| Macro Economy Analysis
Current Economic State
The world economy continues to recover from the recession caused by the fall of the US housing market in 2008. An uneven resurgence has been observed in which advanced economies are struggling in comparison to emerging ones. The volatile state of the economy is also attributed to the present Euro debt crisis, which has weakened global markets. Factors such as a lower than average Gross Domestic Product (expected at 3%) and high inflation rates, are indicative of the economy’s contracted state. Consequently, consumer purchasing power has decreased lowering spending on luxury items. The effect on such companies is substantial, decreasing sales and increasing the unemployment rate.
Many companies struggle to stay alive despite the economic forces working against them, such is true for those within the sector of information technology. As part of the global market, these companies face pressure on sales, earnings and greater market exposure due to the weak performance of counterparts in Europe and the US. Despite these economic obstacles, this industry has been growing and expanding at an accelerated pace over the last decade. IT has changed the way of living by enabling communication; improve standards of living and increasing opportunities across the globe. Its customer base is broad and environments in which it operates are very complex. The use of information technology solves crucial productivity issues such as reducing costs and increasing operational efficiency. As societies around the world become ever more hyper connected through technological sources, such an impact from information technology on critical sectors such as government, healthcare, business, workforces and that on sustainability is evident. IT contributes to an enhanced quality of life globally and so creates endless opportunities for economic growth. Widespread adoption of the products and services developed by this industry is motivated by several factors. These include, advancing the importance of digitization on the national agenda, evolving sector governance structure, adopting an ecosystem perspective, enabling competition and stimulating demand.
According to the International Data Corporation (IDC), “the digital universe is now expected to double every two years”. Radical changes are being brought about by the emergence of more powerful technologies, new ways of accessing and integrating IT in multiple devices (e.g., through mobile broadband), and in the development of new ways in producing digital content (e.g., via social networks.)This has sparked a major industry trend; the convergence among the Information and Communications Technologies, telecommunications, and media industries. Moreover, other key trends are present within the IT industry in which emerging technologies are transforming the way businesses currently use IT, and carry out their operations. One trend is the outsourcing of IT services, such as desktop PC support, or whole IT-supported functions such as accounts processing. A further illustration is that of virtualization, referring to “the ability of large servers to be subdivided into a number of virtual machines, which can be either virtual PCs or virtual servers”. The benefits of virtualization include stopping what, at one stage, looked like an endless proliferation of servers inside companies. One large server can now be split into a number of virtual servers, enabling the organization to reduce the number of boxes it has to manage. Another trend is the creation of virtual environments inside the machine. The fact that desktop processors are now powerful enough to mimic real-world physics in computer space is transforming both design and entertainment. The IT industry is also experiencing a shift from a “desktop experience” to a “on the go” experience for all nations providing endless opportunities and benefits. Industry trends continue...
Cited: Zino, Angelo. "Industry Surveys Semiconductors". Standard & Poor 's, November 10, 2011. Web. 7 Aug 2012.
Dutta, Soumitra (INSEAD) & Bilbao-Osoria, Benat (World Economic Format). The Global Information Technology Report 2012.http://reports.weforum.org/global-information-technology-2012/. 2012.
Q Finance. Information Technology.http://www.qfinance.com/sector-profiles/information-technology. 2010.
. "Jim 's Finance and Investments Blog." Historical Annual Returns for the S&P 500 Index - Updated Through 2011. N.p., June 30, 2012. Web. 02 Aug 2012. <http://financeandinvestments.blogspot.ca/2012/06/historical-annual-returns-for-s-500.html>.
Segment | Market Value ($Billion) | CAGR |
Blade Servers (2009 Forecast) | 7 | 19 |
External Disk Storage (2009 Forecast) | 18 | 11 |
Direct Attach | 5.7 | 5 |
Network Attached Storage | 3 | 12 |
SAN Switch (2009 Forecast) | 2 | 9 |
Ke= 0.0262 + 1.5(0.1367-0.0149)
Please join StudyMode to read the full document