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Economic downturn hits EMEA enterprise infrastructure spending
- Networking and security investment resilient in Q4 2008, but
telephony fell
Reading (UK) - Monday, 30 March 2009
For immediate release
Businesses across EMEA (Europe, the Middle East and Africa) were
forced to reprioritise their IT budgets in Q4 2008, as the banking
problems sent shockwaves through the global economy. The threat of
recession created challenging environments in many countries. Sales
cycles lengthened and final budget sign-off on many non-critical
projects was either delayed or cancelled. The latest research from
Canalys shows that the initial effect on enterprise IT
infrastructure spending differed across telephony, networking and
security.
Investment in call control systems, which provide PBX telephony
functionality, declined sharply in Q4. The total lines shipped fell
11% year-on-year to 5.8 million, representing end-user revenue of
€828 million. “Enterprise telephony sales are primarily driven by
replacement in EMEA, and especially in Western Europe, and these are
typically large CAPEX-based deals,” said Matthew Ball, senior
analyst at Canalys. “With pressure to cut costs immediately, many
sales that were expected to close in Q4 were delayed. Businesses
shifted available budget to higher-priority IT projects. Some
telephony projects will be cancelled altogether as needs are
re-evaluated and a greater emphasis is placed on ROI in the future,”
Ball continued. “Consequently, it was a tough quarter for all
vendors, though Cisco continued to grow to close on the market
leaders. Overall, Alcatel-Lucent remained the leading vendor,
closely followed by Aastra, which leads the sub-100 extensions
segment in Western Europe, and Siemens, which is undergoing
significant restructuring.”
In contrast, investment in security and networking remained
resilient, although this was partly boosted by US dollar to euro
exchange rates. Total EMEA end-user hardware and software security
revenue increased 12% over Q4 2007, to reach €793 million. “Cisco
was the overall market leader, with revenue driven increasingly by
sales of its Adaptive Security Appliance range of integrated threat
management products,” said analyst Nikki Babatola. “Enterprises are
looking to consolidate infrastructure and cut costs by adopting a
single appliance for all security functions. This reduces the need
for individual point products, which take up valuable space and need
a lot of power and cooling.”
Infrastructure security investment rose, while client security
software spending continued to be scaled back. Babatola added,
“Symantec struggled in this segment, overtaken for the first time by
McAfee, and Trend Micro also made gains. Greater demand for single
security appliances helped grow the market shares of Juniper
Networks and Check Point.”
The EMEA networking market (comprising enterprise and service
provider routers, switches and wireless access points) also finished
strongly in 2008, with Q4 end-user revenue increasing both
sequentially and year-on-year to reach €2.5 billion. “Investment was
driven by service providers replacing legacy networks to cope with
the growing demand for fixed and wireless capacity, especially for
mobile broadband, video on demand and IPTV,” said research analyst
Alex Smith. “Enterprise spending, which represented 56% of the
total, also grew, though investment in modular routers and edge
equipment fell year-on-year.” Cisco remained the dominant vendor in
networking, while HP and Juniper Networks gained share to reaffirm
their positions as the leading challengers.
Canalys expects 2009 to be tough for all enterprise IT
infrastructure market segments. “The key questions are when
businesses will decide to replace existing infrastructure and
whether buying behaviour will change to favour more OPEX-based
models. Businesses are more likely to prioritise IT budget for
technologies that can help save money and generate profit,” said
Ball. “Budgets will be under pressure, but Canalys expects
investment in enterprise security to remain strong due to compliance
requirements and the continued threat of attacks. The client
security software market will be more of a challenge, however, with
the PC market shrinking. Investment in networks will weaken, and
telephony will continue to fall down the IT priority list.”
About the research
The shipment estimates discussed in this release come from the
Canalys Enterprise Networking Analysis, Enterprise Security Analysis
and Unified Communications Analysis services. Canalys’ market data
is used by vendors the world over to provide a coherent view of the
enterprise infrastructure markets. Canalys offers services looking
at the markets by country in EMEA, as well as providing global
market overviews.
About Canalys
Canalys specialises in delivering high quality market data,
analysis and advice to the world’s leading technology vendors. It is
recognised as a key provider of continuous advisory services and
confidential custom projects for marketing managers and strategists
within blue-chip IT, telecoms, navigation and consumer electronics
companies. It has unrivalled expertise in routes to market for all
kinds of high technology products and services in the consumer, SMB
and large enterprise segments, and provides worldwide market data
and trends analysis.
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