Tough Times for Corporate Software Spending

But Virtualization Shows an Uptick


By Paul Carton
May 13, 2008

When the going gets tough, the tough get going, according to the old axiom. But that's not the case with U.S. corporate software spending, which continues to trend downward.

An April 8-15 ChangeWave corporate spending trends survey shows a deterioration in 2nd Quarter software purchases with little relief in sight. But there's good news on the Virtualization front - with strikingly upbeat findings for VMware (VMW) and good indications of momentum for Citrix (CTXS).

A total of 1,956 respondents involved with software spending in their company participated in the survey.

How Tough Is Tough?

First, the bad news. A total of one-in-four respondents (25%) say their company will spend less for software over the next 90 days - 3-pts worse than our previous survey in January.

A miniscule 12% say their company will spend more - down 4-pts from previously.

What's behind the continued pullback? A total of 13% cite "a general slowdown in business conditions and capital budgets" as responsible for curtailing their company's software spending - 4-pts higher than in January and double the percentage of six months ago.


In a further sign the downturn isn't over, we asked respondents if there were any recent changes to their 2nd Quarter capital spending budgets, and more than one-in-four (26%) said they had been adjusted lower over the past 90 days. That's 4-pts worse than just three months ago, and more than triple the percentage who say their quarterly capital budgets have increased (8%).

Which business software categories are bearing the brunt of this? Enterprise Resource Planning (ERP; Net Score = -11), Document and Enterprise Content Management (ECM; -9), and Customer Relationship Management Software (CRM; -6) have all been hard hit.

But on the bright side, the survey does show increased corporate spending for Virtualization Software (Net Score = +5), with VMware strengthening its domination over this market. So far this year, VMware's share has risen 12-percentage points in our ChangeWave surveys (from 58% in January to 70% currently).

None of the other major competitors have exhibited anything like this explosive growth, although Citrix (26%; up 5-pts) has also shown a jump in current share.

Looking at planned corporate software purchases over the next 6 months, VMware (73%; down 3-pts) towers over the rest of the market, with better than a four-fold lead over its closest competitors. But once again, Citrix (15%; up 8-pts) is showing momentum going forward.

Thus, in a depressed corporate spending environment, Virtualization is one of the only software spaces showing an increase in purchasing going forward. We will be keeping a close eye on VMware, Citrix, and the overall virtualization software market in the weeks ahead.

So should you. After a precipitous fall in the 1st Quarter, VMware's stock price has rebounded as much as 66% in the past few weeks.

Jim Woods co-wrote this article.


Related ChangeWave Articles
-- Tech Alert: No Soft Landing for Software Industry (3/25/08)
-- Virtualization Trends (2/18/08)


In the News
-- Study: U.S. corporate software spending slowing (5/13/08 - Infoworld)
-- Tech Spending Gets Bleaker (5/13/08 - WSJ)


Nuclear Back in Style? Not Exactly

May 5, 2008

Since the 1979 accident at Three Mile Island, there have been ZERO new nuclear power plants built in the U.S.

But now that folks have finally figured out there's an energy crisis, are nuclear power plants about to start popping up in our backyards?

Not exactly, at least according to a recent ChangeWave survey of 473 energy industry professionals.

What's the big hold up to construction? Take a wild guess.

Yes, political resistance to nuclear energy is the key barrier holding up construction, according to almost one-in-two (44%) respondents - nearly three times the issues of nuclear waste disposal (16%) or cost (15%).

The politics of nuclear energy may be changing, however.

Several states have already allocated or are in the process of allocating funding for nuclear power projects. And the U.S. Nuclear Regulatory Commission says it expects to see more than 20 new applications for nuclear plants over the next two years.

But if you're worried that you might soon find yourself in the shadow of a new nuclear plant - think again.

According to industry respondents, the first new U.S. nuclear facility won't start construction for another 4.2 years...


iPhone vs. BlackBerry: Which Do Consumers Love Most?


By Paul Carton
April 29, 2008

ChangeWave's recent Smart Phone Wars report showed a rapidly evolving two-horse race between the Apple (AAPL) iPhone and Research In Motion's (RIMM) BlackBerry - with second tier players like Palm (PALM) and a host of others being shoved to the sidelines.


To follow-up, we took a closer look at the features users love and hate about their iPhones and BlackBerrys as part of our March 2008 survey of 864 smart phone owners.

If you recall, our previous report showed consumer satisfaction levels were sky high for the two smart phone frontrunners - with Apple boasting a 79% Very Satisfied rating for its iPhone models and RIM garnering a highly respectable 54% rating for the BlackBerry.

But what is it about these two brands that have consumers so very satisfied?

First, we asked RIM BlackBerry owners. By an overwhelming margin they told us the feature they liked most is the BlackBerry's exceptional access to email (56%).

Top Blackberry Features: By a wide margin, respondents to a March 2008 survey indicate that the Blackberry's email functionality (54%) is their favorite feature compared to size (7%), internet access (5%), keypad (5%), Ease of Use (4%), Calendar (2%), GPS (2%).

No other feature comes even close in terms of popularity. As respondent MBR29407 explains, "The email integration of the BlackBerry 8800 is probably its single best feature, but I am constantly amazed at the quality of the phone itself." NEW06507 adds "I like the seamless way my BlackBerry works with corporate email, and the way you can call a number from within an email by highlighting it."


BlackBerry owners also reported a few key dislikes, number one being the speed and quality of its Internet browsing experience (13%). A second major dislike was the size of the keypad (11%), with owners complaining that the keys are too small and cause too many typing errors. "The overlaid keyboard (two letters per key) and TrueType feature make my BlackBerry slow to type messages without errors," reported respondent PET91787.

Click here for additional likes and dislikes on the RIM BlackBerry

The Apple iPhone

By far the most lauded feature of the iPhone among owners is its seamless integration of a Phone, iPod and Internet browser (36%). As respondent DSL06271 puts it, "The feature I use most is the iPod, but it's the integrated whole that makes it so much fun to use. "

Respondent BOB04545 adds, "I love the iPhone. It is revolutionary. I love being able to jump on the Internet, send email, get maps, weather forecasts, instant message, and make phone calls."

The second most popular feature is the iPhone's touch screen interface, followed by its ease of use.

In terms of dislikes, there is no doubt about what iPhone owners hate most. It's the speed of the AT&T EDGE network. No surprise then that the number two criticism is the requirement to Use AT&T.

Users also expressed particular unhappiness with the iPhone's lack of copy & paste functionality.

Click here for additional likes and dislikes on the Apple iPhone

Mirror Mirror On the Wall

So now that we've briefly reviewed the evidence, which smart phone is the fairest of them all?

The answer is clear - both Apple and RIM dominate the U.S. smart phone industry and are in the process of overwhelming the competition.

Each has a super-loyal cadre of users that fervently support their phone brand - and each has extraordinary room to grow.

Today there are over a billion cell phones in the world, and our ChangeWave surveys have picked up a seismic shift occurring among U.S. consumers towards the high end smart phone market. In simplest terms, that's where the momentum lies.

And as consumers gravitate towards quality multidimensional cell phones - i.e., smart phones - our research shows both Apple and Research In Motion are the big winners. In other words, just as the Apple iPhone has captured the hearts and minds of its user base, so has the RIM BlackBerry.

RIM BlackBerry:
While the Apple iPhone boasts some of the highest satisfaction rates we've ever seen in a ChangeWave survey, the bottom line for RIM owners continues to be, "If it ain't broke, don't fix it." Respondent PAN18809 demonstrates RIM's extraordinary hold over business users when he writes, "My BlackBerry enables one simple truth - work is something I do, not someplace I go."

RIM's enormous strength in our ChangeWave business user surveys (73% market penetration) strongly suggests they'll maintain momentum in their core market going forward.

Apple iPhone: For all its momentum, there are still some core issues iPhone owners want to have resolved - and first among them is 3G capability. According to the survey, that's the number one feature iPhone owners want integrated into the next generation of the iPhone (19%) - even more so than third-party software (18%), GPS functionality (15%) or E-mail integration (10%).

The same holds true among respondents who say they are interested in but haven't yet purchased an iPhone. One-in-four say they are holding out to wait for the next generation iPhone (14%) or for 3G network compatibility (11%).

That's great news for Apple - assuming that the next generation of the iPhone is 3G compatible. Stay tuned. We'll know in June.

But the bottom line in this horse race is Apple and Research In Motion are both giant winners. The rest of the smart phone manufacturers lose.

Jim Woods co-wrote this article.




Baby Boomers Go 'Bionic' as Body Replacement Devices Soar in Popularity

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By Paul Carton
April 22, 2008

Many of us old enough to recall the 1970s TV show "The Six Million Dollar Man," know it was about a guy severely injured in a plane crash who was subsequently "rebuilt" in a high-tech, clandestine medical procedure costing six million dollars.

In the show, the main character's right arm, left eye and both legs were replaced by "bionic" body parts that enhanced his strength, speed and vision far beyond that of mortal humans.


Back then it was practically all fiction, but today cardiac implants, joint replacements and other "bionic" limbs and devices are readily available. And according to a recent ChangeWave survey they're increasingly popular - particularly with baby boomers.

ChangeWave's February survey of 148 doctors involved with "bionic" devices, looked at current and future demand trend for joint replacements, cardiac implants and other types of body repair and correction medical products.

"Bionic" Boomers

Today, when a limb or organ no longer functions as it should, one increasingly popular option is to replace it with a "bionic" device.

We asked our panel of doctors which types of devices will experience the largest growth in demand over the next 12 months. Little wonder, with the aging of the baby boomers, that one-in-two (50%) believe that it's Joint Repair/ Replacement devices.

"I'm old enough to remember the 1970s TV show The Six Million Dollar Man," said Tobin Smith, founder of ChangeWave and editor of ChangeWave Investing. "And while we aren't quite there yet in terms of bionic technology, the fact that many aging baby boomers are looking for knee and hip replacements translates into big gains not only for the technology in general, but also for the companies specializing in this sector."



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Online Shoppers Cut the Middleman

April 25, 2008

The current spending downturn is causing a shift in consumer shopping habits, to the detriment of the online travel industry.

A new ChangeWave survey of online travel websites shows consumers increasingly turning to the websites of individual airlines and hotels - rather than using middleman sites like Expedia, Travelocity or Orbitz.com.

The survey found that since February there has been a huge spike in online usage of both hotel chain websites (29%; up 14-pts) and airline websites (41%; up 7-pts). Apparently, in the bid to cut costs, more and more consumers are making reservations directly with airlines and hotel rather than using the travel sites.

In terms of the middleman sites, Expedia.com (24%) continues to maintain its lead among consumers over Travelocity (18%) and Orbitz (15%), followed by Hotels.com (9%) and Priceline.com (9%).

Looking at the next 90 days, these same trends should continue to pick-up momentum - led by a 56% jump in the number of consumers who say they'll use the websites of individual hotel chains to make their reservations, and an even bigger 145% jump in the percentage who will use individual airline websites.

At the same time, usage of middleman travel sites looks flat going forward. Beam me up, Scotty.


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