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Apple – running out of new customers

February 5, 2016

Since 2003 Apple has shipped 1.8B devices – the equivalent of one for 30% of the world’s population (see the Figure for shipments by quarter). On average we gave it $39 each if you divide its $235b 2015 revenues by everyone in the world. But of course not everyone’s a customer: some of us have lots of Apple products – my family has 2 Macs, 3 iPhones, 2 iPads, 6 iPods at least. However it looks likely that it will see diminishing revenues in 2016 as it runs out of new people to sell to. In Q4 its revenues only grew by 2% and its iPhone shipments were ‘only’ 75M – up just 311k on Q4 2014. It also suffered the indignity of being overtaken by Google as the world’s highest valued company in January. Read more »

2016 IT and Communications predictions – the weakness continues

January 25, 2016

It’s that time of the year again.. time to look at the new year and make a few predictions. My forecasts cover those areas and themes that look most likely to prosper. As in 2015 the dramatic changes in exchange rates will make the market difficult. Market growth will continue to be affected by sovereign debt, austerity budgets and lower oil prices.

As always I wish you well as you navigate the ITC market. Let me know if you need any help as you draw up your business plans.

As always I’d like to thank all of those who have helped form my opinions over the years. Please give me any comments and ideas by email, twitter, etc.
Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 predictions 1 – The world ITC market declines by 1.2% to $5.8 trillion

January 25, 2016

In 2015 the market declined by 5.1%, so its unlikely to see a recovery in the year. My forecast is for a 1.2% decline, with the market reaching $5.8T. Performance by category will vary. In particular:

Software will grow 4.2% to $916B: although it lags in revenues, it will continue to delivery the highest profitability of all 4 categories
IT service will grow by 0.6% to $1.6T; the fastest growing segments will be IaaS and PaaS, although they will be only a fraction of the total revenue
Hardware will remain level at $1.2T; the decline in PCs and printers will be steeper than smart phones and tablets; wearables and 3D printers will grow fastest
Telecom service will decline by 1.3% to $2.1T; successful vendors will improve their efficiency and profitability by investing in virtualisation

All-in-all it’s not going to be a great year: the lack of growth will drive even more merger and acquisition activity than in 2015.

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 2 – EMEA and the Americas outgrow Asia Pacific – at least in constant dollars

January 25, 2016

The slackness of the market will also be apparent in region spending growth. In particular:

The Americas will outperform the others, growing by 0.5% to $2.3T; vendors will need to offer innovative products to persuade these sophisticate users to buy yet more technology
EMEA will grow by 0.3% to $1.7T; wildly varying exchange rates will make it difficult to assess which countries vendors should target
The market in Asia Pacific will decline by 4.6% to $1.8T; while there are many opportunities to expand in the smaller countries, the largest ones will disappoint many

In the following predictions I’ll take a look at the countries within each of these regions in turn.

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 3 – The USA grows faster than other American countries

January 25, 2016

The USA is by far the largest country market worldwide and within the Americas: in 2016 it will spend $1.7T – 28% of the world total. Growth will be 1.2% – better than other countries in the region. We need the US to grow in order to make up for the fall in spending in ‘growth’ markets, which will continue to be badly affected by the fall in oil prices.

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 4 – Turkey top, Russia bottom of EMEA growth (again!)

January 25, 2016

EMEA is a region full of country markets. Germany is the largest, followed by the UK. For the second year running I expect the strongest growth (3.8%) to be in Turkey and the steepest decline (-10.7%) to be in Russia. The lifting of sanctions on Iran will lead to growth (2.3%).

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 5 – Chinese spending declines in the lacklustre Asia Pacific market

January 25, 2016

Japan and China will be the two largest IT and communications markets in Asia Pacific. For the first time in a number of years I’m not predicting that the region will outgrow the Americas and EMEA: in fact I expect we’ll see a decline in spending in most countries. Even in China spending will decline by 2.4% to $351B.

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 6 – Raw storage and services drive Big Data growth

January 25, 2016

For an update to this data please click here. Over the last few years there’s been shift in spending away from storage arrays and towards raw storage. I expect this to continue in 2016. In total the market will grow by 2% to $115B, with the strongest growth in raw storage (+4.2%) and associated services (_4.4%). These moves are likely to accelerated by the merger of EMC and Dell later in the year. Although small, analytics software will also grow (+1.2%).

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 7 – Cloud Computing continues to surge – SaaS is the star

January 25, 2016

Cloud computing will grow by 13% to reach $354B. The strongest growth will be in SaaS (26.3%), which we count as part of the software market. IT services engage to build and manage private, public and hybrid clouds will grow by 16.3%, PaaS by 7.7% and IaaS by 8.1%. The shift towards cloud computing can be seen as the development of computing as a utility. Fewer companies will build and run their own datacenters, preferring to rely on service providers to provide applications.

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 8 – Applications dominate in the shift towards a ‘Software Defined’ future

January 25, 2016

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 9 – Small businesses spend more, consumers less in 2016

January 25, 2016

In 2016 I expect consumer spending to decline by 3.2% worldwide to reach $2.2T. Of the business sectors spending by small companies (those with 100 or fewer employees) will grow by 2.2%, while investment by medium businesses (those with between 100 and 1,000 employees) will decline by -0.2% and large ones (those with over 1,000 employees) by –2.2%. The decline in large company spending will be due in part by the continued adoption of cloud computing and other cheaper solutions than used hitherto.

Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2016 prediction 10 – Manufacturing and ‘Other’ lead among vertical markets

January 25, 2016

Total spending by businesses in 2016 will be $3.7B. I expect most of the traditional sectors to spend less than they did in 2015. Manufacturing and finance industries will spend 1.0% less, while government investments will drop by 0.6%. I expect retail spending to be the same ($0.7T) as 2015. The strongest growth will be in ‘other’ sectors, which includes Healthcare and Education.

&Navigate Our Expectations – overview 1 2 3 4 5 6 7 8 9 10

2015 predictions – how did we do?

December 14, 2015

monopoly1

It’s that time of the year again when I make predictions for the new year. As always I’m starting of with a self assessment of last year’s expectations. It was a funny year – especially as strong regional growth was wiped out at an international level by the fall of almost all currencies against the $US. Thus a growth in local business in both Asia Pacific and EMEA looked like a fall in dollars. Nevertheless I was quite accurate in capturing the main themes and developments of the It and Communications market. This is how I score last year’s efforts.

No.	My top 10 predictions	Score/10
1	ITC markets make up for lost ground, growing 1.6%	5
2	Asia Pacific outperforms EMEA and the Americas – China grabs the international initiative	10
3	Country growth best in Turkey, worst in Russia	5
4	Gaming wins, printing falls in the battle between offerings	10
5	The year of the Revenue Cloud – Cloud service grows 14.8%	10
6	Businesses outspend consumers in a ‘top down’ market	10
7	Industry Sectors – health and education lead, government lags	8
8	Software Defined strategies become vital, but remain political and divisive	9
9	Converged Infrastructure and Integrated Systems will embrace modular designs and Cloud integration	10
10	Users are ‘doing IT’ for themselves – death to the mega trend!	7

These scores combine to give my 2015 predictions an accuracy of 84% – better than the 79% we scored ourselves last year. As we address the coming year we’ll continue to look at relevant and measurable issues for the industry as a whole. If you’d like to get involved in the process – adding ideas or acting as an editor – please contact me at info@itcandor.com.

Enterprise networks up 3.7% in Q3 2015

December 11, 2015

Fir an update to this data click here. Today I want to look at developments in the network market. This is the largest sector of the IT world, but has been performing sluggishly. It is split roughly 66:33 between service provider and enterprise offerings. In the quarter the enterprise network market grew 3.6% to $13.4B and in the year was static at $52.2B. The service provider network market declined by 11.7% to $26.5B and in the year by 3.7% to $111B. The combined total of the network market was $40.0B in the quarter and $164B in the year. You’ll want to lean more about the market developments and shares in the year to the end of September.

Storage systems down 15.2% in Q3 2015

December 2, 2015

Those of you who are encouraged by the strength of the server market will be depressed to see that the storage systems market is down again – this time by 15.2% in the quarter to $6.8b and by 11.7% in the year to the end of September to 26.5b. Things weren’t much better in the disk drive market, where revenues were down even more (-25.6%) in the quarter and year (-12.7%). You’ll want to learn more about why this important enterprise IT sector is faring so badly. Read more »

The Server market stays level in Q3 2015

December 1, 2015

The server market is one of vital part of the enterprise IT market. In the quarter it fell very slightly (-0.1%) to reach $18.1b. In the year to the end of September it fared better – growing by 1.6% to $74b. You’ll want to know more about the changes in vendor shares and the evolution of operating systems and virtualisation. Read more »

Devaluation and the headache of assessing market growth

November 30, 2015

You’re going to have to get your best reading glasses for this… I wanted to share the discrepancies in each country’s market growth for the year to the end of September 2014 and 2015. The Figure shows the differences ranked by growth in constant dollars. The data is for IT and Communications n total as discussed in my last paper.
It’s evidence of the continued dramatic fall of local currencies and the difficulty of trying to judge how the market is doing. In almost all cases local growth was significantly higher than $US dollar growth due to the constant devaluation of currencies. The prize for the most extreme difference goes to Russia where a 45.3% growth in Roubles was a 10.5% decline in dollars. As always please contact me if you want to learn more.

The ITC market falls 3.2% to $1.6T in Q3 2015

November 27, 2015

It’s not a great year for the IT and Communications market. Yet again we saw a fall in revenues – by 3.2% in the quarter to $1.6 trillion and in the year to the end of September of 4.4% to $6.0 trillion. Net profits also fell – by 4.3% to $173 billion and 28.3% to $630 trillion respectively. At the end of the quarter vendors employed a total of 17.8 million employees. As in previous years I’m working to publish my predictions for the coming year: for the moment it looks as if the market will fall by just 0.5%, which is much better than the likely all of 4.6% for 2015.

The figure shows the growth of the market by category. IT service – driven on by a significant growth in Cloud offerings – has been doing best followed by hardware: both software and telecom service have been performing badly. You’ll want to learn more about what happened in the last quarter. Read more »

Dell set to buy EMC – Wow!

October 12, 2015

For Sally….

Today Dell announced that it has made a $67B bid to buy EMC. In the last year this would have given the new company a market share of 2.0% of the total $3.8T IT market – jumping over Microsoft into fifth place.

You’ll want to learn more about the implications. In the Figure we combine the revenues of Dell, EMC and VMware to produce the shares for the proposed new company – named ‘Dell*’ here. See our earlier analysis of Dell’s strategy. Read more »

Business sector and consumer IT spending trends

October 6, 2015

I think it’s a good time to look at the development of the IT market by customer size and type, which is an essential feature of ITCandor’s market model. It’s especially important to look at the potential to grow market share by cut across from consumer to business markets. In fact, over the last 8 quarters consumer spending has been remarkably constant at around 34% in quarters 1-3, rising to 35% of total IT spending in the fourth quarter (see Figure). Small businesses (those with 100 or fewer employees) accounted for 33.6% of total spending in the year, followed by large companies (>1k employees) at 21.8%; leaving medium sized companies (those with 100 to 1k employees) with 10.2% of the spending. You’ll want to think more about market shares and industry sector spending we discuss below. Read more »