PRLog (Press Release)– May 07, 2011– Market Overview
The UK IT market is the largest in Europe and, despite fiscal retrenchment, is projected to grow at a CAGR of 6% over the 2011-2015 period. The overall outlook for UK IT spending in 2011 is one of cautious recovery, which lags that of some other major European markets.
BMI projects the addressable domestic market for IT products and services to reach US$84.6bn in 2011. In 2010, the UK IT market recovery was more anaemic than in most European IT markets, suggesting that uncertainty surrounds the strength of the UK economic recovery and the impending steep public sector budget cuts.
UK PC shipments slipped back into negative growth in the final quarter of 2010 due to a disappointing pre-Christmas shopping season. Surveys of UK businesses conducted in 2010 showed a trend of improved business sentiment, but budgets remain tight.
Industry Developments
The coalition government elected in May 2010 imposed a moratorium on new IT contracts of more than GBP1mn and announced its intention to renegotiate a number of existing contracts. However, conditions showed signs of gradual improvement in the latter part of the year, with some new managed services and systems integrations contacts being awarded.
However, the government's efficiency drive will also be a source of opportunities for IT suppliers as more public sector bodies look to utilise digital means to deliver services efficiently. The Home Offices Border Agency has announced plans to invest in new cost-saving technology. Services such as Job Seekers' Allowance applications and new business tax registrations are among those earmarked for digital delivery.
As the new government considers how to achieve savings in public sector IT expenditure, proposals have been advanced for a 'G-Cloud', which could support government IT needs from pooled datacentres to email, as well as a wide range of other applications.
Competitive Landscape
In September 2010, Atos Origin became one of the first IT services vendors to sign an agreement to restart its commercial activity with the UK government following the moratorium on new IT projects. In October 2010, Atos also announced that it had signed a GBP10mn five-year agreement with transport leader First Group to manage its datacentre and messaging services.
In the second half of 2010, the consumer notebook market weakened amid continued weak consumer sentiment. Acer saw its shipments drop by a double-digit year-on-year (y-o-y) factor in Q410, compared with the same period of 2009, which resulted in it losing first place to Hewlett-Packard (HP). Acer had made a steady rise in 2009, fuelled by the relatively robust demand for consumer notebooks, which is its strong suit.
Software-as-a-Service (SaaS) has become a major focus for vendors in the UK market. In July 2010, Microsoft announced a partnership with Japanese IT vendor Fujitsu to provide cloud application services in the UK market. Fujitsu will cooperate with Microsoft to offer services to deliver and manage solutions based on Microsoft's Azure platform for cloud computing.
Computer Sales
BMI forecasts the UK's addressable computer hardware market will be worth around US$20.3bn in 2011, up from an estimated US$19.3bn in 2010. Total PC revenues including notebooks and desktops are forecast at US$16.4bn and are projected to rise to US$20.5bn by 2015 at a compound annual growth rate (CAGR) of 6%.
UK PC shipments bounced back in H110, but the UK PC market recovery was less strong in some other European markets and in H210, back-to school and pre-Christmas sales were soft. The business segment recovery remained moderate. Tough government austerity measures we best rc helicopter buy sell market place re expected to restrain UK PC demand in 2011.
Software
In 2011, UK market software sales are projected by BMI at US$11.8bn and, despite the continuing climate of public and private sector budget constraints, revenues are expected to rise to US$14.7bn in 2015. The software CAGR for 2011-2015 should be in the region of 6%.
Businesses will remain cautious and the downturn may have had a lasting influence on the software market by encouraging adoption of SaaS. UK spending on cloud computing could double by 2014, with demand not only for business, but also for consumer applications such as those offered by Google.
Services
UK IT services spending is forecast to reach around US$52.4bn in 2011, up from US$50.3bn in 2010. The economic crisis and political uncertainty had a mixed impact on services spending in 2010, with most vendors reporting a sharp drop in public sector contracts, while there were signs of a revival in private sector IT services spending.
As of October 2010, around 300 public sector contracts were estimated to be under government review. Outsourcing is one of the main drivers of the IT services segment and its share of the IT market is likely to grow over BMI's forecast period as more organisations start business process outsourcing (BPO) and begin to outsource application functions.
E-Readiness
The UK has historically benefited from significant investments in network expansion and upgrades. Furthermore, various levels of network in remote control helicopter frastructure-sharing agreements have seen mobile services cover over 90% of the population. The broadband sector has also become more competitive, leading to investments in faster networks and better pricing for subscribers.
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