2010 Business Spending Returns to Pre-Recession Levels led by PCs, Networking, and Software, According to The NPD Group

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Sales to businesses through U.S. distributors, commercial technology resellers, and office products dealers rose 12 percent to almost $59 billion in 2010, according to data from leading market research company The NPD Group.

“Business investments in infrastructure are an encouraging sign for the overall economy”

Sales to businesses through U.S. distributors, commercial technology resellers, and office products dealers rose 12 percent to almost $59 billion in 2010, according to data from leading market research company The NPD Group’s Distributor Track® and Reseller Tracking Service, which includes sales of office products to business by contract office supply dealers in addition to IT hardware and software. The increase brought business spending to above pre-recession levels after experiencing a 9 percent decline in 2009.

An increased investment in infrastructure products, from mostly small and medium-sized businesses, propelled total hardware spending up 18 percent to more than $38 billion in 2010, and a major improvement over the 10 percent decline experienced in 2009. The biggest hardware investments were made in the PC market. Revenue jumped nearly 33 percent to $6 billion, and unit sales increased 27 percent. Even coming off tough comps following the launch of Windows 7 in the fourth quarter (Q4 – October - December) of 2009, Q4 2010 PC sales increased by double digits, 14 percent in units and 22 percent in dollars.    

PC business software sales grew 12 percent to $4.2 billion, a strong recovery after the 6 percent decline experienced in 2009. Momentum picked up in the fourth quarter as revenue jumped 17 percent versus 2009. Windows 7, and Office 2010 licensing agreements and database software were key drivers for business software spending.

Network storage products, primarily SAN and NAS products, one of the few major business IT categories to experience growth both in 2009 and 2010, accounted for more than $1 billion in revenue last year. Networking routers and switches was also an area of increased investment where revenue grew 25 percent in 2010 to almost $7 billion.

“We saw strong growth throughout the first three quarters, but it slowed to about 9 percent in the fourth quarter due to the sales lift throughout the IT sector that was associated with the Q4 2009 Windows 7 launch,” said Stephen Baker, vice president of industry analysts at NPD. “All this occurred in a relatively benign pricing environment which was reflected in the strong earnings posted by many tech companies over the past couple of months.”

There were some challenges for business spending in 2010, however, specifically sales of commercial office supplies and printing consumables. While rebounding from 6 percent declines in 2009, sales remained soft, falling 2 percent in 2010, representing a decline of over $1 billion in just two years. However, the end of 2010 brought improving trends as printing consumables and commercial office supplies in Q4 2010 were back to Q4 2008 levels.

“Business investments in infrastructure are an encouraging sign for the overall economy,” said Baker. “Spending on IT products, especially, has traditionally been a way for businesses to invest in future company growth in an efficient and scalable manner. Spending on product segments such as software and network products indicate that small and medium business are putting the technology backbone in place that will enable them to deliver profitable growth as the economy improves.”

About The NPD Group, Inc.
The NPD Group is the leading provider of reliable and comprehensive consumer and retail information for a wide range of industries. Today, more than 1,800 manufacturers, retailers, and service companies rely on NPD to help them drive critical business decisions at the global, national, and local market levels. NPD helps our clients to identify new business opportunities and guide product development, marketing, sales, merchandising, and other functions. Information is available for the following industry sectors: automotive, beauty, commercial technology, consumer technology, entertainment, fashion, food and beverage, foodservice, home, office supplies, software, sports, toys, and wireless. For more information, contact us or visit http://www.npd.com/ and http://www.npdgroupblog.com. Follow us on Twitter: @npdtech and @npdgroup.

FOR MORE INFORMATION:
Sarah Bogaty
+1 516 625 2357
sarah(dot)bogaty(at)npd(dot)com

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