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Corporate IT Spending is Weak - But Research In Motion Blows Away the Smart Phone Market CompetitionCopyright © 2008 Paul CartonResearch In Motion Blows Away the Competition - Even As Overall IT Spending Remains Soft Defying an otherwise soft IT spending environment, Research In Motion (RIMM) is continuing to blow away the competition - expanding on its already vast share of the corporate smart phone market. While corporate IT spending is far less robust elsewhere, after a long and unsettling decline there are signs the spending slowdown may be stabilizing. First, the good news from ChangeWave's May survey of 2,049 respondents involved with IT spending in their organization: It's all about smart phones. Research In Motion Destroys the Competition In extraordinarily upbeat results for Research in Motion (76%; up 3-pts), the Canadian BlackBerry maker is expanding its already vast lead in the corporate smart phone market - even as number two Palm (PALM; 17% - down 1-pt) continues its long term decline. Looking ahead at 3rd Quarter planned corporate purchases, RIM has overwhelming momentum, with 82% of respondents buying smart phones next quarter saying they’ll purchase BlackBerries - a 5-pt jump since the previous survey in February. “When you’re hot, you’re hot, and the latest results for RIM are scorching,” said Tobin Smith, founder of ChangeWave. “If every product had such market dominance, it would be easy to pick the winners in each space,” added Smith. The Apple iPhone (AAPL; 13%) now ranks second in terms of planned corporate purchases, up 2-pts from previously - while Palm continues to languish with a miniscule 8% of future purchases. Meanwhile, despite RIM's upbeat results in the smart phone market, overall corporate IT spending remains anemic and there are very few signs of an uptick going forward - pointing to continued economic weakness for the 2nd half of the year. IT Spending Soft But Stabilizing After a long and unsettling decline, there are signs that the corporate IT spending slowdown - while still soft - may be stabilizing. When asked if their overall IT spending was on track thus far in the 2nd Quarter, 11% of respondents said their company had spent “More than Planned” - up 1-pt since February. Another 27% say they’ve spent “Less than Planned” - unchanged from previously. Thus, current IT spending remains at virtually the same lowered level that it was in the previous quarter - although it's a positive sign that things haven't gotten any worse. Looking ahead to the 3rd Quarter, nearly one-in-four respondents (24%) say their company's IT spending will decrease (or there'll be no spending at all). That's 1-pt worse than the previous survey. In addition, only 15% say spending will increase - unchanged from previously. The softness in projected spending is occurring across companies of all sizes, although once again things have stopped getting worse - another sign that things have at least temporarily begun to stabilize. But the big question is - when are things actually going to get better? Bearish on the 2nd Half We asked respondents about their IT spending outlook for the entire second half of 2008 (July-December), and 28% think their IT budget will be less than first half of 2008 - a whopping 8-pts worse than previously. Only 18% think their company's IT budget will be greater than it was in the first half of 2008. Another 44% say their IT budgets will remain the same. Thus, while the slowdown in corporate IT spending may be finally stabilizing, these results point to continued economic weakness for the 2nd half of the year. At the very least, the ChangeWave findings provide little support for the thesis that a V-shaped U.S. economic recovery will occur in the 3rd Quarter. Rather, they strongly suggest that businesses will continue to maintain a wait and see mode regarding capital spending - possibly until the November elections. Research In Motion's success in the smart phone market, however, remains one extraordinary bright spot in the IT economy. The BlackBerry smart phone maker appears likely to enjoy one of its best quarters ever. About The Author:
*** Digital Reprint Rights *** *** Author Notification *** We ask that you notify the author of publication of his or her work. Paul Carton can be reached at: agolub@changewave.com *** Print Publication Reprint Rights *** If you desire to publish this article in a PRINT publication, you must contact the author directly for Print Permission at: agolub@changewave.com
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