Changewave Research: Corporate IT Spending

ChangeWave Research: Corporate IT Spending

Corporate IT Spending Outlook

Latest Survey Shows IT SpendingRapidly Stabilizing – 90 Day Outlook Registers Dramatic Improvement

Overview: Last quarter we saw a leveling off in the rate of decline. But our latestsurveyshows U.S. corporate IT spending in the process of rapidly stabilizing – with a dramatically improved outlook now in place for the 3rd Quarter.

A total of 1,849 respondents involved with IT spending in their organization participated in the May 11-20ChangeWave survey.

Dramatically Improved Outlook: While one-in-four respondents (24%) say their company’s IT spending will decrease (or there will be no spending at all) for the 3rd Quarter, that’s a major 17-pt improvement since our February survey. Another15% report their company's IT spending will increase –a 5-pt improvement and, most importantly, the first recorded uptick in a ChangeWave survey in two and one-half years.

Current 2nd Quarter Spending: We also askedrespondentsif their IT spending was on track thus far in the 2nd Quarter, and the results show smaller but unmistakable signs of improvement.

One-in-ten respondents (11%) now say they’ve spent “More than Planned” so far in the 2nd quarter – 4-pts better than our February survey. And while 33%say they’ve spent “Less than Planned” – that’s a 5-pt improvement from previously.

In a follow-up question we asked respondents to rate the current willingness of their company to spend money on IT products and services. Nearly one-in-four (23%) say their company is giving a "Green Light" to IT spending (i.e., spending is normal) – a 5-pt improvement from the previous quarter.

A Jump in Corporate PCs and Servers. There are signsof momentum in corporate purchasing of PCs and Servers. Of the 13 IT categories looked at in this survey, PCs (Change in Net Difference Score = +6) and Servers (+5) registered the biggest increase by far since the previous quarter.

We’ll take a close-up look at corporate PC and Server purchasing trends – including the outlook for Dell, Hewlett-Packard and Apple – in an upcoming ChangeWave report.

Corporate Smart Phones

Research In Motion Holds Its Lead: In terms of current share, Research in Motion(RIMM; 74%; unchanged) continues tomaintainits huge lead over the rest of its rivals in the corporate smart phone market.

Apple (AAPL; 20%) remains in second place, unchanged from February. We note that most of Apple’s corporate share is among small- to medium-sized companies (under 1,000 Employees), while RIM’s corporate share is heavily concentrated among larger companies (over 1,000 Employees).

Planned Smart Phone Buying:Looking ahead, corporate smart phone buying appears set toregain momentum in the third quarter. A total of 36% of respondents report their company plans to buy smart phones next quarter – a 3-pt increase from previously.

In terms ofmanufacturers, RIM (75%) maintains its dominant share of corporate planned purchases going forward, but we note that it’s down 2-pts since February. Apple (26%; up 4-pts) continues toshow surprising momentum in the corporate market– once again among small to medium-sized businesses.

Bottom Line: ChangeWave's latest survey showsU.S. corporate IT spending in the process of rapidly stabilizing – with a dramaticallyimproved outlook now in place for 3rd Quarter 2009.

Several bullish indicators – including the firstrecorded uptick in planned IT spending in two and one-half years – signal theU.S. business recession could be over before 2009 comes to a close.

Along withApple and Research In Motion, other companies showing momentum based upon our survey findings include Cisco (CSCO; +4), VMware (VMW; +4), Microsoft (MSFT; +3) and Oracle (ORCL; +1).

The ChangeWave Research Network is a group of 20,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. They are credentialed professionals who spend their everyday lives on the frontline of technological change. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

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Table of Contents

Summary of Key Findings...... 5

3rd Quarter 2009 Visibility...... 5

Projected IT Spending For Next Quarter: Sep ’01 – May ‘09...... 5
IT Spending for Next Quarter – By Company Size...... 6

2nd Quarter IT Spending

IT Spending Thus Far in Current Quarter (2Q 2009)...... 6

Green Light Spending...... 7

Willingness to Spend on IT Products & Services...... 7

A Closer Look at 2nd Half 2009...... 7

Looking Ahead – IT Budget for Next Half...... 7

IT Spending Categories...... 8

Corporate Smart Phones ...... 10

Spending for Specific Vendors...... 12

ChangeWave Research Methodology...... 13

About ChangeWave Research...... 13

I. Summary of Key Findings

A total of 1,849 respondents involved with IT spending in their organization participated in the May 11-20 ChangeWave survey.

Dramatically Improved Outlook: While one-in-four respondents (24%) say their company’s IT spending will decrease (or there will be no spending at all) for the 3rd Quarter, that’s a major 17-pt improvement since our February survey. Another 15% report their company's IT spending will increase – a 5-pt improvement and, most importantly, the first recorded uptick in a ChangeWave survey in two and one-half years.

While projected IT spending for the 3rd Quarter is still negative, it has improved across companies of all sizes.

Projected IT Spending for Next Quarter (3Q 2009) – By Company Size

Current 2nd Quarter Spending: We also askedrespondentsif their IT spending was on track thus far in the 2nd Quarter, and the results show smaller but unmistakable signs of improvement.

Willingness to Spend:In a follow-up question we asked respondents to rate the current willingness of their company to spend money on IT products and services. Nearly one-in-four (23%) say their company is giving a "Green Light" to IT spending (i.e., spending is normal) – a 5-pt improvement from the previous quarter.

While another 73% say their company has a “Yellow/Red Light" to spend on IT– this is also a6-pt improvement.

Further Signs of Hope for 2nd Half 2009:In another bullish sign, when we looked at 2nd half 2009 (Jul-Dec), 20% think their company’s budget will be greater than the 1st half, a 6-pt improvement since the previous survey.

A total of 23% think their company’s IT budget will be less than 1st half–5-pts improved.

IT Spending Categories

For which of the following main IT spending categories - if any - have you spent more than planned thus far in the 2nd Quarter? (Check All That Apply)

Current Survey May ‘09 / Previous Survey Feb ‘09 / Previous
Survey
Nov ‘08 / Previous
Survey
Aug ‘08 / Previous
Survey
May ‘08
PCs / 9% / 6% / 7% / 10% / 9%
Servers / 7% / 5% / 6% / 7% / 7%
Security / 7% / 5% / 5% / 7% / 6%
Storage / 6% / 6% / 5% / 6% / 7%
Software: Enterprise Applications / 5% / 5% / 3% / 5% / 5%
Application Development Software/Tools / 5% / 4% / 4% / 5% / 5%
Software: Platforms/Operating Systems / 4% / 3% / 3% / 5% / 3%
Networking / 4% / 4% / 5% / 6% / 6%
Virtualization / 4% / 3% / 2% / 4% / 4%
Communications / 3% / 2% / 2% / 3% / 4%
Outsourced IT Services: Systems Integration/ Implementation / 3% / 3% / 4% / 4% / 4%
Outsourced Application Management/Software-as-a-Service (SaaS) / 2% / 1% / 1% / 1% / NA
Business Process Outsourcing/Hosting (BPO) / 0% / 1% / 0% / 1% / NA
Don't Know / 24% / 24% / 27% / 25% / 29%
Other / 7% / 8% / 7% / 6% / 6%

And for which of the following main IT spending categories – if any – have you spent less than planned thus far in the 2nd Quarter? (Check All That Apply)

Current Survey
May ‘09 / Previous Survey
Feb ‘09 / Previous
Survey
Nov ‘08 / Previous
Survey
Aug ‘08 / Previous
Survey
May ‘08
PCs / 17% / 20% / 20% / 15% / 14%
Servers / 11% / 14% / 12% / 11% / 10%
Software: Enterprise Applications / 9% / 11% / 12% / 8% / 7%
Software: Platforms/Operating Systems / 8% / 10% / 11% / 8% / 9%
Application Development Software/Tools / 8% / 11% / 11% / 8% / 7%
Networking / 8% / 9% / 8% / 6% / 6%
Storage / 8% / 9% / 9% / 8% / 7%
Outsourced IT Services: Systems Integration/ Implementation / 8% / 9% / 10% / 7% / 7%
Security / 5% / 6% / 5% / 4% / 5%
Communications / 5% / 6% / 6% / 5% / 4%
Virtualization / 5% / 6% / 7% / 5% / 4%
Outsourced Application Management/ Software-as-a-Service (SaaS) / 4% / 5% / 5% / 3% / NA
Business Process Outsourcing/Hosting (BPO) / 3% / 5% / 4% / 3% / NA
Don't Know / 26% / 24% / 27% / 28% / 31%
Other / 5% / 4% / 4% / 4% / 4%

Change in Net Difference Score: Current Survey (May ‘09) vs. Previous Survey (Feb ‘09)

Overall IT Spending Categories / Current
Survey
Net
Difference
Score
(Feb ’09) / Previous
Survey
Net Difference
Score
(Feb ’09) / Change
in Net
Difference
Score
PCs / -8 / -14 / +6
Servers / -4 / -9 / +5
Application Development Software/Tools / -3 / -7 / +4
Security / +2 / -1 / +3
Software: Platforms/Operating Systems / -4 / -7 / +3
Virtualization Software / -1 / -3 / +2
Communications / -2 / -4 / +2
Outsourced Application Management/ Software-as-a-Service (SaaS) / -2 / -4 / +2
Software: Enterprise Applications / -4 / -6 / +2
Storage / -2 / -3 / +1
Business Process Outsourcing/Hosting (BPO) / -3 / -4 / +1
Networking / -4 / -5 / +1
Outsourced IT Services Systems Integration/ Implementation / -5 / -6 / +1

A Jump in Corporate PCs and Servers. There are signsof momentum in corporate purchasing of PCs and Servers. Of the 13 IT categories looked at in this survey, PCs (Change in Net Difference Score = +6) and Servers (+5) registered the biggest increase by far since the previous quarter.

We’ll take a close-up look at corporate PC and Server purchasing trends – including the outlook for Dell, Hewlett-Packard and Apple – in an upcoming ChangeWave report.

PCs:

II. Corporate Smart Phone Market

Research In Motion Holds Its Lead: In terms of current share, Research in Motion (RIMM; 74%; unchanged) maintains its huge lead over the rest of its rivals in the corporate smart phone market. Apple (AAPL; 20%) remains in second place, unchanged from February.

We note that most of Apple’s corporate share is among small- to medium-sized companies (under 1,000 Employees), while RIM’s corporate share is heavily concentrated among larger companies (over 1,000 Employees).

Palm (PALM; 10%) is now at an all-time low, possibly due to users waiting for the upcoming Palm Pre release.

(1) Who is the manufacturer of the current Smart Phones your company provides? (Check All That Apply)(n=736)

Current Survey May ‘09 / Previous Survey Feb ‘09 / Previous
Survey
Nov ‘08 / Previous
Survey
Aug ‘08 / Previous
Survey
May ‘08
Research In Motion (e.g., RIM/Blackberry) / 74% / 74% / 76% / 77% / 76%
Apple (e.g., iPhone) / 20% / 20% / 14% / 9% / 6%
Palm (e.g., Treo, Centro) / 10% / 12% / 11% / 15% / 17%
Motorola (e.g., Krave, Q) / 7% / 7% / 6% / 9% / 10%
Nokia (e.g., N95) / 6% / 6% / 5% / 7% / 5%
Samsung (e.g., BlackJack, Instinct) / 6% / 6% / 6% / 6% / 6%
HTC (e.g. Touch, Tilt, Dash) / 5% / 7% / 6% / 6% / 5%
LG (e.g., Dare, Incite) / 2% / 2% / 1% / NA / NA
T-Mobile G1 (e.g., Android) / 1% / 1% / 1% / NA / NA
Other / 2% / 3% / 4% / 4% / 3%

Current Share: Apple vs. RIM Breakdown by Company Size

Current Survey (May’09)

1-10 Employees / 11-100 Employees / 101-1,000 Employees / Over 1,000 Employees
Apple (e.g., iPhone) (n=148) / 28% / 39% / 14% / 19%
Research In Motion (e.g., RIM/Blackberry) (n=542) / 11% / 17% / 18% / 53%

Planned Smart Phone Buying: Looking ahead, corporate smart phone buying appears set toregain momentum in the third quarter. A total of 36% of respondents report their company plans to buy smart phones next quarter – a 3-pt increase from previously.

In terms ofmanufacturers, RIM (75%) maintains its dominant share of corporate planned purchases going forward, but we note that it’s down 2-pts since February. Apple (26%; up 4-pts) continues toshow surprising momentum in the corporate market – once again among small to medium-sized businesses.

We note that Palm (6%) is registering a 1-pt uptick from the all-time low recorded in the previous survey.

(2) (FOR THOSE COMPANIES BUYING SMART PHONES IN 2ND QUARTER 2009) Who is the manufacturer of the Smart Phones your company is planning on buying? (Check All That Apply)(n=622)

Current Survey May ‘09 / Previous Survey Feb ‘09 / Previous
Survey
Nov ‘08 / Previous
Survey
Aug ‘08 / Previous
Survey
May ‘08
Research In Motion (e.g., RIM/Blackberry) / 75% / 77% / 78% / 79% / 82%
Apple (e.g., iPhone) / 26% / 22% / 22% / 17% / 13%
Palm (e.g., Treo, Centro) / 6% / 5% / 5% / 6% / 8%
Motorola (e.g., Krave, Q) / 5% / 5% / 5% / 5% / 6%
Nokia (e.g., N95) / 5% / 6% / 4% / 5% / 4%
Samsung (e.g., BlackJack, Instinct) / 5% / 5% / 5% / 5% / 5%
HTC (e.g. Touch, Tilt, Dash) / 4% / 6% / 3% / 4% / 4%
LG (e.g., Dare, Incite) / 2% / 2% / 1% / NA / NA
T-Mobile G1 (e.g., Android) / 1% / 2% / 2% / NA / NA
Other / 1% / 2% / 2% / 2% / 1%

III. Spending for Specific Vendors

Along withApple and Research In Motion, other companies showing momentum based upon our survey findings include Cisco (CSCO; +4), VMware (VMW; +4), Microsoft (MSFT; +3) and Oracle (ORCL; +1).

Question Asked: Looking at your company's 3Q 2009 IT Spending plans, please tell us if your company will increase their spending with each of the following vendors, decrease their spending, or will spending remain the same in the 3rd quarter compared to the 2nd Quarter?

Increase / Decrease / Net
Score / Change in Net
Score / No Change / Not Planning to Purchase in 3Q 2009, BUT Considering for Future Purchases / Not Planning to Purchase Ever / Don't Know/
No Answer
Cisco / 9% / 5% / +4 / +7 / 30% / 14% / 15% / 27%
VMware / 7% / 3% / +4 / +6 / 18% / 10% / 27% / 34%
Microsoft / 14% / 11% / +3 / +10 / 38% / 13% / 3% / 21%
Oracle / 7% / 6% / +1 / +4 / 22% / 8% / 27% / 30%

IV. ChangeWave Research Methodology

The current findings are based on a survey of ChangeWave Research Network members involved with IT spending in their organization, conducted May 11-20, 2009. The goal of the survey was to get an up-to-date picture of IT spending for the 3rd Quarter of 2009. To this end, the survey was composed of a sample of 1,849accredited members.

ChangeWave's proprietary research and business intelligence gathering system is based upon the systematic gathering of valuable business and investment information directly over the Internet from accredited members.

The Research Network is assembled from senior technology and business executives in leading companies of select industries. Nearly 3 out of every 5 members (56%) have advanced degrees (e.g., Master's or Ph.D.) and 93% have at least a four-year bachelor's degree.

The business and investment intelligence provided by ChangeWave provides a real-time view of companies, technologies and business trends in key market sectors, along with an in-depth perspective of the macro economy – well in advance of other available sources.

V. About ChangeWave Research

ChangeWave Research, a subsidiary of InvestorPlace Media, LLC, identifies and quantifies "change" in industries and companies through surveying a network of thousands of business executives and professionals working in more than 20 industries.

The ChangeWave Research Network is a group of 20,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. They are credentialed professionals who spend their everyday lives on the frontline of technological change. ChangeWave surveys its Network members weekly on a range of business and consumer topics, and converts the information into a series of proprietary quantitative and qualitative reports.

ChangeWave delivers its products and services on the Web at

ChangeWave Research does not make any warranties, express or implied, as to results to be obtained from using the information in this report. Investors should obtain individual financial advice based on their own particular circumstances before making any investment decisions based upon information in this report.

For More Information:

ChangeWave ResearchTelephone: 301-250-2200

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This information is from ChangeWave Research and contains confidential business information.