The total Canadian IT market was valued at US$42 billion in 2008. The computer hardware sector accounts for about 38 percent of the IT market, with a total market size of US$16.1 billion in 2008. According to the Information and Communications Technology Council, growth in the computer hardware sector has slowed to approximately 2.5 percent in 2007 and 2008, from a growth rate of 6.4 percent in 2006 due to intense pricing pressure.
Growth in this sector is expected to rebound and continue at a compound annual growth rate of 3.5 percent throughout the next three years and to reach a spending of over US$16.9 billion by 2010. The primary market drivers of growth in this sector will be new software applications and hardware replacement cycles.
The personal computer (PC) market is the largest sub-sector in the Canadian computer hardware sector and represents 43 percent of hardware spending. This sub-sector was valued at US$6.6 billion in 2006 and is expected to post an annual growth rate of 2.5 percent over the next three years to reach a total spending of US$7.1 billion by 2010.
The second largest sub-sector in the hardware market is 'other hardware' category that includes printers, handhelds, and other hardware-related items. This sector accounts for 35 percent of the hardware market. The spending in this sector was US$5.2 billion in 2006 and it is expected to have an annual growth rate of 4.9 percent between 2007 and 2010 when estimated spending to be reached is US$6 billion.
The multi-user hardware (server) market captures 13 percent of the total hardware spending with expenditures of US$1.9 billion in 2006. This sector is projected to grow at an annual rate of 3.6 percent with an estimated US$2.2 billion dollars of spending by 2010. Spending in the volume server category (multiple units) will be the main driver for the growth of this sector whereas growth in the sales of the mid-range servers will remain flat.
Finally, the smallest sub-sector in the hardware segment is storage hardware, accounting for only 8.9 percent of total hardware spending. This sector was valued at US$1.35 billion during 2006. It is estimated this sector will post an annual growth rate of 2.1 percent until 2010 when spending will reach US$1.4 billion. The main reason for the slowdown in this sector is the decline in the demand for direct attached storage and tape storage. However, the market for network attached storage and storage area networks is growing at a greater pace under this category.
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IDC Canada has identified a number of growth trends in Canada's hardware market. U.S. companies seeking to enter into Canada's computer hardware market may find opportunities in the following areas:
- In the PC market, the notebook, specifically netbooks, will continue to have the biggest share in the hardware market, while the sale of desktops will continue to decline.
- In the multi-user hardware or server market, volume servers will be the growth driver.
- In the storage sector, network attached storage and storage area networks will be the main growth area.
Canadian companies have a strong preference for vendors with a local presence either directly or through a partner. Selling through value added resellers, systems integrators or partnering with a Canadian-based IT company is a quick and cost-effective way to reach a large customer base. Alternatively, U.S. vendors may choose to have a direct presence in the Canadian market.
Recently the Federal Government of Canada updated the procurement process for IT infrastructure. The federal government is interested in "Green IT" such as recycling initiatives, power-management strategies and virtualized work environments.