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ChangeWave Research: Corporate IT Spending

Corporate IT Spending TrendsGrim IT Spending Results Point to Rough Times Ahead – But Tablets and Smart Phones Outperform Paul Carton and Jean Crumrine Overview: The downturn in the U.S. economy is not over. ChangeWave’s latest IT spending survey points to a further slowdown in U.S. corporate purchasing – both in the current quarter and moving forward. ChangeWave Research is a division of The 451 Group.

A total of 1,618 respondents involved with IT spending in their organization participated in the August 10-29 survey, which also focused on business demand for PCs, tablets and smart phones.

90 Day Outlook: Going forward, 31% of respondents report their company’s IT spending will decrease (or there will be no spending at all) in 4th Quarter 2011 – 9-pts worse than our May survey. Only 15% say their IT spending will increase, a 4-pt drop from previously.

Putting these Findings in Context. As the following chart shows, this is the second consecutive drop in IT spending. Moreover, only twice in the past ten years of ChangeWave surveys have we witnessed a quarterly slowdown of greater magnitude.

This information is from ChangeWave Research, a division of The 451 Group, and contains confidential business information.It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved.

September 7, 2011


We note the spending pullback is occurring across companies of all sizes.

Current Quarter Spending: We also asked respondents if their IT spending was on track thus far in the 3rd Quarter, and the results were similarly bearish. Three-in-ten (30%) say they’ve spent Less than Planned so far in the quarter – 5-pts worse than May. And only 13% say they’ve spent More than Planned – a 2-pt drop from previously.

IT Categories: Of the 13 IT spending categories focused on in this survey, PCs (Change in Net Difference Score = -5), Servers (-5) and Networking (-4) registered the biggest declines since last quarter.

Among the other categories we note that Software-as-a-Service (SaaS) (+1) did register a slight improvement.

Underlying Reasons for the Spending Slowdown

Pullbacks in spending normally result from a multiplicity of factors. But back in July – even before S&P lowered the U.S. credit rating – our Corporate Software Spending survey found the debt reduction controversy had resulted in serious consequences for capital spending.

In the current survey, we asked corporate respondents whether the S&P downgrade and debt reduction controversy had caused adjustments to be made to their 4Q IT spending.

Thinking about your company's overall IT Spending for 4th Quarter 2011, is the recent S&P downgrade and continuing debt reduction controversy causing your company to increase its IT spending for 4th Quarter (Oct-Dec) 2011, decrease its IT spending, or is it having no impact on your overall IT spending for 4th Quarter?

CurrentSurveyAug ‘11

S&P Downgrade and Debt Reduction Controversy Causing 4Q IT Spending to be Decreased

14%

S&P Downgrade and Debt Reduction Controversy Causing 4Q IT Spending to be Increased

1%

S&P Downgrade and Debt Reduction Controversy Having No Impact on our 4Q IT Spending

69%

Don’t Know 16%

This information is from ChangeWave Research, a division of The 451 Group, and contains confidential business information.It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved. 2


A total of 14% reported the S&P downgrade and debt reduction controversy had caused IT spending going forward to be Decreased. Only 1% said Increased.

We note that 69% said it was having No Impact on their IT spending. But similar to our conclusion back in July – when 14% of companies decrease their IT spending because of an issue it means it’s having a serious and damaging economic impact, especially in the midst of a tenuous post-recession recovery.

Corporate PC DemandGoing forward, the ChangeWave findings point to a precipitous slowdown in PC purchasing plans, with just 61% of respondents saying their company will buy desktops in 4th Quarter – down 5-pts from the previous quarter. Planned laptop purchasing (65%) is down 4-pts. While some of the decline may be due to seasonality, all told these are the lowest corporate PC buying percentages of the past four years.

Let’s look at the impact on the major PC manufacturers.

Planned Purchasing. Despite the overall slowdown in corporate PC demand, Apple (14%) has hit a new all-time high in terms of planned laptop buying – up 2-pts since May.



Dell (27%) – which sells 80% of its PCs on the corporate market – finds itself down 1-pt in planned laptop buying, while Hewlett-Packard (15%), which just announced they are exiting the PC hardware market, remains unchanged.

In terms of planned desktop buying, Apple (9%; up 2-pts) is also registering a new all-time high – while Dell (29%) finds itself down 1-pt and H-P (17%) down 2-pts.

Computer Operating Systems. When corporate respondents were asked which operating systems they’ll be installing on their new PCs next quarter, 13% said they’re installing Mac OS X – up 2-pts from previously. While 48% said they’ll install Windows 7, that’s unchanged.

Corporate Tablet Market: The iPad vs. the Competition

Despite the downturn in overall corporate IT spending, the Tablet market is one area where demand remains exceptionally robust.

A total of 16% of respondents say their company is currently providing employees with Tablet devices – up 4-pts in one quarter and more than double the level of nine months ago.

Does your company currently provide employees with Tablet devices?

Note: The May and August 2010 survey question was “Has your company purchased Apple iPad tablets for business purposes?”

Just 16 months after launching the iPad, Apple (85%) continues to enjoy near total domination of the enterprise market – even as the number of tablet competitors grows.

H-P (8%), which ranks a distant second in corporate tablet share, has announced they’re throwing in the towel and discontinuing their TouchPad Tablet line – a clear sign of how tough this market remains for Apple’s rivals.

The H-P decision could create opportunities for other competitors – including Samsung (e.g., Galaxy Tab; 4%), Dell (e.g., Streak; 4%), Motorola (e.g., Xoom; 3%) and RIM (e.g., PlayBook; 2%) – but to date none have posed a serious individual challenge. In fact, both Motorola and RIM have declined 3-pts in enterprise tablet share since our May survey.

Planned Corporate Tablet Buying. Going forward, nearly one-in-five respondents (19%) say their company will purchase Tablets for their employees in the 4th Quarter – up 1-pt since May. Importantly, it’s four times the level of demand we saw just one year ago.



Note: The August 2010 survey question was “Over the next 90 days does your company plan on purchasing Apple iPad tablets for business purposes?”

The Apple iPad remains the overwhelming choice for planned corporate tablet buyers, with 80% saying they’ll purchase iPads next quarter – unchanged since the previous survey. Who is the manufacturer of the Tablets your company is planning on buying?

*The H-P TouchPad was preferred by 10% of future buyers but was subsequently discontinued.

Importantly, we’re still not seeing any major breakthroughs among the competition. But with H-P having removed itself from the market, Samsung (7%; up 1-pt) now shows the most promise, followed by Dell (5%; down 1-pt).

The findings are a further disappointment for Motorola (4%; down 6-pts) and RIM (3%; down 5-pts) – each having experienced a big decline in corporate tablet buying plans since May.

How are Companies Making Use of Tablets? We presented our corporate respondents with a list of business functions and asked them which ones their company is currently using their Tablet devices for.

Internet Access (70%), Checking Email (70%) and Working Away From the Office (68%) remain the three most popular business uses, even as Customer Presentations (44%) and Sales Support (43%) remain highly popular functions as well.



But in a clear sign of how large a threat surging Tablet demand poses to the enterprise PC industry, better than one-in-three companies (36%) providing Tablets to their employees say they’re using them as Laptop Replacements – a 2-pt increase.

In addition, the percentage using Tablets for Desktop Replacement (6%; up 2-pts) and Netbook Replacement (13%; up 5-pts) has also increased since the previous survey.

Corporate Smart Phone Demand In terms of current mobile OS share, the ChangeWave corporate survey shows a jump since the previous survey for both the Apple iPhone OS (44%; up 6-pts) and the Google Android OS (GOOG; 31%; up 4-pts).

This is the seventh straight quarterly increase for both the Apple iOS and the Android OS within the enterprise market in the past two years.

Although it still controls the dominant share of the corporate market – Research-In-Motion’s (RIMM) Blackberry RIM OS (59%) has declined yet another 2-pts in current share since May. We note, however, that RIM’s corporate share is more heavily concentrated in larger companies and its unit volume per company has historically been highest in the industry.



Planned Corporate Smart Phone Buying. Similar to tablets, enterprise demand for Smart Phones remains robust going forward, with two-in-five (41%) respondents reporting their company plans to buy smart phones next quarter – up 4-pts to a two year high.

Apple vs. Research-In-Motion. At the individual manufacturers’ level, we’re seeing a major surge in demand for Apple (52%), with more than half of companies planning to buy smart phones next quarter saying they’ll purchase iPhones – a major 6-pt leap since May.

On the downside, RIM (46%) is registering a 9-pt drop, and for the first time has slipped to second place in terms of the percentage of companies planning to purchase their phones.

Despite the setback, we again note that RIM is more heavily concentrated in larger companies and its unit volume per company has historically been highest in the industry. Moreover three new Blackberries were just released as the survey was ending, and the impact of these new models won’t be fully known until our next IT survey in November.

Motorola vs. HTC. After reaching a four year high last quarter, Motorola (MOT; 15%) is seeing a 2-pt slowdown in the corporate market in terms of planned buying.

HTC (15%; up 1-pt) – with a new EVO 3D model and several other releases expected soon – is experiencing an increase in corporate demand for the second quarter in a row.



Samsung. Samsung (10%), which recently released several new smart phones – including the U.S. launch of the Galaxy S II – has also jumped 3-pts to its highest level ever in terms of planned corporate buying in a ChangeWave survey.

And the Winner Is. In the midst of a rapidly changing corporate smart phone market, Apple is still the clear momentum winner according to the latest survey results – even though it didn’t have a new summer release for the first time in 5 years.

Apple is widely expected to unveil their next generation “iPhone 5” this fall, and we asked respondents whether the release of an iPhone 5 would have an impact on their company’s 4th quarter purchasing plans. In another encouraging finding for Apple, 13% said a new model release would Increase their company’s overall purchases of iPhones.

Bottom Line: ChangeWave’s latest IT spending survey shows a further slowdown in U.S. corporate purchasing – and not only are IT expenditures lower than expected in the current quarter, but visibility into next quarter shows considerable deterioration as well.

While there are multiple reasons for the downturn, we note that 14% of respondents reported that the S&P downgrade and debt reduction controversy had caused their company to decrease their planned IT spending for next quarter. This is a further sign of the serious economic damage caused by the recent round of political infighting in Washington.

There are still pockets of significant IT growth, however, led by tablets and smart phones, where enterprise demand is up considerably. These trends are highly beneficial to Apple, which continues to monopolize the tablet market and shows major momentum in the enterprise smart phone market as well. Another winner here is the Android OS.

It’s a different story for Dell and H-P. The current survey again shows the major threat that surging Tablet demand poses to the enterprise PC industry – and to Dell and H-P in particular.

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals in leading companies of select industries—credentialed professionals who spend their everyday lives working on the frontline of technological change. ChangeWave surveys its Alliance members on a range of business and investment research and intelligence topics, collects feedback from them electronically, and converts the information into proprietary quantitative and qualitative reports.



Table of Contents

Summary of Key Findings...........................................................................................10

4th Quarter 2011 Visibility...................................................................................10

Projected IT Spending: A Comparison...........................................................10

Projected IT Spending For Next Quarter: Nov ’01 – Aug ‘11..........................11

Projected IT Spending By Company Size......................................................11

3rd Quarter IT Spending......................................................................................12

IT Spending Thus Far in Current Quarter (3Q 2011).....................................12

A Closer Look at 1st Half 2012............................................................................12

Looking Ahead – IT Budget for Next Half......................................................12

IT Spending Categories.......................................................................................13

Corporate PC, Tablet and Smart Phone Markets ......................................................16

Corporate PCs ....................................................................................................16

Corporate Tablets ...............................................................................................20

Corporate Smart Phones ....................................................................................25

ChangeWave Research Methodology ......................................................................30



I. Summary of Key Findings

Introduction: The downturn in the U.S. economy is not over. ChangeWave’s latest IT spending survey points to a further slowdown in U.S. corporate purchasing – both in the current quarter and moving forward. ChangeWave Research is a division of The 451 Group.

A total of 1,618 respondents involved with IT spending in their organization participated in the August 10-29 survey, which also focused on business demand for PCs, tablets and smart phones.

90 Day Outlook: Going forward, 31% of respondents report their company’s IT spending will decrease (or there will be no spending at all) in 4th Quarter 2011 – 9-pts worse than our May survey. Only 15% say their IT spending will increase, a 4-pt drop from previously.

This information is from ChangeWave Research, a division of The 451 Group, and contains confidential business information.It may not be copied or distributed without permission. ©2011 ChangeWave Research. All rights reserved.

A Further Downturn in U.S. Business IT Spending Grim 90 Day Outlook 31% report their company’s

IT spending will decrease for 4th Quarter 2011 – 9-pts worse than previously

Only 15% say IT spending will increase – a 4-pt drop

IT Spending also Pulls Back in Current Quarter 30% say they’ve spent Less

than Planned so far in 3Q – 5-pts worse than previous survey in May

Just 13% say they’ve spent More than Planned – a 2-pt drop from previously

Smart Phone Market - Apple and Android OS Keep On Winning Mobile OS – Current Share RIM OS (59%; down 2-pts) Apple iOS (44%; up 6-pts) Google Android (31%; up 4-pts) Windows Phone 7 (4%; down

2-pts)4Q Smart Phone Buying Plans 41% report their company plans

to buy smart phones next quarter – up 4-pts to highest level in two years

Apple Surges in Future Share – HTC and Samsung Also Rise RIM (46%; down 9-pts) Apple iPhone (52%; up 6-pts) HTC (15%; up 1-pt) Motorola (15%; down 2-pts) Samsung (10%; up 3-pts)

Bucking the Trend – Explosive Corporate Demand for TabletsSurging 4th Quarter Demand 16% say their company uses

tablets currently – up 4-pts But a huge 19% say their

company plans on buying tablets next quarter

Apple Dominates Corporate Tablet Planned Buying 80% Apple iPad 7% Samsung – up 1-pt 5% Dell – down 1-pt 4% Motorola – down 6-pts 3% RIM Playbook – down 5-

pts

A Sharp Slowdown in Corporate PC Buying Laptops (65%; down 4-pts) Desktops (61%; down 5-pts)

10


Putting these Findings in Context. As the following chart shows, this is the second consecutive drop in IT spending. Moreover, only twice in the past ten years of ChangeWave surveys have we witnessed a quarterly slowdown of greater magnitude.

We note the spending pullback is occurring across companies of all sizes.

Projected IT Spending for Next Quarter (4Q 2011) – By Company Size:



Current Quarter Spending: We also asked respondents if their IT spending was on track thus far in the 3rd Quarter, and the results were similarly bearish. Three-in-ten (30%) say they’ve spent Less than Planned so far in the quarter – 5-pts worse than May. And only 13% say they’ve spent More than Planned – a 2-pt drop from previously.

1st Half 2012: Looking ahead to 1st half 2012 (Jan-Jun), we see continued bearish signs. Only 13% now think their company’s IT budget will be greater than 2nd half 2011 – 8-pts less than the previous survey.

At the same time, 27% believe their company’s IT budget will be less than 2nd half 2011 – which is 1-pt worse than previously. Another 15% say they Don’t Know.



IT Spending CategoriesFor which of the following main IT Spending categories - if any - have you spent more than planned thus far in the 3rd Quarter? (Check All That Apply)


PreviousSurveyMay ‘11

PreviousSurveyFeb ‘11

PreviousSurveyNov ‘10

PreviousSurveyAug ‘10

PCs 10% 11% 10% 12% 13%Security 8% 9% 8% 7% 7%Software: Enterprise Applications 6% 8% 7% 7% 7%Servers 7% 8% 8% 8% 7%Storage 7% 8% 7% 9% 7%Software: Operating Systems/ Platforms 6% 4% 7% 6% 6%Networking 5% 7% 7% 7% 7%Application Development Software/Tools 4% 5% 5% 5% 5%Communications 4% 4% 4% 3% 3%Virtualization 4% 5% 3% 4% 4%Outsourced IT Services: Systems Integration/Implementation

4% 3% 3% 4% 3%

Software-as-a-Service (SaaS)/ Outsourced Application Management

2% 1% 2% 1% 2%

Business Process Outsourcing/Hosting (BPO)

1% 1% 1% 1% 1%

Don't Know 21% 20% 21% 19% 20%Other 6% 5% 6% 7% 6%

And for which of the following main IT Spending categories – if any – have you spent less than planned thus far in the 3rd Quarter? (Check All That Apply)


Previous

SurveyMay ‘11




PCs 19% 15% 16% 17% 20%Servers 13% 9% 10% 13% 14%Software: Operating Systems/ Platforms 10% 8% 8% 10% 12%Networking 9% 7% 7% 8% 10%Storage 9% 8% 8% 9% 10%Software: Enterprise Applications 8% 8% 7% 8% 9%Application Development Software/Tools 8% 7% 7% 8% 9%Outsourced IT Services: Systems Integration/Implementation

7% 5% 5% 6% 7%

Security 6% 5% 6% 7% 7%Communications 5% 5% 6% 5% 6%Virtualization 5% 4% 4% 5% 6%Software-as-a-Service (SaaS)/ Outsourced Application Management

4% 4% 3% 3% 4%

Business Process Outsourcing/Hosting (BPO)

3% 3% 3% 3% 4%



Don't Know 21% 23% 24% 23% 22%Other 3% 3% 4% 3% 4%

Change in Net Difference Score: Current Survey (Aug ’11) vs. Previous Survey (May’11)

Overall IT Spending Categories

CurrentSurvey

NetDifference

Score(Aug ’11)

PreviousSurvey

NetDifference

Score(May ’11)

Changein Net

DifferenceScore

Software-as-a-Service (SaaS)/ Outsourced Application Management

-2 -3 +1

Software: Operating Systems/ Platforms -4 -4 0Communications -1 -1 0Business Process Outsourcing/Hosting (BPO) -2 -2 0Software: Enterprise Applications -2 0 -2Outsourced IT Services: Systems Integration/Implementation

-3 -2 -1

Security +2 +4 -2Virtualization -1 +1 -2Storage -2 0 -2Application Development Software/Tools -4 -2 -2Networking -4 0 -4Servers -6 -1 -5PCs -9 -4 -5

IT Categories: Of the 13 IT spending categories focused on in this survey, PCs (Change in Net Difference Score = -5), Servers (-5) and Networking (-4) registered the biggest declines since last quarter.

Among the other categories we note that Software-as-a-Service (SaaS) (+1) did register a slight improvement.



Underlying Reasons for the Spending Slowdown

Pullbacks in spending normally result from a multiplicity of factors. But back in July – even before S&P lowered the U.S. credit rating – our Corporate Software Spending survey found the debt reduction controversy had resulted in serious consequences for capital spending.

In the current survey, we asked corporate respondents whether the S&P downgrade and debt reduction controversy had caused adjustments to be made to their 4Q IT spending.

Standard & Poor's recently lowered the U.S. credit rating from AAA to AA+, stating among other things that the recent debt-reduction bill didn't go far enough to improve the U.S. government's fiscal situation.Thinking about your company's overall IT Spending for 4th Quarter 2011, is the recent S&P downgrade and continuing debt reduction controversy causing your company to increase its IT spending for 4th Quarter (Oct-Dec) 2011, decrease its IT spending, or is it having no impact on your overall IT spending for 4th Quarter?


S&P Downgrade and Debt Reduction Controversy Causing 4Q IT Spending to be Decreased

14%

S&P Downgrade and Debt Reduction Controversy Causing 4Q IT Spending to be Increased

1%

S&P Downgrade and Debt Reduction Controversy Having No Impact on our 4Q IT Spending

69%

Don’t Know 16%

A total of 14% reported the S&P downgrade and debt reduction controversy had caused IT spending going forward to be Decreased. Only 1% said Increased.

We note that 69% said it was having No Impact on their IT spending. But similar to our conclusion back in July – when 14% of companies decrease their IT spending because of an issue it means it’s having a serious and damaging economic impact, especially in the midst of a tenuous post-recession recovery.



II. Corporate PCs, Tablets and Smart Phones

(A) Corporate PC Demand

Going forward, the ChangeWave findings point to a precipitous slowdown in PC purchasing plans, with just 61% of respondents saying their company will buy desktops in 4th Quarter – down 5-pts from the previous quarter. Planned laptop purchasing (65%) is down 4-pts. While some of the decline may be due to seasonality, all told these are the lowest corporate PC buying percentages of the past four years.

Let’s look at the impact on the major PC manufacturers.

Planned Laptop Purchasing. Despite the overall slowdown in corporate PC demand, Apple (14%) has hit a new all-time high in terms of planned laptop buying – up 2-pts since May.

Dell (27%) – which sells 80% of its PCs on the corporate market – finds itself down 1-pt in planned laptop buying, while Hewlett-Packard (15%), which just announced they are exiting the PC hardware market, remains unchanged.



Netbooks. We also asked enterprise respondents planning to buy laptops next quarter to tell us their company’s Netbook purchasing plans. The consensus estimate for Netbooks is just 8% of planned laptop purchases for next quarter – unchanged from previously.

(FOR THOSE COMPANIES BUYING LAPTOPS IN 4th QUARTER 2011) What percentage of the laptops your company is buying in the 4th Quarter will be Netbooks? (NOTE: "Netbooks" are low-cost, highly portable laptops designed for basic computing - such as web browsing, email, word processing and other general purpose applications.)

Planned Desktop Purchasing. In terms of planned desktop buying, Apple (9%; up 2-pts) is also registering a new all-time high – while Dell (29%) finds itself down 1-pt and H-P (17%) down 2-pts.

Note that about 70% of H-P’s sales come from outside the U.S., while our ChangeWave surveys focus primarily on the U.S. market.



(FOR THOSE COMPANIES BUYING COMPUTERS IN 4th QUARTER 2011) Who is the manufacturer and what computer type(s) is your company planning on buying? (Check All That Apply)

DesktopsCurrentSurveyAug ‘11






Dell - Desktops 28% 29% 30% 30% 30% 33%Hewlett-Packard (including Compaq) - Desktops

15% 17% 17% 17% 17% 17%

Apple - Desktops 9% 7% 7% 7% 7% 7%Lenovo (formerly IBM) - Desktops

5% 5% 5% 4% 5% 5%

Acer (including Gateway and eMachines) - Desktops

2% 2% 2% 2% 3% 2%

ASUS - Desktops 1% 1% 1% 1% 1% 1%Sony - Desktops 0% 1% 0% 1% 1% 1%Other - Desktops 2% 2% 2% 2% 2% 3%Don't Know 6% 6% 6% 7% 6% 6%Not Buying Desktops in 4th Quarter

39% 34% 34% 33% 35% 31%

LaptopsCurrentSurveyAug ‘11


Previous Survey Feb ‘11

Previous Survey Nov ‘10



Dell - Laptops 27% 28% 27% 29% 29% 31%Hewlett-Packard (including Compaq) - Laptops

15% 15% 16% 17% 16% 16%

Apple - Laptops 14% 12% 13% 12% 11% 12%Lenovo (formerly IBM) - Laptops

8% 10% 10% 9% 10% 10%

Toshiba - Laptops 3% 4% 4% 3% 3% 4%Acer (including Gateway and eMachines) - Laptops

2% 2% 2% 2% 3% 3%

Sony - Laptops 1% 2% 2% 1% 2% 2%ASUS - Laptops 1% 1% 2% 1% 2% 1%Other - Laptops 1% 1% 1% 1% 1% 1%Don't Know 6% 7% 7% 7% 6% 6%Not Buying Laptops in 4th Quarter

35% 31% 31% 31% 31% 27%



And for those companies buying computers in 4th Quarter 2011, what operating system(s) will be installed on your new computers?


Previous

SurveyMay ‘11





Linux 5% 5% 5% 6% 5% 6%

Mac OS X Lion 9% NA NA NA NA NAMac OS X Snow Leopard 4% 11% 11% 10% 8% 10%

Windows 7 Ultimate 5% 5% 5% 5% 3% 5%Windows 7 Professional 40% 40% 41% 40% 35% 37%Windows 7 Home Premium 3% 3% 3% 3% 3% 4%

Other Windows OS 12% 16% 15% 16% 22% 24%

Other OS 0% 0% 1% 1% 0% 0%Don't Know 5% 5% 5% 6% 5% 5%Not Buying Computers in 4th Quarter

21% 19% 19% 18% 21% 17%

Computer Operating Systems. When corporate respondents were asked which operating systems they’ll be installing on their new PCs next quarter, 13% said they’re installing Mac OS X – up 2-pts from previously. While 48% said they’ll install Windows 7, that’s unchanged.



(B) Corporate Tablet Market: The iPad vs. the CompetitionDespite the downturn in overall corporate IT spending, the corporate Tablet market is one area where demand remains robust.

Does your company currently provide employees with Tablet devices?

Current Survey Aug ‘11

Previous Survey May ‘11





Yes 16% 12% 9% 7% 6% 4%No 80% 82% 86% 88% 87% 91%Don't Know 5% 6% 5% 5% 7% 5%

Note: The May and August 2010 survey question was “Has your company purchased Apple iPad tablets for business purposes?”

A total of 16% of respondents say their company is currently providing employees with Tablet devices – up 4-pts in one quarter and more than double the level of nine months ago.

Who is the manufacturer(s) of the Tablets your company currently provides? (Check All That Apply)

Note: During the survey H-P announced they are discontinuing their Tablet line.



Current Share. Just 16 months after launching the iPad, Apple (85%) continues to enjoy near total domination of the enterprise market – even as the number of tablet competitors grows.

H-P (8%), which ranks a distant second in corporate tablet share, has announced they’re throwing in the towel and discontinuing their TouchPad Tablet line – a clear sign of how tough this market remains for Apple’s rivals.

The H-P decision could create opportunities for other competitors – including Samsung (e.g., Galaxy Tab; 4%), Dell (e.g., Streak; 4%), Motorola (e.g., Xoom; 3%) and RIM (e.g., PlayBook; 2%) – but to date none have posed a serious individual challenge. In fact, both Motorola and RIM have declined 3-pts in enterprise tablet share since our May survey.

Current Survey Aug ‘11




Apple (e.g., iPad, iPad 2) 85% 83% 82% 82%H-P (e.g., TouchPad, Slate, DreamScreen)

8% 4% 9% 11%

Dell (e.g., Streak) 4% 4% 5% 7%Samsung (e.g., Galaxy Tab) 4% 4% 2% 0%Motorola (e.g., Xoom) 3% 6% NA NARIM/Blackberry (e.g., PlayBook) 2% 5% NA NAAcer (e.g., Iconia) 2% 2% NA NAArchos (e.g., 101, 70) 1% 1% 0% 0%Asus (e.g., Eee Pad, Eee Slate) 1% 1% NA NABarnes & Noble (e.g., Nook Color) 1% NA NA NAHTC (e.g., Flyer) 1% NA NA NAMotion (e.g., C5v, F5v) 1% 1% NA NAViewSonic (e.g., gTablet, ViewPad) 1% 1% 1% NALG (e.g., G-Slate) 0% 1% NA NADon't Know 1% 1% 1% 1%Other 3% 1% 6% 6%

Planned Corporate Tablet Buying. Going forward, nearly one-in-five respondents (19%) say their company will purchase Tablets for their employees in the 4th Quarter – up 1-pt since May. Importantly, it’s four times the level of demand we saw just one year ago.



The previous August 2010 survey question was “Over the next 90 days does your company plan on purchasing Apple iPad tablets for business purposes?”

The Apple iPad remains the overwhelming choice for planned corporate tablet buyers, with 80% saying they’ll purchase iPads next quarter – unchanged since the previous survey.

Who is the manufacturer of the Tablets your company is planning on buying? (Check All That Apply)

*The H-P TouchPad was preferred by 10% of future buyers but was subsequently discontinued.

Importantly, we’re still not seeing any major breakthroughs among the competition. But with H-P having removed itself from the market, Samsung (7%; up 1-pt) now shows the most promise, followed by Dell (5%; down 1-pt).

The findings are a further disappointment for Motorola (4%; down 6-pts) and RIM (3%; down 5-pts) – each having experienced a big decline in corporate tablet buying plans since May.

(FOR THOSE COMPANIES BUYING TABLETS IN 4th QUARTER 2011) Who is the manufacturer of the Tablets your company is planning on buying? (Check All That Apply)




Previous SurveyNov ‘10

Apple (e.g., iPad, iPad 2) 80% 80% 79% 78%Samsung (e.g., Galaxy Tab) 7% 6% 7% 4%Dell (e.g., Streak) 5% 6% 5% 9%Motorola (e.g., Xoom) 4% 10% 3% NAAcer (e.g., Iconia) 3% 1% 1% 1%RIM/Blackberry (e.g., PlayBook) 3% 8% 7% 9%Asus (e.g., Eee Pad, Eee Slate) 2% 2% 1% 1%Barnes & Noble (e.g., Nook Color) 1% NA NA NAHTC (e.g., Flyer) 1% 2% NA NALG (e.g., G-Slate) 1% 1% 2% NAMotion (e.g., C5v, F5v) 1% 1% NA NAToshiba (e.g., Tablet) 1% 2% 3% 2%ViewSonic (e.g., gTablet, ViewPad) 1% 0% 0% NASony (e.g., Dash) 0% 0% 1% 1%



Don't Know 2% 0% 1% 0%Other 4% 3% 4% 5%How are Companies Making Use of Tablets? We presented our corporate respondents with a list of business functions and asked them which ones their company is currently using their Tablet devices for.

Internet Access (70%), Checking Email (70%) and Working Away From the Office (68%) remain the three most popular business uses, even as Customer Presentations (44%) and Sales Support (43%) remain highly popular functions as well.

But in a clear sign of how big a threat surging Tablet demand poses to the enterprise PC industry, one-in-three companies (36%) providing Tablets to their employees say they’re using them as Laptop Replacements – a 2-pt increase.

In addition, the percentage using Tablets for Desktop Replacement (6%; up 2-pts) and Netbook Replacement (13%; up 5-pts) has also increased since the previous survey.

What business functions does your company/organization currently use Tablets for? (Check All That Apply)

Current SurveyAug ‘11

Previous SurveyMay ‘11

Internet Access 70% 74%Checking Email 70% 74%Working Away From the Office 68% 70%Customer Presentations 44% 42%Sales Support 43% 45%Laptop Replacement 36% 34%Netbook Replacement 13% 8%Healthcare Applications 10% 9%GPS Navigation 9% 10%Desktop Replacement 6% 4%Other 6% 5%

*Previous Nov ’10 survey question asked: What business functions does your company/ organization currently use the iPad for?



The Impact on Wireless Providers

We also asked respondents of companies planning to buy tablets which wireless service – if any – their company will be using.

The battle continues – with AT&T (31%; up 3-pts) narrowly edging out Verizon (28%; down 4-pts) in the current survey as the number one choice for wireless services among companies buying Tablets next quarter.

For those companies buying tablets in 4th Quarter 2011, which wireless service provider - if any - will your company use for your tablets?

Note: 29% of respondents to the August 2011 survey answered ‘Don’t Know/Other’



(C) Corporate Smart Phone Demand

Mobile Operating Systems

Current Share. In terms of current mobile OS share, the ChangeWave corporate survey shows a jump since the previous survey for both the Apple iPhone OS (44%; up 6-pts) and the Google Android OS (GOOG; 31%; up 4-pts).

This is the seventh straight quarterly increase for both the Apple iOS and the Android OS within the enterprise market in the past two years.

Although it still controls the dominant share of the corporate market – Research-In-Motion’s (RIMM) Blackberry RIM OS (59%) has declined yet another 2-pts in current share since May. We note, however, that RIM’s corporate share is more heavily concentrated in larger companies and its unit volume per company has historically been highest in the industry.



Which of the following mobile Operating Systems are used on the Smart Phones your company currently provides? (Check All That Apply)







Blackberry OS (RIM) 59% 61% 64% 64% 66% 69%iOS (Apple) 44% 38% 35% 33% 31% 30%Android (Google) 31% 27% 25% 20% 16% 10%Windows Phone 7 * 4% 6% 6% 7% 9% 10%webOS (H-P/Palm) ** 2% 3% 4% 5% 6% 7%Symbian 1% 2% 2% 2% 2% 2%Mobile Linux 0% 0% 1% 1% 0% 1%Don't Know 1% 3% 3% 4% 4% 3%Other 1% 0% 0% 0% 0% 0%*In the previous May ’11 and Feb ’11 surveys there were two response choices: ‘Windows Phone 7’ and ‘Windows Mobile (6.5 or earlier); and in the previous Nov ’10 and earlier surveys the response choice was ‘Windows Mobile’.

**In the previous May ’11 and earlier surveys there were two response choices ‘Web OS (Palm Pre/Pixi)’ and ’Palm OS (Treo/Centro)’

Planned Corporate Smart Phone Buying. Similar to tablets, enterprise demand for Smart Phones remains robust going forward, with two-in-five (41%) respondents reporting their company plans to buy smart phones next quarter – up 4-pts to a two year high.

Apple vs. Research-In-Motion. At the individual manufacturers’ level, we’re seeing a major surge in demand for Apple (52%), with more than half of companies planning to buy smart phones next quarter saying they’ll purchase iPhones – a major 6-pt leap since May.

On the downside, RIM (46%) is registering a 9-pt drop, and for the first time has slipped to second place in terms of the percentage of companies planning to purchase their phones.



Despite the setback, we again note that RIM is more heavily concentrated in larger companies and its unit volume per company has historically been highest in the industry. Moreover three new Blackberries were just released as the survey was ending, and the impact of these new models won’t be fully known until our next IT survey in November.

Motorola vs. HTC. After reaching a four year high last quarter, Motorola (MOT; 15%) is seeing a 2-pt slowdown in the corporate market in terms of planned buying.

HTC (15%; up 1-pt) – with a new EVO 3D model and several other releases expected soon – is experiencing an increase in corporate demand for the second quarter in a row.

Samsung. Samsung (10%), which recently released several new smart phones – including the U.S. launch of the Galaxy S II – has also jumped 3-pts to its highest level ever in terms of planned corporate buying in a ChangeWave survey.



(FOR THOSE COMPANIES BUYING SMART PHONES IN 4th QUARTER 2011) Who is the manufacturer of the Smart Phones your company is planning on buying? (Check All That Apply)



Previous

SurveyFeb ‘11




Apple (e.g., iPhone) 52% 46% 45% 40% 34% 35%Research In Motion (e.g., Blackberry)

46% 55% 56% 58% 62% 66%

HTC (e.g. Thunderbolt, Incredible 2, Surround)

15% 14% 12% 17% 16% 10%

Motorola (e.g., Droid 3, Citrus, Atrix 4G)

15% 17% 16% 16% 15% 12%

Samsung (e.g., Infuse 4G, Captivate, Droid Charge)

10% 7% 6% 6% 4% 3%

LG (e.g., Revolution, Vortex, Quantum)

4% 2% 2% 2% 1% 2%

Nokia (e.g., N8, Nuron, E7) 2% 3% 3% 4% 4% 5%H-P/Palm (e.g., Arena, Veer, Pre 3) 2% 2% 2% 1% 2% 3%Dell (e.g., Venue, Venue Pro) 1% 1% 1% NA NA NAT-Mobile (e.g., myTouch 4G, G2x) 1% 1% 1% 1% 2% 1%Other 1% 1% 0% 1% 1% 2%

And the Winner Is. In the midst of a rapidly changing corporate smart phone market, Apple is still the clear momentum winner according to the latest survey results – even though it didn’t have a new summer release for the first time in 5 years.

Apple is widely expected to unveil their next generation “iPhone 5” this fall, and we asked respondents whether the release of an iPhone 5 would have an impact on their company’s 4th quarter purchasing plans. In another encouraging finding for Apple, 13% said a new model release would Increase their company’s overall purchases of iPhones.



Apple is widely expected to unveil their next generation “iPhone 5” this fall. New features are likely to include a faster A5 processor, an 8 MegaPixel camera and a new iOS 5 operating system. If Apple does release the “iPhone 5” this fall, what impact - if any - will it have on your company's 4th quarter smart phone purchasing plans?


iPhone 5 Release Will Increase our Overall Purchases of Apple iPhones 13%iPhone 5 Release Will Decrease our Overall Purchases of Apple iPhones 0%iPhone 5 Release Will Have No Impact on our Overall Purchases of Apple iPhones

30%

Our Company Does Not Purchase Apple iPhones 41%Don’t Know 16%



ChangeWave Research Methodology

The current findings are based on a survey of ChangeWave Research Network members involved with IT spending in their organization, conducted August 10-29, 2011. The goal of the survey was to get an up-to-date picture of IT spending for the 4th Quarter of 2011. To this end, the survey was composed of a sample of 1,618 accredited 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 half of members (48%) have advanced degrees (e.g., Master's or Ph.D.) and 86% 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.

About ChangeWave ResearchChangeWave Research, an independent division of The 451 Group, is a survey research firm that identifies and quantifies change in corporate buying & business trends, telecom trends, and consumer spending & electronics trends.

The ChangeWave Research Network is a group of 25,000 highly qualified business, technology, and medical professionals – as well as early adopter consumers – who work in leading companies of select industries. 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 www.ChangeWaveResearch.com.

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.

About The 451 GroupThe 451 Group is a leading technology-industry analyst company focused on the business of enterprise IT innovation. The company's analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, Washington, DC, London, Boston, Seattle and Denver. For additional information on The 451 Group, go to: www.the451group.com.

For More Information:ChangeWave Research Telephone: 301-250-23637101 Wisconsin Ave. Fax: 240-200-3988Suite 1350 www.ChangeWaveResearch.comBethesda, MD 20814 [email protected]


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