Sweden Information Technology Report Q4 2012

BMI View: Swedish IT spending is expected to reach US$16.7bn in 2012, up 2%, with BMIupwardly revising its forecast as the market continued to generate opportunities in Q1-Q3 2012, despitethe economic headwinds from the eurozone. The IT market is expected to grow, but consumer andbusiness confidence are vulnerable to external economic developments, particularly in the eurozone.

Drivers of Swedish IT spending purchases of computers for schools, a new national digital agenda andgrowing interest in cloud computing services.

Headline Expenditure Projections

Computer Hardware Sales: US$3.5bn in 2011 to US$3.6bn in 2012, +2% in US dollar terms. Forecastin US dollar terms upwardly revised due to analyst modification, but there should be a stimulusfrom the iPad3 and ultrabooks.

Software Sales: US$5.1bn in 2011 to US$5.2bn in 2012, +2% in US dollar terms. Forecast in US dollarterms upwardly revised due to analyst modification, and cloud computing services such as softwareas-a-service (SaaS) are likely to be used more in Sweden over BMI's forecast period.

IT Services Sales: US$7.7bn in 2011 to US$7.9bn in 2012, +2% in US dollar terms. Forecast in USdollar terms upwardly revised due to analyst modification, and there should be more spending bysectors such as financial services, retail and telecoms.

Risk/Reward Ratings: Sweden's score was 75.2 out of 100.0. Sweden retains its third place ranking inour latest Europe RRR table, behind Germany and the UK, but ahead of France and CEE countries. Thecountry benefited from a good, albeit slightly reduced, industry rewards score of 61.7, and its overallranking received a further boost from a high country rewards score of 90.

Key Trends & Developments.

In 2012, continuing economic uncertainty in Europe and tight credit conditions have thepotential to hamper demand in the medium term, but there will be opportunities in verticals suchas retail and financial services. With the eurozone crisis looming large, we believe that Swedishbusinesses will be less likely to invest in IT in the quarters ahead.

The consumer PC segment is also expected to report slower growth in 2012, with durable goodspurchases slowing during 2011. Disposable income is growing slowly, with minimal overallwage pressure. By our calculations, real wages contracted in every month in 2011, and this likelytook a toll on purchases of consumer lifestyle products such as PCs and tablets.

The government's broad consultations on a new digital agenda are likely to create opportunitiesin various segments, ranging from healthcare to education and enterprise. Meanwhile, cloudcomputing is gradually being adopted across the public and private sectors, with a number ofnew cloud-based services launched in 2011.