We expect Canada's IT market to report moderate overall growth in 2014, and forecast a CAGR of 3% 2014-2018. Premium consumer hardware will remain a growth area, while we also expect enterprise adoption of cloud computing, real-time software and services and big data analytics to accelerate.
Headline Expenditure Projections:
- Computer hardware sales: CAD15.4bn in 2013 to CAD15.6bn in 2014, an increase of 1.4%. Demand for tablets is strong, particularly Apple's iPad, but with the tablet market approaching saturation we expect growth to slow from 2014.
- Software sales: CAD9.3bn in 2013 to CAD9.5bn in 2014, an increase of 2.7%. There is 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: CAD21.4bn in 2013 to CAD21.9bn in 2014, an increase of 2.6%. Emerging technologies such as real time enterprise services and data analytics are growing segment of the market, while cloud computing adoption is widening.
Key Trends And Developments
Cisco Systems is set to become a major local IT firm after announcing in December 2013 that its subsidiary Cisco Canada plans to invest up to CAD4bn (US$3.77bn) and generate employment opportunities in Ontario. Subsequently in March 2014 Cisco Canada announced it had selected Toronto as the site for one of four global Cisco Internet of Everything (IoE) Innovation Centres. This centre represents an investment of US$100mn in design and infrastructure, technology, staffing as well as operational costs for a period of 10 years. BMI believes the investment will strengthen Canada's position in emerging technologies around the IoE, and give Cisco greater access to major contracts in Canada's domestic market.
Enterprise spending on IT should be driven by hardware refreshes, datacentre consolidation and a growing interest in cloud computing. However, in the cloud computing market the issue of data security could limit adoption in the short term, with the market heavily reliant on US providers. Surveys in 2013 show Canadian enterprises already had concerns about cloud adoption with US companies, due to the Patriot Act, even before the revelations about the NSA activities and the European Parliament commissioned reports on the US Foreign Intelligence Surveillance Act. This was estimated to dent growth in 2013; however, there are an increasing number of local solutions appearing that will boost growth over the medium term.
Canada is a highly developed IT market with widespread adoption of products and solutions in the consumer, public and enterprise segments. The maturity of the market means growth rates will significantly underperform emerging markets, but in terms of spending per capita Canada will continue to be one of the most lucrative markets globally.