Canada Information Technology Report Q4 2013 - New Market Report

From: Fast Market Research, Inc.
Published: Thu Nov 07 2013

Canadian IT spending is forecast to reach CAD46.0bn in 2013, a 1.8% increase over 2012's forecast, with the maturity of the market and relatively slow economic growth limiting expansion of the market overall. Nonetheless we expect Canada's IT market to remain in positive growth territory in 2013, and over the medium term to 2017 as emerging technologies such as cloud computing, machine-to-machine communications and Big Data boost spending levels. The retail hardware market will see continued growth due to demand for tablets and innovation in form factors including ultra-thin notebooks and hybrids/ convertibles. However, government spending will continue to be constrained by a focus on cutting costs, with cost reviews being conducted by Toronto and Ontario, but there have been a spate of large tenders, highlighting continued opportunities within the sector.

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Headline Expenditure Projections

Computer hardware sales: CAD15.3bn in 2012 to CAD15.4bn in 2013, an increase of 0.6%. Demand for tablets is strong, maintaining unit growth, however with the shift to relatively cheaper tablets through cannibalisation of notebook sales, increases in market value will be muted.

Software sales: CAD9.0bn in 2012 to CAD9.3bn in 2013, an increase of 2.4%. Enterprise software growth potential, however public-sector deficits will require vendors to provide a clear cost benefit if they are to secure sales growth.

IT Services sales: CAD20.9bn in 2012 to CAD21.4bn in 2013, an increase of 2.5%. Cloud computing market expected to continue gaining momentum as competition from local vendors increases. Emerging technologies such as real time enterprise services and data analytics are another growing segment of the market.

Risk/Reward Ratings: Canada's score was 70.3 out of 100.0. Canada ranks second in our latest RRR table, behind the US, but still ahead of Latin American giants such as Brazil and Mexico.

Key Trends and Developments

Canadian cloud computing vendors have been stepping up investments in the wake of the NSA PRISM scandal to tap into demand from enterprises no longer comfortable using US service providers. Enterprises have shown concern in surveys for several years about exposure to the Patriot Act if using US cloud providers, however, these concerns have been amplified by revelations around the NSA, as well as a report commissioned by the European Parliament which revealed in February 2013 that, according to the US Foreign Intelligence Surveillance Act (FISA), it is lawful in the US to conduct political surveillance on foreigners' data accessible in US clouds and hosted by US firms.

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