An overall slowdown in Canadian IT spending will be offset by an inevitable replacement cycle, IDC Canada analysts predicted in its Future of the Canadian IT and Communications Market Forecasts 2003-07 recently.
The Toronto-based research firm says it expects $35 billion to be spent on IT over
the next five years, with the country’s IT market facing a compounded annual growth rate (CAGR) of 2.5 per cent. This is down from historical highs of eight to 12 per cent in the past.
“”We now see a one-to-one relationship between the IT market and GDP (gross domestic product) growth,”” said Vito Mabrucco, vice-president for IDC Canada. “”It may not be as a boom . . . but hardware will have to replaced over time, and that will drive software and services markets.””
Mabrucco said IDC expects IT investment plans to continue to recover despite two years of negative business growth. There’s a clear need among companies to invest in infrastructure upgrades in 2003. The previous boom in IT spending remains fresh in people’s minds and that it’s unclear whether end-users believe more IT investment is necessary this year, he said.
Eddie Chan, the firm’s PC market analyst, said desktops accounted for 78 per cent of total PC shipments in 2002. “”On a total PC spend-basis, desktops represented 68 per cent in 2002,”” Chan said. “”Looking forward to 2007, desktops are forecasted to increase to 75 per cent of total PC shipments and 60 per cent of total PC spending.””
Chan cited the mobile computing trend as an inhibitor to the desktop PC market as computing habits are continuing to change.
Security of WLANs remain a concern and could slow mobile market adoption, Chan says, but the WPA (WiFi Protect Access) specification released recently is viewed as an intermediate step towards the adoption of the 802.11i standard, slated for release in September.
Also, IDC analyst Alan Freedman said opportunities for servers and storage in the small- and medium-sized business segment is estimated to grow at a CAGR of seven per cent, mid-range enterprise at four per cent, and high-end enterprise will decline at minus-seven per cent from 2003-07.
“”Customers are still looking at short-term requirements . . . they’re looking in the near term to only buy what they need through the next few months,”” he said. “”We don’t see spending patterns changing until at least the fourth quarter of 2003.””
Affordable technology, such as Linux, Blades and IA64 is driving the server market, Freedman said. Linux is projected to have a GAGR of 25 per cent, Blades 103 per cent, and IA64 58 per cent from 2003-07.
However, the lower cost of these technologies is removing revenue from the Canadian server market place, he said.
Software storage management is driving the storage market, Freeman said, as network storage is gaining traction (storage area networks and network attached storage) accounting for 44 per cent of revenues in 2003 and will comprise 73 per cent of storage revenues by 2007.