ChangeWave Research: 1Q 2006 Corporate IT Spending
ChangeWave Research Report:
Corporate IT Spending Survey
IT Spending Continues to Pick Up –1Q 2006 Growth Rate Looks Strong
Overview
For the second Quarter in a row corporate IT spending has picked up. The Alliance’s latest Corporate IT Spending survey projects a strong rate of growth for 1st Quarter 2006. And while there are hints of softness in some IT subcategories, the overall outlook is solid for the 1st half of the coming year.A total of912members involved with IT spendingin their organization participated in this survey, conducted November 15-21.
1Q 2006 IT Spending: Overall, 36% of Alliance members report their company will increase IT spending for 1st Quarter 2006, a 3-point increase over the previous quarter. We note that 13% didreport IT spending will decrease (or there will be no spending at all), 3-points worse than previously.
Putting these Findings in Context: As the following chart shows, IT spending remains strong – and the percentage of companies reporting increased spending is the highest we’ve recorded since November 2004.
Future Spending: Focusing on the future, we asked respondents to rate the current willingness of their company to spend money on IT products and services. A total of 63% say their company is giving a "Green Light" to IT spending (i.e., spending is normal) – which isthe highest percentage since we began asking this question in 2002.
Another 26% say their company has given a “Yellow Light" (i.e., spending is downsized, though not completely stopped), while 6% say their company has given a "Red Light" (i.e., spending is on hold). The combined “Yellow Light/Red Light” percentage (32%) is a 1-point improvementfrom the previous survey, and is at the lowest level since 2002.
Looking ahead to the first half of2006 (Jan-Jun), 35% think their company's overall IT budget will be greater than second half 2005 – a bigimprovement from our previous survey in whichonly 29% said their budget would be greater.
Slight Softness Seen in 4Q 2005 IT Spending. Respondents were also asked if their corporate IT spending is on track thus far in the 4th Quarter. A total of 18% say they have spent “More than Planned” to date, down 1-pt from the previous survey. Another 22% say they have spent “Less than Planned,” up 4-pts from previously. According to ChangeWave Analyst Michael Shulman, some 4Q spending may have been delayed due to the tailwind effects from the catastrophic hurricane season.
Corporate PCs and Servers. WhileDell still leads in terms of planned 1st Quartercorporate PC purchases, they are losingPC market share to Hewlett Packard in both the Desktop and Laptop markets. Interms of servers, Dellhas the lead with HP firmly in second and IBM third.
Smart Phones. RIM continues to lead in the corporate smart phone market, and despite all of its well publicized problemsour results show it has actually gained market share among companies providing Smart Phones to employees. Palm remains a distant second, down 2-pts since August.
Looking ahead, neither RIM nor Palm shows momentum in the corporate market. Among companies planning to buy smart phones in 1st Quarter 2006,RIMis down 1-ptand Palmis down 2-pts since the previous survey. We note, however, that this survey was completed before the recent court decision against RIM.
Other Winners and Losers. The outlook for Corporate Software appears relatively strong heading into the 1st Quarter,particularly for Supply Chain Management, Enterprise Resource Planning, and Business Intelligence Reporting software.
Other areas of IT strength includeVOIP Systems, Flat Panel Displays, Printers and Enterprise/Network Security.
On the downside, weaker areas include Data Storage & Management software, Intel-Based Servers, Authentication & Identification software, andAnti-Virus software.
Bottom Line: The current survey findingspoint toa solid rate of growth for Corporate IT Spending for1st Quarter 2006. Moreover, the outlook looks good for the 1st half of next year – with Corporate"Green Light" IT spending at the highest level we’ve recorded over the past four years.
When coupled with recent signs ofweakening picked up in ourConsumer Holiday Spending Survey (11/7/05) it looks like corporate spending may now be grabbing the leadership baton from consumers as we enter the stretch run for calendar year 2005.
The ChangeWave Alliance is a group of 6,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.
Helping You Profit From A Rapidly Changing World ™
Table of Contents
Summary of Key Findings...... 4
- Chart One: 1stQuarter 2006 IT Spending...... 4
Putting the Findings in Context...... 5
- Chart Two: Last 18 IT Spending Surveys...... 5
Future Spending...... 5
- Chart Three: Willingness of Company to Spend on IT...... 5
- Chart Four: Willingness to Spend – A Comparison...... 6
A Closer Look at 2006...... 6
- Chart Five: IT Budget for 1stHalf 2006...... 6
- Chart Five A: IT Budget for Next Half – A Comparison ...... 7
Spending So Far in 4thQuarter...... 7
- Chart Six: Actual IT Spending Thus Far in 4Q...... 7
- Chart Seven: IT Spending Thus Far in Quarter – A Comparison...... 8
Corporate PCs and Servers...... 10
PC Purchasing...... 10
Server Purchasing ...... 12
Corporate Smart Phones and "Hybrid" PDAs...... 13
IT Spending Subcategories for 1stQuarter...... 16
ChangeWave Research Methodology...... 27
About ChangeWave Research...... 28
I. Summary of Key Findings
For the second Quarter in a row corporate IT spending has picked up. The Alliance’s latest Corporate IT Spending survey projects a strong rate of growth for 1st Quarter 2006. And while there are hints of softness in some IT subcategories, the overall outlook is solid for the 1st half of the coming year. A total of912members involved with IT spending in their organization participated in this survey, conducted November 15-21.
1Q 2006 IT Spending: Overall, 36% of Alliance members report their company will increase IT spending for 1st Quarter 2006, a 3-point increase over the previous quarter. We note that 13% did report IT spending will decrease (or there will be no spending at all), 3-points worse than previously.
Putting these Findings in Context: As the following chart shows, IT spending remains strong – and the percentage of companies reporting increased spending is the highest we’ve recorded since November 2004.
Future Spending: Focusing on the future, we asked respondents to rate the current willingness of their company to spend money on IT products and services. A total of 63% say their company is giving a "Green Light" to IT spending (i.e., spending is normal) – which is the highest percentage since we began asking this question in 2002.
Another 26% say their company has given a “Yellow Light" (i.e., spending is downsized, though not completely stopped), while 6% say their company has given a "Red Light" (i.e., spending is on hold). The combined “Yellow Light/Red Light” percentage (32%) is a 1-point improvement from the previous survey, and is at the lowest level since 2002.
A Closer Look at1st Half 2006. Looking ahead to the first half of 2006 (Jan-Jun), 35% think their company's overall IT budget will be greater than second half 2005 – a big improvement from our previous survey in which only 29% said their budget would be greater.
Spending So Far in the 4th Quarter
We asked respondents several questions on planned vs. actual 4Q IT Spending to date:
(1) Question Asked: We’re halfway through the 4th Quarter. Based upon your IT Spending plans of three months ago, have you spent more than planned, less than planned, or the same as planned on IT products/services thus far in 4Q?
Slight Softness Seen in 4Q 2005 IT Spending. Respondents were also asked if their corporate IT spending is on track thus far in the 4th Quarter. A total of 18% say they have spent “More than Planned” to date, down 1-pt from the previous survey. Another 22% say they have spent “Less than Planned,” up 4-pts from previously. According to ChangeWave Analyst Michael Shulman, some 4Q spending may have been delayed due to the tailwind effects from the catastrophic hurricane season.
(2) Question Asked: For which of the following main IT Spending categories - if any - have you spent more than planned thus far in the 4th Quarter? (Check All That Apply)
CurrentSurvey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05
Security / 13% / 15% / 14%
Software: Application Development / 10% / 9% / 8%
Servers / 9% / 11% / 8%
Networking / 8% / 9% / 8%
Outsourced Services / 8% / 9% / 5%
PCs / 8% / 11% / 12%
Software: Enterprise Applications / 8% / 9% / 7%
Storage / 7% / 8% / 7%
Communications / 4% / 4% / 5%
Software: Platforms / 4% / 5% / 5%
Don't Know / 19% / 17% / 19%
Other / 4% / 2% / 2%
(3) Question Asked: And for which of the following main IT Spending categories – if any – have you spent less than planned thus far in the 3rd Quarter? (Check All That Apply)
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05PCs / 15% / 12% / 15%
Outsourced Services / 9% / 9% / 10%
Software: Application Development / 8% / 7% / 6%
Software: Enterprise Applications / 8% / 5% / 7%
Servers / 7% / 8% / 8%
Storage / 7% / 6% / 5%
Networking / 6% / 5% / 7%
Communications / 5% / 4% / 3%
Software: Platforms / 5% / 5% / 6%
Security / 4% / 4% / 5%
Don’t Know / 23% / 22% / 23%
Other / 2% / 1% / 1%
Net Difference Score – Current Survey (November 2005)
Overall IT Spending Categories / SpentMore Than Planned in 4Q / Spent Less Than Planned in 4Q / Net Difference Score
Security / 13% / 4% / +9
Software: Application Development / 10% / 8% / +2
Servers / 9% / 7% / +2
Software: Enterprise Applications / 8% / 8% / 0
Storage / 7% / 7% / 0
Outsourced Services / 8% / 9% / -1
Communications / 4% / 5% / -1
Software: Platforms / 4% / 5% / -1
Networking / 8% / 6% / -2
PCs / 8% / 15% / -7
Similar to previous surveys, Security (Net Difference Score = +9) is the top category for which member companies have spent more than planned so far in the4thQuarter.
On the down side, PCs (-7) leads the list of 4Q IT spending categories for which member companies have spent less than planned thus far in the quarter.
II. Corporate PCs and Servers
(A) PCs
(1) Question Asked: (FOR THOSE COMPANIES BUYING COMPUTERS IN 1st QUARTER 2006) Who is the manufacturer and what computer type(s) is your company planning on buying? (Check All That Apply)
Desktops
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05Dell - Desktop Computer / 42% / 45% / 39%
HP/Compaq - Desktop Computer / 15% / 14% / 12%
Lenovo (formerly IBM) - Desktop Computer / 5% / N/A / N/A
Apple - Desktop Computer / 3% / 3% / 2%
Sony - Desktop Computer / 1% / 1% / 0%
Gateway/eMachines - Desktop Computer / 1% / N/A / N/A
Other - Desktop Computer / 5% / 8% / 8%
Don't Know / 8% / 6% / 9%
Not Buying Desktops in 1st Quarter / 17% / 18% / 16%
Laptops
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05Dell - Laptop Computer / 37% / 40% / 37%
HP/Compaq - Laptop Computer / 13% / 10% / 10%
Lenovo (formerly IBM)- Laptop Computer / 10% / 10% / 13%
Toshiba - Laptop Computer / 6% / 6% / 5%
Apple - Laptop Computer / 4% / 4% / 2%
Sony - Laptop Computer / 3% / 3% / 3%
Gateway/eMachines - Laptop Computer / 1% / N/A / N/A
Other - Laptop Computer / 3% / 4% / 2%
Don't Know / 7% / 6% / 8%
Not Buying Laptops in 3rd Quarter / 16% / 18% / 12%
Corporate PCs Purchases. WhileDell leads in terms of planned 1st Quarter corporate PC purchases, they are losing PC market share to Hewlett Packard in both the Desktop and Laptop markets.
(2A) Question Asked: (FOR COMPANIES PURCHASING APPLE COMPUTERS IN 1ST QUARTER) Has your company purchased any Apple computers in the past, or are you purchasing Apple computers for the first time?(n=41)
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05We have purchased Apple computers in the past / N/A / 78% / 87%
We have purchased Apple computers within the past 10 years / 79% / N/A / N/A
We have purchased Apple computers, but more than 10 years ago / 5% / N/A / N/A
We are purchasing Apple computers for the first time / 16% / 22% / 13%
Apple Computer Purchasers.Among the relatively small group of companies buying Apple computers in the 1st Quarter, 16% say they are purchasing Apple for the first time – 6-points less than in our August 2005 survey.
(2B) Question Asked: What is the most important reason(s) why your company is purchasing Apple computers?
Security and Stability are Top Reasons for Apple Purchases. Respondents cited “Security” and “Operating System Stability” as the top reasons for their company’s Apple computer purchasing. Employee preference also received mention. As respondent JIM2793 writes about Apple, "Less security problems, high reliability, smooth and stable operating system." Respondent RGL19684 adds, "A number of employees prefer to use the MacOS, and these systems require less support."
(3) Question Asked: How satisfied is your company with the following PC manufacturers? (Please rate only those that your company has previously purchased products from or had experiences with.)
VerySatisfied / Somewhat
Satisfied / Somewhat
Unsatisfied / Very
Unsatisfied
Apple / 52% / 37% / 7% / 5%
Dell / 46% / 42% / 8% / 4%
HP/Compaq / 26% / 56% / 14% / 4%
Lenovo (formerly IBM) / 33% / 48% / 14% / 5%
Sony / 33% / 38% / 20% / 9%
Gateway/eMachines / 15% / 39% / 22% / 25%
Apple Leads in PC Satisfaction. Apple (89% Very/Somewhat Satisfied) and Dell (88%) received the highest satisfaction ratings among the major PC manufacturers that we asked about in this survey. Gateway/eMachines (54%) received the lowest rating.
(B) Servers
(4A) Question Asked: (FOR THOSE COMPANIES WHO PURCHASED SERVERS DURING CALENDAR YEAR 2005) From which of the following vendors has your company purchased servers from during calendar year 2005?(Check All That Apply)
Dell / 25%HP/Compaq / 18%
IBM / 13%
Sun Microsystems / 10%
Generic White Box / 3%
Gateway / 1%
Did not Purchase Servers During 2005 / 16%
Don’t Know / 14%
Other / 2%
Dell and HP Lead in Corporate Servers. Dell (25%) and HP (18%) lead in terms of corporate servers purchased during calendar year 2005.
(4B) Question Asked: (FOR THOSE COMPANIES PURCHASING SERVERS IN 1ST QUARTER 2006) From which of the following vendors is your company purchasing servers from in 1st Quarter 2006?(Check All That Apply)
Dell / 20%HP/ Compaq / 14%
IBM / 10%
Sun Microsystems / 8%
Generic White Box / 2%
Gateway / 0%
Not Buying Servers in 1st Quarter 2006 / 19%
Don’t Know / 17%
Other / 1%
Planned Corporate Server Purchases. In terms of planned 1st Quarter server purchases, Dell again holds the lead with HP a strong second and IBM third.
III. Corporate Smart Phones and "Hybrid" PDAs
(A) Current Ownership
(1) Question Asked: Does your company currently provide employees with Smart Phones or "Hybrid" PDAs?
Current Survey Nov’ 05 / Previous Survey Aug ‘05Yes – Smart Phone / 21.7% / 19.6%
Yes – “Hybrid PDAs” / 10.0% / 9.5%
Company Provided Smart Phones / “Hybrid” PDAs. More than 21% ofrespondents say their company provides employees with Smart Phones, up 2-pts from August 2005. Another 10% says their company provides “Hybrid” PDAs, slightly more than in August.
(1A) Question Asked: Who is the manufacturer of the current “Hybrid" PDAs or Smart Phones your company provides?
Smart Phones(n=198)
Current Survey Nov’ 05 / Previous Survey Aug ‘05Research In Motion (RIM/Blackberry) / 63% / 58%
Palm (Treo) / 17% / 19%
Motorola (MPx) / 5% / 4%
Nokia (6600) / 4% / 2%
Audiovox (XV) / 2% / 1%
Samsung (SPH) / 2% / 4%
T-Mobile (Sidekick) / 1% / 2%
Kyocera (7135) / 1% / 1%
Sierra Wireless (Voq) / 1% / 1%
Other Smart Phones / 5% / 5%
Don't Know / 1% / 4%
Corporate Smart Phones.RIM continues to lead in the corporate smart phone market, and despite all of its well publicized problemsour results show it has actually gained market share among companies providing Smart Phones to employees. Palm remains a distant second, down 2-pts since August.
“Hybrid” PDA's (Without Cell Phone)(n=91)
Current Survey Nov’ 05 / Previous Survey Aug ‘05Research In Motion (RIM/Blackberry) / 51% / 55%
HP (iPaq) / 20% / 7%
Palm (Zire/Tungsten/LifeDrive)* / 18% / 22%
Dell (Axim) / 4% / 12%
Panasonic (Toughbook) / 1% / 0%
Symbol (MC50) / 1% / 0%
NEC (MobilePro) / 0% / 0%
Sharp (Zaurus) / 0% / 0%
Garmin (iQue) / 0% / 0%
Other "Hybrid" PDA's / 4% / 1%
Don't Know / 1% / 2%
Corporate “Hybrid” PDAs.RIM (51%) also dominates among companieswho provide “Hybrid” PDAs. We note that HP’s market share (20%) hasspiked while Palm’s (18%) is down4-points since August.
(B) Future Purchases
(2) Question Asked: Is your company buying Smart Phones or “Hybrid” PDAs in 1st Quarter 2006?
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05Yes – Smart Phone / 24.3% / 21.3% / 21.6%
Yes – “Hybrid” PDAs / 11.4% / 10.8% / 20.5%
Purchase Plans. Looking at purchase plans for the 1Q 2006, 24.3% say their company plans to buy Smart Phones, up from 21.3% in August 2005. Purchase plans for “Hybrid PDAs” (11.4%) arerelatively unchanged from previously.
(2A) Question Asked:Who is the manufacturer of the “Hybrid" PDAs or Smart Phones your company is planning on buying?
Smart Phones(n=222)
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05Research In Motion (RIM/Blackberry) / 49% / 50% / 38%
Palm (Treo) / 22% / 24% / 22%
Motorola (MPx) / 10% / 10% / 11%
Nokia (6600) / 6% / 8% / 13%
Samsung (SPH) / 4% / 3% / 6%
T-Mobile (Sidekick) / 2% / 2% / 4%
Audiovox (XV) / 3% / 1% / 3%
Kyocera (7135) / 0% / 0% / 1%
Sierra Wireless (Voq) / 0% / 0% / 0%
Other Smart Phones / 3% / 6% / 4%
Planned Smart Phone Purchases. Looking ahead, neither RIM nor Palm shows momentum in the corporate market. Among companies planning to buy smart phones in 1st Quarter 2006,RIMis down 1-ptand Palmis down 2-pts since the previous survey.We note, however, that this survey was completed before the recent court decision against RIM.
“Hybrid” PDA's (Without Cell Phone)(n=97)
Current Survey Nov’ 05 / Previous Survey Aug ‘05 / Previous Survey May ‘05Research In Motion (RIM/Blackberry) / 53% / 50% / 45%
Palm (Zire/Tungsten/LifeDrive) / 22% / 24% / 22%
HP (iPaq) / 11% / 10% / 12%
Dell (Axim) / 10% / 15% / 18%
Sharp (Zaurus) / 1% / 0% / 1%
Panasonic (Toughbook) / 1% / 0% / 0%
Symbol (MC50) / 0% / 1% / 0%
NEC (MobilePro) / 0% / 0% / 1%
Garmin (iQue) / 0% / 0% / 0%
Other "Hybrid" PDA's / 3% / 0% / 3%
Planned “Hybrid” PDA Purchases. RIM (53%) holds the lead among respondents who say their company is buying “Hybrid” PDAs next quarter, up3-points from August. Palm (22%) registered a 2-point drop, while Dell (10%) declined 5-points. HP (11%; up 1-point) is the one other manufacturer gaining share.
Part IV. IT Spending Subcategories for 1st Quarter 2006
Table One: Biggest WINNING Subcategories – Largest Projected 1Q Spending Increases
WINNERS / (A) PercentUpgrading/
Buying
for 1st Time / (B) Percent
Downgrading/
Phasing Out / (C) Net %
Change Score
(A-B) / (D) Percentage
Point Change
From Previous Survey
I. Software: Enterprise Applications
(a) Supply Chain Management/Procurement
Nov2004 / 7% / 1% / 6% / 3%
Feb2005 / 7% / 2% / 5% / -1%
May2005 / 6% / 1% / 5% / --
Aug 2005 / 5% / 1% / 4% / -1%
Nov2005 / 8% / 2% / 6% / 2%
(b) Enterprise Resource Planning (ERP)
Nov2004 / 7% / 3% / 4% / 1%
Feb 2005 / 6% / 3% / 3% / -1%
May2005 / 6% / 2% / 4% / 1%
Aug 2005 / 6% / 2% / 4% / --
Nov2005 / 9% / 3% / 6% / 2%
(c) Business Intelligence and Reporting
Nov2004 / 9% / 1% / 8% / --
Feb2005 / 9% / 2% / 7% / -1%
May2005 / 9% / 1% / 8% / 1%
Aug 2005 / 10% / 1% / 9% / 1%
Nov2005 / 12% / 1% / 11% / 2%
II. Security
(c) Enterprise/Network Security Software
Nov2004 / 13% / 1% / 12% / 4%
Feb2005 / 10% / 1% / 9% / -3%
May2005 / 10% / 0% / 10% / 1%
Aug2005 / 9% / 0% / 9% / -1%
Nov2005 / 11% / 0% / 11% / 2%
III. Communications
(a)VoIP Systems
Nov2004 / 15% / 1% / 14% / 2%
Feb2005 / 14% / 1% / 13% / -1%
May2005 / 14% / 1% / 13% / --
Aug2005 / 13% / 0% / 13% / --
Nov2005 / 15% / 0% / 15% / 2%
WINNERS / (A) Percent
Upgrading/
Buying
for 1st Time / (B) Percent
Downgrading/
Phasing Out / (C) Net %
Change Score
(A-B) / (D) Percentage
Point Change
From Previous Survey
IV. PCs
(a) Flat-Panel Displays
Nov2004 / 22% / 1% / 21% / 4%
Feb2005 / 23% / 1% / 22% / 1%
May2005 / 20% / 0% / 20% / -2%
Aug2005 / 18% / 1% / 17% / -3%
Nov2005 / 21% / 1% / 20% / 3%
(b) Printers
Nov2004 / 11% / 3% / 8% / 3%
Feb2005 / 8% / 3% / 5% / -3%
May2005 / 9% / 2% / 7% / 2%
Aug2005 / 7% / 1% / 6% / -1%
Nov2005 / 9% / 1% / 8% / 2%
Table Two: Biggest LOSING Subcategories – Largest Projected 1Q Spending Decreases