United States Information Technology Report Q4 2012

Business Monitor International
October 31, 2012
76 Pages - SKU: BMI4898811
Countries covered: United States

BMI View: USA IT spending is forecast to reach US$559bn in 2012, up 5.5% year-on-year. This leavesour 2012-2016 forecast largely unchanged this quarter, despite a further contraction in PC sales inH112. Meanwhile, public IT procurements remained constrained due to the budget constraints faced bymany government entities. Overall moderate growth in budgets is expected, but much depends on theeconomic situation. Despite a drive to cut expenses across government, many public sector organisationshave appeared willing to continue spending on IT; however, the government hopes to make savings in itsUS$80bn IT budget. US businesses remain cautious, but there is pent-up demand from projects delayedas a result of the economic situation and cloud computing is expected to be increasingly important.

Headline Expenditure Projections

Computer Hardware Sales: US$141.5bn in 2011 to US$146.8bn in 2012, +3.6% in US dollar terms.Forecast in US dollar terms unchanged from Q312, but Ultrabook failed to provide the hoped-for supportto PC sales in H112.

Software Sales: US$153.0bn in 2011 to US$163.0bn in 2012, +6.4% in US dollar terms. Forecast in USdollar terms unchanged from Q312, but more investment is expected in utility software and servicesorientatedarchitectures rather than traditionally packaged PC software.

IT Services Sales: US$234.9bn in 2011 to US$249.3bn in 2012, +6.0% in US dollar terms. Forecast inUS dollar terms unchanged from Q312, with an increasing share of IT budgets being earmarked for newersolutions such as virtualisation and cloud computing.

Risk/Reward Ratings: The USA scores 76.3 out of 100.0 for Q412. The USA ranks first in ourlatest Americas risk/reward ratings (RRRs) table, ahead of Canada, as well as Latin American giantsBrazil and Mexico. The country ranking was secured by its global highest industry rewards score of 82.5,while its rating was also boosted a relatively high country rewards score of 90.0.

Key Trends & Developments

The US federal government's ambitious Cloud First cloud migration strategy has taskedgovernment agencies with migrating 80 services to the cloud within 18 months. Key governmentagencies including NASA and the General Services Administration are already using the cloudto collaborate and deliver applications. The government hopes to eventually realise savings of upto 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 issueand the failure of politicians to agree a deficit reduction programme. If automatic federalspending cuts kick in during the next fiscal year, this could hit IT projects. The November 2012elections will also create uncertainty about the trajectory of future government IT spending.

US PC sales are forecast to report single-digit growth in 2012, after a further annualisedcontraction in Q212. In H112, sales of ultrabooks fell far short of Intel's prediction thatultrabooks would comprise 40% of US notebook sales by the end of 2012. While exact salesfigures are hard to derive, these devices seem unlikely to enjoy the success that was hoped for, atleast initially. In the United States, the average market price for an ultrabook was upwards ofUS$900 during H112, compared to around US$500 for a Windows notebook.



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