Germany Information Technology Report Q3 2012

BMI View: The German IT market is forecast to increase to US$61.14bn in 2012, up by around 2%, with our forecast downwardly revised from Q212. Consumers and businesses remain wary because of the risk of a new recession in the eurozone, and in 2011 IT spending continued to trend negatively, with a further decline in PC sales. However, the decline was at least relatively modest compared with that reported in many other EU markets. Over the next five years, we forecast a more favourable outlook for the German IT market, with areas of opportunity including cloud computing. Headline Expenditure Projections Computer hardware sales: US$16.1bn in 2011 to US$16.3bn in 2012, +1.5% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modification following continued weakness in PC sales in Q411. Software sales: US$19.3bn in 2011 to US$19.6bn in 2012, +2% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors as political and economic uncertainty weigh on investments. IT Services sales: US$24.8bn in 2011 to US$25.1bn in 2012, +2% in US dollar terms. Forecast in US dollar terms downwardly revised due to macroeconomic factors but the search for cost-savings will be a driver behind some managed services contracts. Risk/Reward Rating: Germany's score was 80.0 out of 100.0. Germany ranked second in the Europe region in our latest business environment ratings table, behind only the UK, and ahead of France. Key Trends & Developments

The market's high level of exposure to the ongoing eurozone currency crisis suggests a more challenging economic outlook for German IT spending in 2012. Businesses remain cautious, but BMI expects IT spending to outperform GDP growth in 2012, and if business confidence improves then there could be a boost from pent-up demand. Surveys from 2011 had suggested that around 40% of German companies expected to increase spending on IT services, with enterprise resource planning and customer relationship management systems among the main spending areas.

Many German enterprises retain concerns about the data security implications of cloud computing, as well as compliance issues when cloud services are outsourced across borders. However, there is now increasing interest from government organisations as well as the private sector in cloud computing services such as SaaS and Infrastructure-as-a-Service (IaaS).

Other key drivers of IT spending opportunity will include growing mobile and fixed broadband penetration, the proliferation of mobile devices such as smartphones, tablets and e-readers, data centre virtualisation, technology innovation such as GSP technology and services, and economic recovery.