It business climate v3

ITC Market Research Report ITCandor 2010

IT Business Climate – Comparing the UK and Scandinavian Markets

Martin Hingley5th October 2010


• 03:30 Registration• 04:00 Welcome - Espen Gregersen, Copenhagen Capacity• 04:15 IT Business Climate – Comparing the UK and

Scandinavian Markets – Martin Hingley, ITCandor• 04:55 UK Business Experience in Scandinavia - Ray

Power, CEO, Active Reception• 05:15 Break • 05:30 Perceptions and Prejudices - Mike Simons, Chief

Editor, Computerworld UK• 05:40 Panel -What does it take to make it in Scandinavia? • 05:55 Access Scandinavia, Espen Gregersen• 06:25 Networking


IT Business Climate - Agenda

• IT Climate, Themes and Challenges in 2010• Comparative Demographics• IT Purchasing Profile

– Countries by Category– Average Spending per Head

• Historical growth rates by Offering• Hardware market shares• IT Forecasts

Sources used in this presentation include:• IT Market data and business demographics –

ITCandor Ltd• GDP, population and national debt - IMF


IT Climate, Themes And Challenges 2010

• The World ITC market will grow 5% - but the UK market only 2%• The IT market has recovered well, but is threatened by uncertainty• The Icelandic volcano slowed Europe, BP’s spills left the US

unaffected• Smart Phones – and especially iPhones and apps – are growing

rapidly• Cloud Computing promises cheaper corporate apps – threatens

managed services suppliers• Fat and thin clients drive Corporate Client Refresh• The UK government has implemented CRC demanding reduction in

energy usage• Business and Industry expertise drives IT supplier success• UK companies typically expand into the USA, Germany and France


Some Scandinavian Demographics

NorwayPopulation – 4.9mBusinesses – 169kGDP - $433bITC Spending - $44b

DenmarkPopulation – 5.5mBusinesses – 147kGDP - $314bITC Spending - $40b

FinlandPopulation – 5.4mBusinesses – 145k

GDP - $240bITC Spending - $27b

SwedenPopulation – 9.3mBusinesses – 133k

GDP – $444bITC Spending - $62b


UK and Scandinavia – Business Numbers by Size (Employees)

2,459,381

83,046

10,6506,474

1,1101,792

557,627

30,438

3,3381,823

404637

1

10

100

1,000

10,000

100,000

1,000,000

10,000,000

0-19 20-99 100-199 200-499 500-1000 >1000

UK

Scandinavia

•The UK is four times the size of Scandinavia•The UK has proportionately more large companies•Both regions have many self-employed businesses

Notes: A logarithmic scale is used in this chart


UK and Scandinavia – Businesses by Vertical Market (>20 Employees)

0% 5% 10% 15% 20% 25% 30% 35%

Agriculture/…

Manufacturing

Transport/…

Retail/…

Finance

Business Services

Central Government

Local Government

Health

Education

Other

UK

Scandinavia

•Retail is particularly strong in the UK•Manufacturing is stronger in Scandinavia•Finance are similar in ratio, but generate more of GDP in the UK•Government accounts are stronger in the UK

Notes: Companies with less than 20 employees have been excluded from this chart


ITC Spending By Category Q2 2010 – Higher Telecoms, Lower IT Services In Scandinavia

Hardware

IT Service

Software

Telecom Service45%

47%

41%

11%

12%

16%

29%

25%

27%

15%

16%

16%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

UK

Scand-inavia

USA

•Spending on Telecoms Services strongest in Scandinavia•IT Services strongest in the UK•Software biggest in the USA•Total Spending USA - $418bUK – $104bScand - $38.1b


ITC Spending/Total Population – the UK and Scandinavia Spend Most

$0

$1,000

$2,000

$3,000

$4,000

$5,000

$6,000

$7,000

$8,000

$9,000

2003 2004 2005 2006 2007 2008 2009

GermanyFrance

Italy

Russia

UK

USA

Scandinavia

•The UK and Scandinavia lead the world in spending on ITC•USA has higher IT spending, but less on Telecoms•Southern lags Northern Europe•Russia and emerging countries are far behind


Worldwide ITC Offerings – Revenue, Revenue Growth and Net Profit

$200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

AppsPC

Broadband

SaaS

Internet -20%

-10%

0%

10%

20%$50 $100 $150 $200

NetworkingCustomS/W

H/WMaintenance

Peripheral

S/WMaintenance

Storage

GamingConsole

Server

OtherIT

Service

InfrastructureS/W

FixedLine

WirelessImplementation

Outsourcing

OtherH/W

OS

ConvergedDevice

$1,800$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600-20%

-10%

0%

10%

20%

30%

40%

50%

60%

70%

AppsPC

Broadband

SaaS

Internet -20%

-10%

0%

10%

20%$50 $100 $150 $200

NetworkingCustomS/W

H/WMaintenance

Peripheral

S/WMaintenance

Storage

GamingConsole

Server

OtherIT

Service

InfrastructureS/W

FixedLine

WirelessImplementation

Outsourcing

OtherH/W

OS

ConvergedDevice

$1,800$0

•Revenue ($b) for the year to June 2010 – y axis•Revenue Growth (annual this v last) x axis•Net Profit – size of bubble


ITC Spending Growth – The USA Leads Recovery

•All countries were badly affected by the recession and credit crunch•Sweden’s decline (and recovery) were delayed)•All countries recovering with the USA in the lead

Notes: Spending growth is expressed in constant (local) currency

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2007 2008 2009 2010

UK

USA

Scandinavia


Some Examples of Comparative IT Spending Growth

2007 2008 2009 2010-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

UK

USA

Scandinavia

•PC – UK had deeper decline•Converged Device – includes Smart Phones•SaaS – dramatic growth everywhere•Implemen-tation – USA leads, especially in building private Clouds

2007 2008 2009 2010-20%

-10%

0%

10%

20%

30%

40%

50%

60%

UK

USA

Scandinavia

2007 2008 2009 20100%

50%

100%

150%

200%

250%

300%

350%

UK

USA

Scandinavia

2007 2008 2009 2010-15%

-10%

-5%

0%

5%

10%

15%

UKUSA

Scandinavia

PC Converged Device

SaaS Implementation


Hardware Market Shares H1 2010 – UK and Scandinavia

Samsung11.8%

Nokia9.1%

Apple8.6%

HP7.3%

Dell5.7%

Cisco3.4%

Acer2.7%

Others51.2%

Samsung12.3%

HP11.9%

Nokia6.1%

Apple4.9%

Canon4.2%

Cisco3.3%Dell

3.2%

Others53.9%

UK

Total: $33.9b

Scandinavia

Total: $13.2b

•Handset suppliers hold strong positions•Nokia has a bigger share in the UK than in home territory•HP has a stronger position in Scandinavia•Top 7 suppliers have higher market share in the UK


Sovereign Debt/GDP – Norway’s Oil Keeps it in Surplus

-13%

-4%

-7%

12%

-5%

-18%

1%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

UK Sweden Denmark Norway Finland Iceland Scand-inavia

•The credit crunch - harder consequences in the UK•Norway –oil tax adds surpluses•Iceland very small, but challenged•Scandinavia overall has a small surplus•Don’t expect to grow UK government business for now


ITC Growth Forecasts – the UK will lag behind Scandinavia

•ITC spending fell dramatically in all countries in 2009•Both regions are recovering in 2010•‘Austerity’ will be stronger in UK government accounts•Scandinavia offers stronger growth throughout the forecast period

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

30%

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

UK

USA

Scandinavia


IT Business Climate Conclusions

• The UK ITC market is crowded – especially in software and services areas

• The credit crunch hit the UK harder than Scandinavia as will the governments austerity package

• Scandinavia has no sovereign debt – largely due to the taxation of Norway’s oil

• Average spending on ITC is almost as high in Scandinavia as in the UK

• Good opportunities in PC, converged device, SaaS, broadband, Internet services - including downloads and apps - and implementation services - such as building private Clouds

• The ITC forecast predicts stronger growth in Scandinavia for the foreseeable future

• UK IT suppliers should consider expanding operations there

It business climate v3

Technology

business climate

spending

usa

size

scandinavia

stronger

notes

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