Canada Q4 Information Technology Report Now Available
The Q4 Canada Information Technology Report from Research and Markets, which provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Canada’s information technology industry is now available for purchase for approximately $780.00 (581.00 EUR). Here is a summary of what is contained in the report, but you can receive a sample of the actual report by registering on the Research and Markets site.
Market Overview
The Canadian addressable domestic market for IT products and services is projected by BMI to reach US$41.4bn in 2010 and US$47.5bn by 2014. Canada PC sales grew strongly in H110, with unit sales estimated by BMI at more than 3mn units, and new outsourcing and IT services contracts in the public and private sectors pointed to underlying demand potential.
In our core IT forecast scenario, market growth will be around 10% in 2010 and advance at a compound annual growth rate (CAGR) of 3.6% over our five-year forecast period. Government spending in 2010 will be constrained by a focus on cutting costs, but a stimulus measure allowing business taxpayers to expense all of the value of their investment in computers and systems in one year is forecast to provide a boost to the IT market over the next two years.
The government’s digital economic strategy provides a framework for IT market growth, with a number of two-year programmes having been confirmed in the federal 2010 budget. Meanwhile, the consumer segment remains a bright spot, with a steadily improving unemployment situation supportive of consumer confidence.
Industry Developments
In its 2010 budget, delivered in March, the Canadian government confirmed plans to launch a digital economy strategy. In the 2009 budget, the government announced several two-year programmes, and much of the budget this year was focused on the roll-out of these existing plans rather than new funding initiatives. Among the initiatives confirmed from 2009 was Broadband Canada, which received US$225mn of funding over three years.
In the 2009 budget, the government introduced a subsidy for business computer hardware purchase, which is expected to have a major impact on the IT market. The measure proposed a 100% capital cost allowance rate for computer hardware and systems software acquired between January 27 2009 and February 1 2011. It has been estimated the measure could provide a US$700mn boost to the information and communication technology (ICT) market.
Competitive Landscape
International vendors dominate the Canadian PC market. HP, Acer and Dell were the leading vendors in Q210, ahead of rivals such as Toshiba and Lenovo. Telecoms operators have emerged as one significant channel for PC sales. This year, Canadian telecoms companies competed to offer bundling deals involving Apple’s iPad. Rogers and Bell both offered plans that gave users 250MB of data for CAD15 per month, as well as a high-end plan of 5GB of data for CAD35 per month.
IT services vendors in the Canadian market reported a pick-up in projects in H110, with a boost from tenders delayed from 2009. In May, US giant IBM announced it had won an IT infrastructure operations and hosting contract from Canada’s largest cooperative financial group Desjardins Group. Meanwhile, IBM also signed a CAD130mn five-year agreement with the Greater Toronto Airports Authority to create a more efficient transport system.
The pick-up in project flow also brought opportunities for leading local market service provider CGI Group, which recorded some big project wins. In August, CGI announced it had signed a six-year $46.2mn contract with eHealth Ontario, an Ontario government agency. This followed another highprofile success for CGI in July 2010, when the company announced it had won a multi-million dollar contract renewal from financial services giant Manulife.
Computer Sales
The government’s stimulus measure allowing business tax-payers to expense all of the value of their investment in computers and systems in one year is expected to have a major impact on the PC segment over the next two years.
PC volume sales were around 5.5mn units in 2009, with sales down from 2008 as businesses and consumers deferred purchases. Sales dropped off sharply in the first half of the year, with a double-digit decline in desktop sales.
Software
In 2010, Canadian market software sales are projected by BMI at US$8.1bn and, despite the uncertain economic conditions, revenues are expected to rise to US$9.7bn in 2014. Software CAGR during 2010- 2014 should be around 4.8%. With the economic crisis having an impact in both public and private sectors, some vendors reported a further slowdown in 2009.
Given the uncertain economic environment and large deficits faced by the Ontario government, vendors will need to provide clients with ways to reduce costs by increasing efficiency. At the same time, the software market will be influenced by a continued move towards distributed computing, software-as-aservice (SaaS) and service-oriented architectures. Governments at all levels are also expected to be a growing market for cloud computing services.
Services
Canadian IT services spending is forecast to reach around US$18.9bn in 2010, up from US$17.3bn in 2009. The economic crisis and political uncertainty had an impact on services spending in 2009, with projects being put on hold. The market is projected to pass US$22.0bn by 2014. The economic situation meant reduced spending in the two largest IT spending verticals, government and financial services. Vendors reported the government had developed greater caution around large IT projects, due in part to budget overruns and failures in the past, as well as fiscal restraint.
E-Readiness
The Canadian broadband market appeared unaffected by the recession and strong growth was recorded by most service providers in 2009. There remains a considerable number of fixed lines in service and fixedline operators are deploying fibre and WiMAX platforms. However, many operators balk at the cost of building out infrastructure to under-served areas.
Canada’s penetration rate for mobile services remains well below that of comparable developed markets, and this is expected to remain the case for at least the next five years, even taking into the account increased competition as new players finally enter the market. However, 3G has been available in some form for several years. Faster speeds and more bandwidth-heavy applications mean operators must move quickly to roll out platforms that offer high-speed connectivity in line with demand from subscribers.
