Tag: spending

Internet of things to become a trillion dollar business

internet of thingsAsia Pacific will lead the drive to widespread adoption of the internet of things (IoT), with a report estimated that spending will hit $1.3 trillion in 2019.

IDC said that represents a CAGR of 17 percent, with worldwide spending accounting for a not insignificant $698.6 billion this year.

Over 40 percent of the spend comes from Asia Pacific, followed by North America and Western Europe.

Part of the reason Asia Pacific is so buoyant is because in some countries IT infrastructure isn’t fully developed, meaning it’s easier to implement IoT technology.

Manufacturing and transportation represented the biggest spenders of IoT tech, with totals of $165.6 billion and $78.7 billion respectively.

Other sectors rapidly implementing the tech are insurance, healthcare and domestic implements, IDC said.

Mobile spending to be worth in the trillions

HTC smartphoneA report from the International Data Corporation (IDC) said that spending on mobile technologies will hit $1.2 trillion by 2019.

According to IDC, mobile use started with the idea to move employees from being bound to desktops to being mobile.

But that pattern has changed and now many enterprises use the technology to improve their efficiency.

IDC figures indicate that $901 billion was spent worldwide on mobile technologies last year, with wireless data and smartphones representing the bulk of the spend.

But by 2019 the sector will be worth as much as $1.2 trillion, with particular verticals using the technologies in different ways.

Jessica Goepert, a programme director at IDC, said: “It goes beyond providing a smartphone to the desktop worker. Instead, it’s about utilising mobile technology to increase sales, improve profitability and raise customer and employee satisfaction.”

Banks to spend a fortune on digital re-engineering

Old bankWhile, as we reported earlier, overall IT spending is predicted to decline during 2015, such a phenomenon is not uniform.

IDC said that American banks are expected to spend $16.6 billion on hardware, software, services and IT staff to make everything a lot more digital this year.

And the market analysis firm also predicts that such moves will continue at a compound annual growth rate of 10.4 percent right up until 2019.

The highest growth in spending will be on software and internal IT, while services will be a factor in growth too.

In five years, IDC predicts that one third of the IT budget at US banks will be dedicated to so-called “digital transformation”.

The banks have realised they need to say relevant to their individual and corporate businesses and that’s why they’re ready to splash the cash.

Part of the problem is that there are heavy burdens on the banks for compliance, risk, and security.

But, perhaps surprisingly, banks don’t have a lot of money to spend. But they’re going to spend it.

Government IT spending falls

cashWorldwide spending by national, federal and local government will fall by 1.8 percent to $431 billion in 2015.

And that has led Gartner to outline what it considers to be the 10 most important tech trends for governments so they don’t fall behind.

The first on its list is to have digitally literate employees from top to bottom, with the workplace being open, flat and democratic.

And government with multiple channels need to develop an overall strategy by radically redesigning service models.

Government agencies also need to provide open data programmes with Gartner estimating that by 2018 over 30 percent of digital government projects will treat data as open data.

Governments also need to create trusted citizen electornic IDs, and use edge analytics. They also need to provide interoperability between their own data and external agencies.

And they’ll also have to take account of the internet of things and hybrid cloud, suggesting Gartner believes they all have some way to go.

Semiconductor materials market declined in 2012

The global semiconductor materials market fell by two percent in 2012 compared to the same time in 2011, SEMI has found.

In its latest report, the global industry association for the manufacturing supply chain for the micro- and nano-electronics industries also found that the worldwide semiconductor revenues declined three percent.

Revenues of $47.11 also marked the first decline in the semiconductor materials market in three years, the association pointed out.

Total wafer fabrication materials and packaging materials were $23.38 billion, compared to  $24.22 billion in 2011.

However, 2012 marked a turn for packaging materials revenues, which for the first time  exceeded wafer fabrication materials revenues standing $23.74 billion in 2012 compared to $23.62 billion in 2011.

A substantial decline in silicon revenue contributed to the year-over-year decrease to the total semiconductor materials markets. For the third year in a row, SEMI highlighted Taiwan as the largest consumer of semiconductor materials with record spending of $10.32 billion due to its large foundry and advanced packaging base.

Materials markets in China and South Korea also experienced increases in 2012, benefiting from strength in packaging materials. The materials market in Japan contracted seven percent, with markets also contracting in Europe, North America, and elsewhere.

Semiconductor revenues decline in 2012

Worldwide semiconductor revenue has declined from this time last year, according to preliminary results from Gartner.

According to Gartner, revenue was$298 billion in 2012, compared to $307 billion in 2011. The top 25 semiconductor vendors’ revenue also saw a downturn with a decline of 4.2 percent.  Those companies had 68.2 percent of total revenue in 2012, compared with 69.2 percent in 2011.

Gartner conceded that its previous expectations had not been correct.  Earlier this year it had predicted the industry would show little growth in the early part of 2012, but order rates would creep up in the second half, paving the way for a recovery phase in 2013, but this proved to be wrong.

Instead, expected renewal did not occur in 2012, while third quarter order rates were below seasonal expectations, and guidance for the fourth quarter of 2012 forecast further declined.

The company blamed this on the uncertainty about the state of the economy, coupled with ongoing inventory overhang, which it claimed “sent ripples through the semiconductor industry”.

Steve Ohr, research director at Gartner, pointed out that the hardest hit areas included the PC supply chain, memory, analog and discrete components.

Ohr pointed out that the PC business, ordinarily a growth driver, was on a negative slope for the first time in many years, while PC production declined 2.5 percent in 2012.

Intel recorded a 2.7 percent revenue decline mostly due to poor PC sales. Despite this, the company did manage to cling onto first position in market share for the 21st consecutive year, capturing 16.6 percent of the 2012 semiconductor market, its best performance ever.

Samsung, at second place, saw its semiconductor revenue fall. Gartner said this was due to declines in its three major product areas, DRAM, NAND flash and system integrated circuit (IC).

It was better news for Qualcomm however, which rose three places to third position as a result of  its 29.6 percent growth, thanks to continued adoption of smartphones and the growth of 3G and LTE technology in emerging regions, such as China and India.

The only other top 10 semiconductor vendor to record positive growth in 2012 was Broadcom, which rose from the 10th to the ninth position with growth of 8.8 percent.

Worldwide wafer fab equipment spend drops in 2012

Sales of wafer fab equipment (WFE) spending dropped.

According to Gartner, the industry is on pace to total $31.4 billion in revenues this year, a decline of 13.3 percent from 2011 spending of $36.2 billion.

The analyst house said that while the market would improve in 2013, it would not return to positive growth, with WFE spending projected to total $31.2 billion, a 0.8 percent decline from 2012.

However, there seems to be some light at the end of the tunnel, with the company claiming that in 2014 the market would return to growth. It predicts that it will, probably,  increase 15.3 percent to surpass $35.9 billion.

According to Bob Johnson, research vice president at Gartner, the outlook for the semiconductor equipment markets had deteriorated because the macro economy had weakened.

He said WFE started off the year strong, as foundries and other logic manufacturers ramped up sub-30-nm (nanometer) production. However, he warned demand for new equipment logic production “would soften as yields improve, leading to declining shipment volumes for the rest of the year.”

According to Gartner, wafer fab manufacturing capacity utilisation will decline into the low 80 percent range by the end of 2012 before slowly increasing to about 87 percent by the end of 2013.

It added leading-edge stuff will return to the high 80 percent range by the second half of 2012, and move into the low 90 percent range through 2013, providing for “a somewhat positive capital investment environment”.

Gartner believes that memory will continue to be weak through 2012, with strong declines in DRAM investments and a virtually flat NAND market. By rubbing its crystal ball its analysts forsee a modest growth pattern beyond 2012 with normal, but relatively benign, cyclical fluctuations as the industry returns to mid-single-digit growth in device revenue, and capital investment responds accordingly.

And it’s not much better for foundry capital spending, which has been revised by the company downward for 2012 and 2013 due to an earlier yield improvement on 28 nm technology achieved by some foundries and a higher downside risk of wafer demand in the fourth quarter of 2012 and first quarter of 2013.

It said foundries will likely tighten their short-term capex when they experience a more than 10 percent reduction of the fab utilisation rate later in 2012.

Wafer demand will drop for several quarters due to the revised downward semiconductor device outlook and the earlier success on yield improvement of 28 nm low-power polysilicon silicon oxynitride (SiON) technology achieved by some key foundries, although the yield of 28 nm high-k metal gate (HKMG) remains below normal.

Slight sales slump sees Infineon cut spending

German semiconductor powerhouse Infineon has committed to cutting its spending as demand for its chips dries up which is knocking the company’s sales and profitability.

Shares rose by 5.6 percent on the announcement. As Infineon gets together its programme of “sharply” cutting spending, it has also frozen its headcount, worldwide. Investment cuts will beging in Infineon’s fiscal year beginning 1 October.

Niels de Zwart, ING Groep NV Amsterdam analyst, told Bloomberg that the company has plenty of capacity to meet current demands, which should ease the transition from Peter Baeur as CEO to Reinhard Ploss, who will take up position as chief exec at the beginning of the new fiscal year. Baeur is stepping down because of ongoing health problems.

De Zwart said that Infineon’s outlook is positive considering it is reacting and adapting its model to the current economic climate. According to De Zwart, the company has enough capacity to keep operations running through 2013 as well as enough flexibility for more investments if necessaray, for example, in the case of unexpected higher demands.

Investments for 2012 are looking a lot like 2011 – that is, roughly around $1 billion – including property purchases, internally generated assets, plant and equipment purchases, and intangible asset purchases.

Infineon estimates its operating margin to shrink between 13 and 14 percent this year compared to 2011, and sales are expected to drop three percent from 2011’s 4 billion euros. It expects Q4 operating profit to make up roughly 12 percent of sales, down 0.7 percent from the third quarter. 

Technology industry hits rock bottom

Gartner has been adding up the numbers and dividing by its shoe size and claims that growth in technology spending by companies and the public sector is stabilising.

However, Big G warns that although things are stable activity is at much lower levels than last year. It puts the blame on the fact that everyone is worried about the economy, particularly in Europe.

The report’s author Richard Gordon, research vice president at Gartner, told Bloomberg that while the challenges facing global economic growth persist the outlook has at least stabilised.

In other words things probably are not going to get any worse.

Gartner now expects global IT budgets to rise 3.0 percent this year to $3.6 trillion, instead of a previously forecast 2.5 percent gain.

That compares with a 7.9 percent rise in spending in the sector last year, Gartner said.

Growth is slowing in all businesses including computing hardware, enterprise software, IT services, telecom equipment and telecom services.

Even the $1.7 trillion telecom services market will see growth will slow to 1.4 percent this year from six percent seen in 2011, Gartner said.

It looks like the only thing that will grow significantly is cloud based services. 


SMEs ride to the rescue of government IT plans

Medium sized IT companies ought to be given a chance to tender for IT plans for government departments, particularly after the cock ups damned in a report last week.

That’s what Andrew Gilbert, MD of Node4 thinks anyway.

The report pointed out that too many governments have relied in the past on a small group of large IT suppliers – a desktop PC that costs £3,500 although unusually high priced to you and me, was common fare when supplied by the cosy cartel to the civil servants.

Gilbert said that the tendering process should be urgently reviewed and claimed that would “dramatically improve” IT services. The report suggested that government departments shift to smaller companies to improve their services and keep a better handle on their costs.

Gilbert said that tax payers would benefit from using SMEs rather than the big boys.

Node4 is an SME.