2012 (US$) Consumer expenditure per capita e/f = BMI estimate/forecast. Source: World Bank, Country data; BMI calculation © Business Monitor International Ltd Page 62 United States Information Technology Report Q4 2011 Table: Average Annual Wages, 2000-2012 (US$) 2000 2006 2007e 2008e 2009e 2010e 2012f Total 29,120 34,798 35,997 38,006 39,906 41,718 45,396 Manufacturing 29,786 34,944 36,591 38,634 40,565 42,407 46,146 3.9 3.8 3.4 5.5 5.0 4.5 4.3 Total wage growth, % y-o-y e/f = BMI estimate/forecast. Source: ILO, BMI © Business Monitor International Ltd Page 63 United States Information Technology Report Q4 2011 BMI Methodology How We Generate Our Industry Forecasts BMI’s industry forecasts are generated using the best-practice techniques of time-series modelling. The precise form of time-series model we use varies from industry to industry, in each case being determined, as per standard practice, by the prevailing features of the industry data being examined. For example, data for some industries may be particularly prone to seasonality, i.e. seasonal trends. In other industries, there may be pronounced non-linearity, whereby large recessions, for example, may occur more frequently than cyclical booms. Our approach varies from industry to industry. Common to our analysis of every industry, is the use of vector autoregressions. Vector autoregressions allow us to forecast a variable using more than the variable’s own history as explanatory information. For example, when forecasting oil prices, we can include information about oil consumption, supply and capacity. When forecasting for some of our industry sub-component variables, however, using a variable’s own history is often the most desirable method of analysis. Such single-variable analysis is called univariate modelling. We use the most common and versatile form of univariate models: the autoregressive moving average model (ARMA). In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for analysis and forecasting. It must be remembered that human intervention plays a necessary and desirable part of all our industry forecasting techniques. Intimate knowledge of the data and industry ensures we spot structural breaks, anomalous data, turning points and seasonal features where a purely mechanical forecasting process would not. Transport Industry There are a number of principal criteria that drive our forecasts for each transport variable: GDP Growth As transport activity is heavily influenced by real GDP growth, this factor is examined to ascertain its relationship with overall trade volumes. Projected GDP growth is calculated using BMI’s own macroeconomic and demographic forecasts. Real Trade Volumes The sum of imports and exports plays a particularly important role in developing countries with a small © Business Monitor International Ltd Page 64 United States Information Technology Report Q4 2011 domestic industrial sector. In particular, the focus is on goods, as services not employ transport. The volumes are forecast based on the following criteria: Trends manifested through historical data; The impact of future step changes to the economy (such as future membership of the EU or some other regional body). Port Traffic Port traffic levels act as a ‘second opinion’ on trade volumes. However, this check needs to be used with caution as trade values and volumes not always move over time in the same way. Market Share The market share of each mode (road, rail, inland waterway, coastal shipping) for future years is based upon: Trends in historical modal split data; Evidence of government policy favouring one or more modes over others; Government and or private sector investment plans in specific modes. Sources Sources used in transport reports include local transport ministries, officially released company results and figures, established think tanks and institutes and donor agencies such as the World Bank and the Asian Development Bank. © Business Monitor International Ltd Page 65 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. [...]... Monitor International Ltd Page 20 United States Information Technology Report Q4 2011 Market Structure (% Of Total IT Market) 2011e 2015f e/f = estimate/forecast Source: BMI © Business Monitor International Ltd Page 21 United States Information Technology Report Q4 2011 United States Market Overview Government Authority Government Authority National Telecommunications and Information Administration (NTIA),... rebuilding began apace in H210 © Business Monitor International Ltd Page 17 United States Information Technology Report Q4 2011 The largest IT market in the region is, vastly, the United States, with spending estimated at US$529.3bn in 2011, while Canada is a distant second with US$44.7bn Brazil is estimated at US$27.8bn in 2011, making it the largest IT market in the Latin American region, and a major... federal data centres Federal IT Spending (US$bn) 2009-2010 Source: US Office of E-Government and Information Technology © Business Monitor International Ltd IT Spending By Federal Agencies 2009 Source: US Office of E-Government and Information Technology Page 34 United States Information Technology Report Q4 2011 In full-year 2009, total IT spending including all federal IT investment was measured at.. .United States Information Technology Report Q4 2011 IT Business Environment Ratings Regional IT Business Environment Ratings Limits Of Potential Returns Risks To Realisation Of Returns IT Market Country Structur e Limits Market Risks Country Risk Risks IT BE Rating Region al Rankin g United States 83 90 85 50 59 56 76.3 1 Canada 68 90 75 50 77 66... penetration in the United States was estimated at 28.1% in 2010, and is forecast to reach 32.5% by 2015 Meanwhile, in Latin American markets, broadband penetration is on course to reach as high as 23.1% in Argentina and 18.7% in Mexico, and to pass 10% in Brazil, Chile, Colombia and Venezuela within our © Business Monitor International Ltd Page 14 United States Information Technology Report Q4 2011 forecast... US Treasury is in charge of tax issues affecting the US industry, including such issues as R&D tax subsidies © Business Monitor International Ltd Page 22 United States Information Technology Report Q4 2011 The Office of E-Government and Information Technology within the Office of Budget Management is responsible for monitoring federal IT spending across federal departments Overview IT Spending – 2009... product and technology innovation to drive continued growth: the average US household has 2.5 PCs Hardware BMI forecasts that the US computer and accessories market value will grow around 3% in 2011, slower than 2010 We have downwardly revised our figures after PC sales contracted in H111 y-o-y, after strong © Business Monitor International Ltd Page 24 United States Information Technology Report Q4 2011 growth... by 2015 © Business Monitor International Ltd Page 25 United States Information Technology Report Q4 2011 The US addressable market for PCs and accessories is estimated by BMI at US$122.5bn in 2011, with mid single-digit growth compared with 2010 In 2010, sales were boosted by a revival of the business PC market, which is expected to gather pace in 2011 with signs of an improvement in SME confidence... outscores rival products Software Software CAGR for 2011- 2015 is projected at around 6.3%, as the addressable market reaches around US$196.4bn Overall moderate growth in budgets is expected in 2011, with the market stabilising following the economic slowdown and rebound in © Business Monitor International Ltd Page 28 United States Information Technology Report Q4 2011 2010 At the same time, the software market... SMEs, and similar initiatives have been seen in Mexico and elsewhere © Business Monitor International Ltd Page 15 United States Information Technology Report Q4 2011 Market Growth And Drivers Across the Americas, in 2011, a greater IT Market Sizes range of financing options for consumers 2011e (US$mn) and more flexible terms from retailers will be the main drivers of consumer IT spending growth Key . deadline: October 2011 United States Information Technology Report Q4 2011 © Business Monitor International Ltd Page 2 United States Information Technology Report Q4 2011 ©. information hereto contained. UNITED STATES INFORMATION TECHNOLOGY REPORT Q4 2011 INCLUDES 5-YEAR FORECASTS TO 2015 Part of BMI's Industry Report & Forecasts Series Published. software. United States Information Technology Report Q4 2011 © Business Monitor International Ltd Page 7 IT Services The US IT services market is forecast at US$236bn in 2011, with