Value of IT market increases 5% in 2006: peripherals and popularity of social media driving growth.

The value of the IT market was nearly [pounds sterling]9 billion in 2006, according to the GfK IT Barometer released today, a 5% increase year-on-year. GfK's research also highlights the increasing popularity of social media, such as Youtube.com, with huge growth in the sales of peripherals such as PC speakers and webcams.

Key drivers for growth

The key driver behind the growth is the tremendous demand for mobile PCs, which accounts for more than 30% of the value of total IT equipment & software purchases. Aside from PCs, the market is seeing significant growth within its lower valued peripherals. In particular, consumers are updating their personal multimedia infrastructure in 2006, highlighted by significant growth within such areas as Multimedia Cards, PC-speakers and webcams. This also mirrors the adoption of services like Skype, Youtube.Com and personal music management and accounts for an increasing in multi-media communication also the need for additional disk-capacity.

Although sales of digital photo frames were relatively small, with only 3000 units sold each month at the beginning of 2006. Volumes increased in October to 7,000 units due to a wider product range available on the market which offered competitive pricing. In particular, the recorded increase in demand of digital photo frames by consumers over the Christmas period was enormous with over 100,000 units sold, bringing the value of the market up to about [pounds sterling]1,000,000 for December alone. In fact, 66% of digital photo frame sales in 2006 were in December.

The main drivers for growth in the second half of 2006 were:

* Mobile PCs worth [pounds sterling]1,6bn

* Multimedia cards worth [pounds sterling]80bn

* PC-speakers up 73% in value year- on-year

* Webcams worth [pounds sterling]77bn

* Storage devices up 31% year- on-year

Segments in decline

IT market segments that declined in 2006 were notably monitors, printers and multi disk drives. The display segment is generally linked with the downtrend of the desktop market, and as a result we see a loss in value here for monitors. Nevertheless, even in this weak environment there are niche segments with sustainable growth such as wide-screen monitors, and digital photo frames.

The main segments in decline in the second half of 2006 were:

* Monitors down 19% in value year-on-year

* Printers down 21%

* Multi disk drives down 32%

Commenting on GfK's IT Barometer, Anthony Norman, Business Group Director, GfK, said: "Falling price barriers have been the most significant trend in 2006. There are, however, signs that this is nearing an end, specifically within the major product groups. With the launch of Windows Vista the PC market is expecting to have an even stronger impact on the total IT market in 2007, not in the least due to higher hardware requirements for running it. "In particular, memory vendors and storage manufacturers are looking positively toward the launch as Vista promises better performance while creating demand for more memory, additional storage and wider screens."