ChangeWave HotWire Blog

Tough Times for Corporate Software Spending

2008-05-13T10:00:28Z

But Virtualization Shows an Uptick

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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

2008-05-05T19:33:20Z

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?

2008-04-26T02:04:26Z

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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%).

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.

Related ChangeWave Articles
-- Smart Phone Wars: RIM vs. Palm vs. ...Android Operating System? (4/1/08)
-- RIM Leads in Corporate Smart Phone Market (2/26/08)

In the News
-- 3G iPhone positioned to crush Blackberry (4/29/08 - Arstechnica)
-- Apple and RIM dominate smartphone biz - ChangeWave (4/29/08 - Macworld)
-- Watch out, BlackBerry -- iPhone flaws cited in survey soon to be remedied
(4/29/08 - Baltimore Sun)
-- IPhone Hasn't Buried BlackBerry (4/28/08 - Wall Street Journal)

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

2008-04-22T20:55:30Z

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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."

Which companies are expected to benefit most from this growth in demand for bionics? Joint Replacement manufacturers Stryker (SYK) (27%) and Zimmer (ZMH) (20%) were two of the top firms mentioned, along with cardiac device maker Medtronic (MDT) (27%).

"Medtronic recently purchased multiple patents and technology from Biophan Technologies with regards to MRI-safe pacemaker and pacemaker leads," according to respondent WPW6938. "Aging baby boomers that require pacemakers and defibrillating implants will benefit from devices that also allow for MRI scanning to be done."

Manufacturers Stryker and Zimmer offer a variety of custom products and solutions that help to simplify joint replacement surgeries. They are well positioned to capitalize on the growing momentum for bionic devices. As respondent MAG02539 points out, "Joint replacement solutions are becoming more specific for the patients' particular problem, requiring less complicated surgeries."

New Medical Breakthroughs

Which types of devices are most likely to experience new technology breakthroughs over the next 12-24 months?

Joint Repair/Replacement Devices (31%), along with Prosthetic Limbs (30%) head up the list of devices most likely to experience technology breakthroughs going forward.

Dental Implants (25%), Vision Correction Devices (23%) and Back/ Spine Repair & Replacement solutions (21%) also received significant mention.

In another big positive for the growth of "bionic" devices, 31% of doctors think insurance companies and other payors will be More Willing to reimburse healthcare providers for these devices over the next 12 months. Only 18% think they will be Less Willing.

So, is the baby boomer generation set to go "bionic"?

Yes, according to the ChangeWave survey results. And not only won't it cost six million dollars, but insurance companies appear increasingly willing to pick up the tab.

Jim Woods co-wrote this article.

Online Shoppers Cut the Middleman

2008-04-22T20:20:41Z

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.

Got Any 3G, Steve?

2008-04-22T20:00:15Z

April 22, 2008

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For all the success of the Apple (AAPL) iPhone, there are still some pretty big issues iPhone owners want to have addressed - and first among them is 3G capability.

That's the number one feature iPhone owners want integrated into the next generation of the iPhone (19%) - according to a recent ChangeWave survey - even more so than third-party software (18%), GPS functionality (15%) or E-mail integration (10%).

The survey also uncovered the exact same concern among 779 consumers who said they'd likely be buying an iPhone in the future.

When we asked them why they hadn't yet purchased an iPhone, one-in-four said they were holding out to wait for the next generation iPhone (14%) or for 3G network compatibility (11%).

That's good news for Apple, assuming the next generation of the iPhone is
3G compatible.

Hey Steve, are you seeing the same numbers we are? We'll know in June...

High Marks for Chuck

2008-04-22T17:23:25Z

April 22, 2008

Seems like brokerages are barraging us for business at every turn - whether through reduced service fees, free trades, or wildly inflated claims to having the best data and most satisfied customers around.

But just how satisfied are their customers for real?

A recent ChangeWave survey asked more than 2,000 investors to rate their satisfaction with the online brokerages they use. And while satisfaction levels were relatively strong overall, it turns out there is definitely a standout in the industry:

It's Charles Schwab (50%) -- which led the rest of its competitors by a comfortable margin in terms of having the highest percentage of customers report they're Very Satisfied with their service.

Scottrade (45%) and Fidelity (42%) came in second and third respectively to round out the winners circle.

At the other end of the spectrum, only a quarter of the respondents who use
T. Rowe Price (26%) reported they were Very Satisfied with the service.

Big Surge for Solar Energy and LEDs

2008-04-15T15:48:13Z

ChangeWave Survey Shows Major Corporate Shift to Energy Alternatives

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By Paul Carton
April 15, 2008

There's a new standing order in corporate America and it goes almost exactly like this:

Be much more efficient in your energy usage.

A sea change is occurring in the way U.S. businesses view energy consumption, according to a March 24-28 ChangeWave survey of 1,400 respondents knowledgeable about their company's energy spending.

Nearly three-in-five respondents (57%) say their company is concerned about reducing energy usage, and these heightened concerns are leading to a transformational shift in corporate energy consumption - with an extraordinary 26% of respondents saying their company has used Less energy than normal during the past six months.

In comparison, only 16% of respondents say they've used More energy over this time period.

In a related finding, nearly one-in-four respondents (23%) report their company's spending on energy efficient products and technologies will Increase over the next six months - three-times the percentage that see a Decrease (8%).

"The perfect storm of rising energy costs and concern over global climate disruption is forcing companies to rethink the most basic ways they use energy," said ChangeWave analyst Joshua Levine. "A tremendous shift in corporate perception is occurring and it's going to impact virtually all industries and create investment opportunities in the process."

To track the corporate race towards greater energy efficiency, we asked respondents which technologies and products their company is actually using. Two technologies - solar power and LED lighting - stand out above the rest.

Alternative Technologies - Here Comes the Sun

Corporate use of "off-the-grid" energy technologies is gaining momentum, with 8% of respondents saying they currently use alternative sources to generate power. Going forward, better than one-in-five (21%) say they'll install and make use of alternative energy sources within the next five years.

The shift to alternative energy is great news for solar power, which dominates the landscape.

As the above chart shows, solar is far ahead of other alternative energy options, both in terms of current corporate usage (51%) and future planned users (72%). Wind Power is relegated to a distant second for current (24%) and future users (19%).

Solar Flares

According to the survey, an unattractive payback period (24%) still ranks as one of the big barriers to corporate use of alternative power technologies, second only to initial capital investment (39%). And when asked how long they think it will take to achieve a payback for their current solar energy investments, the consensus estimate among respondents is seven years (for future solar energy investments it's 6.4 years).

But despite this, with crude oil prices hitting new all-time highs the solar industry clearly has momentum and is helping bring about a transformational shift in corporate energy use.

"Solar's rapid expansion on the corporate energy efficiency front is good news for companies in the solar food chain," says Josh Levine. "Polysilicon producers, solar cell manufacturers and solar installation firms are all likely beneficiaries of the trend toward the sun."

Adding to solar's attraction is the near certainty of continued tax credits.

U.S. lawmakers appear likely to pass an extension of a key solar industry tax credit. The bill, if passed, would extend the 30% commercial tax credit by eight years, the residential credit by one year and would remove a $2,000 cap on residential systems. Importantly, utilities would be able to take advantage of the credit for the first time.

According to Levine, the companies best positioned to ride this solar wave are the major photovoltaics manufacturers like First Solar (FSLR), SunPower Corp. (SPWR) and Suntech Power Holdings (STP) - each of which are leading the solar energy industry ever closer to the "Holy Grail" of alternative energy economics - grid price parity.

LED Lights Up

Along with solar power, the survey shows LED lighting is another standout in the corporate race towards energy efficiency.

Overall, lighting is the single easiest area for businesses to reduce their energy usage.

It is little wonder then, that energy efficient lighting is the top product/technology companies will be purchasing over the next six months to improve energy efficiency.

And while Compact and Regular Florescent Lighting maintain the greatest market share in terms of corporate purchasing over the past six months - LED Lighting (21%; up 7-pts) is the clear momentum leader going forward.

One big obstacle to the wider adoption of LED lighting technology is cost, according to survey respondents. Nearly three-in-four respondents (74%) say their company would only consider replacing all of its lighting with LED if the cost were less than $5 per bulb. But despite pricing issues, the survey shows that LED lighting is rapidly being adopted by U.S. companies.

This bodes well for major lighting companies like Philips Electronics (PHG) and General Electric (GE), who are the top LED manufacturers and distributors. However, Levine says it is the smaller pure-plays in LED lighting technology that are set to be the biggest winners in this market.

"Among the handful of innovators that have developed LED technologies, Cree Inc. (CREE) stands out as a likely candidate to be eventually acquired by a lighting giant," says Levine. "The light fixture market is a 2.5 billion unit market worldwide, and Cree's technologies are clearly addressing this enormous opportunity."

Back in a February ChangeWave report we named 2008 "The Year of Solar Power." The current survey shows the transformation in the way companies view energy consumption continues to represent a giant opportunity for investors, particularly within the solar and LED markets.

Jim Woods co-wrote this article.

Marriage Made In Heaven?

2008-04-15T13:00:41Z

April 15, 2008

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Better service = higher satisfaction. It's as simple as that, according to the latest ChangeWave cell phone survey. Verizon (VZ) - the perennial leader in customer satisfaction among cellular service providers - wins it again with a 42% Very Satisfied rating.

Tied for second, a distant 14-pts behind, are AT&T (T) and T-Mobile with 28% Very Satisfied ratings. That represents a 2-pt decline for AT&T in customer satisfaction since our January survey.

Customer Loyalty. Whether its sheer merit or sheer repetition of the annoying "We never stop working for you" jingle, Verizon customer loyalty is thriving. Only 10% of its current customers say they plan to switch to another cellular provider, an industry-wide low. Funny thing though, while AT&T customers say they're far less satisfied, AT&T's churn is just 11%.

So what gives? Why are their customers so loyal? And why are more people saying they'll switch to AT&T (28%) than Verizon (22%)?

The answer is the Apple (AAPL) iPhone, which looks set to capture more than a third of smart phone sales over the next 90 days, according to the ChangeWave survey.

AT&T's exclusive contract with Apple has clearly given it an advantage over Verizon - even if Verizon is by far the better service. So in hindsight, based on the numbers so far, AT&T's decision to hook-up with the iPhone looks like a marriage made in heaven.

Now if only their customers were happy and the EDGE network weren't so awfully slow...

U.S. Inflation Worries Spiral as Spending Falls and Customers Stream to Costco and Wal-Mart

2008-04-14T20:38:55Z

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By Paul Carton
April 14, 2008

The discounters are back in vogue as inflation rears its ugly head.

That's the verdict from ChangeWave's latest consumer survey, which shows a large-scale movement to discount retailers driven by skyrocketing inflation and an overall spending environment that continues to slow.

The ChangeWave survey of 4,735 consumers, completed April 7th, looked at spending for the next 90 days.

In a clear sign the economic downturn isn't over yet, this is the third-consecutive ChangeWave survey in 2008 showing a recession in consumer spending. However, the current survey does contain one small glimmer of hope - the actual rate of spending decline appears less severe than in either of the previous two surveys.

Better than two-in-five U.S. respondents (42%) say they'll spend less over the next 90 days than they did a year ago - 3-pts worse than our February 2008 survey. Another quarter (25%) say they'll spend more - unchanged from previously.

Going forward, however, the most disconcerting finding isn't just tighter spending; it's the huge and growing toll that inflation is having on consumers.

Inflation Rears Its Ugly Head

We asked those who said they are spending less to tell us why, and Inflation was by far the greatest concern, cited by nearly half of respondents (46%; up 6-pts since February). In a related finding, 43% pointed to Higher Energy Costs as a reason they'll spend less, a whopping 11-pt jump since the previous survey.

Discounters Transform Retail Shopping

Sharply lower spending and increased inflation - coupled with deteriorating home values - are conspiring to produce an increasingly beleaguered and worried American shopper.

The survey shows half of respondents think the economy is going to worsen over the next 90 days, compared to just 14% who think it will improve.

Since November 2007 there has been a 76% jump in the percentage saying they are unsatisfied with their personal finances (from 21% to 37%).

But the phenomenon of the worried consumer represents great news for discount retailers and wholesale clubs. Going forwards, Costco (COST; Net Score = +8) is once again the biggest winner among shoppers, while Wal-Mart (WMT; +1) also shows positive growth for the next 90 days, though 1-pt less than previously.

Note that Costco and Wal-Mart were also the two big winners in our previous survey (February 2008).

On the downside, Sears (SHLD; Net Score = -10), Bed Bath & Beyond (BBBY; -10), Linens N Things (-8), and Macy's (M; -8) all show considerable weakness going forward, as do JC Penney (JCP; -6), K-Mart (SHLD; -6), and The Gap (GPS; -6).

Where Has Spending Slowed The Most?

Once again, it's spending on consumer electronics (-8 pts) that is registering the biggest slowdown of any category. In fact, it's the weakest 90-day outlook for electronics spending ever recorded in a ChangeWave survey.

Restaurant Spending (-2) also looks particularly weak going forward as does Durable Goods (-3).

To top it off, the survey points to a relatively small number of consumers using the special tax rebate check they'll be getting this spring to buy consumer goods. Rather, consumers appear far more likely to use defensive tactics - like saving money or paying off debt - during this period of economic uncertainty.

When you couple all of the above with inflation's increasingly sharp toll, there is little in the current survey to suggest the bottom has been reached in the consumer spending downturn.

Jim Woods co-wrote this article

Water Industry Spending Still Up - But Clouds Loom

2008-04-08T20:51:06Z

By Paul Carton
April 8, 2008

The world is worried about water - and investors are worried about water companies.

Midst mounting concerns over the scarcity and quality of the world's water supply, a recent ChangeWave survey of industry professionals found increased water project spending for 2008 - but not at the extraordinary levels of recent years. And troubles may lie ahead.

The February survey asked 147 respondents working in the water industry about project spending over the next 12 months, and two-thirds (67%) say they think spending will increase. But that's a 14-pt decline since our previous survey in June 2007.

Despite the decline these results are still relatively upbeat. But according to the survey there is a cloud looming over the water industry that could drive down the numbers - and its epicenter is in the U.S.

Zeroing In On the United States

The Wall Street Journal recently reported that 40% of fresh water consumption in the U.S. is from industrial applications and that water use normally drops in a recession. Moreover, the stock prices of many U.S. water utility companies have fallen recently on recession fears.

Add to this the findings of our ChangeWave survey, which shows a drop in the percentage of U.S. water industry respondents who think project spending will increase over the next 12 months within the private, federal and local government sectors.

Note the main reason for these more conservative growth projections is very straightforward:

By better than a 2-to-1 margin, industry respondents believe a U.S. recession would lead to decreased water project spending - as summarized in the following chart.

"Investors in water should keep a close eye on water project spending during a recession," says Josh Levine, co-editor of ChangeWave Investing. "But our survey also shows there are still plenty of opportunities out there. In particular, industry respondents are most excited about two sectors right now - Wastewater Treatment and Water Infrastructure Repair and Replacement. That's where we are focused."

Industry respondents were also excited about a short list of top water companies, with industry behemoth General Electric (GE) (42%) ranking as the leader. Of course, GE is a huge conglomerate and water is only a small part of their business. But there are a handful of other companies industry respondents cited as having momentum:

American States Water (AWR) - the one utility of this group, engaged in the purchase, production, and distribution of water for California residential and commercial customers. California's favorable regulatory environment and rapidly increasing population bodes well for the company's future profits.

Flowserve (FLS) - a seller of precision-engineered flow control equipment, Flowserve receives two-thirds of its business from overseas markets in water as well as other industries. Lately the company's been on a roll, having experienced record bookings in 2007.

Gorman-Rupp (GRC) - the company's pumps and fluid control equipment are used in water, wastewater, and other industrial applications. Gorman-Rupp recently announced a 5-for-4 stock split and is enjoying record sales, a boost in new orders, and increased penetration within international markets.

Calgon Carbon (CCC) - focuses on purifying water and air through the manufacture of granular activated carbon used in the removal of organic compounds from liquids and gases. Recently it's been an exceptional performer in the water group, its shares rising considerably over the past year.

Nalco Holding Co. (NLC)- provides water treatment products and services to prevent corrosion, contamination and the build up of harmful deposits. Its focus is on production processes that enhance efficiency and improve customers' end products.

As Ben Franklin noted more than two centuries ago, "When the well's dry, we know the worth of water." There may be short term dips in the rate of water spending, but savvy investors know that water issues are going to be with us for decades - indeed, centuries - to come.

Keep your eye out for an upcoming ChangeWave survey that dives further into ongoing water industry trends.

Jim Woods co-wrote this article

Smart Phone Wars: Apple vs. RIM vs. ...the Android Operating System?

2008-04-01T13:38:49Z

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By Paul Carton
April 1, 2008

The release of the Apple (AAPL) iPhone rocked the cellular industry last year, and some analysts are now asking if the pending release of Google's (GOOG) Android cellular phone operating system may have a similar impact.

The answer: Not likely.

According to a March 17-24 ChangeWave survey of 3,597 consumers, the smart phone industry continues to transform into a two-horse race between Research In Motion's (RIMM) BlackBerry and Apple's iPhone.

While RIM currently dominates smart phone sales among consumers, the Apple iPhone has had tremendous success and continues showing momentum in this market. Meanwhile, the longstanding woes of Palm (PALM) and its Treo are accelerating.

RIM's On Top, But Apple Is Growing

RIM (42%; down 1-pt) maintains its towering lead in smart phone market share, even as number two Palm (16%; down 2-pts) is maintaining its two year losing streak. Palm has now lost market share in seven-consecutive ChangeWave surveys dating back to October 2006.

Now within striking distance of Palm, the Apple iPhone (9%) continues to exhibit strong growth in the smart phone market - jumping 3-points since our previous survey in January.

Smart Phone Reviews: Customer Satisfaction

If customer satisfaction is a good indicator of future growth, Apple occupies the sweet spot. An extraordinary four-in-five iPhone owners (79%) report they're Very Satisfied with their iPhone - a significant lead over number two RIM (54%) and far ahead of all other major manufacturers.

In the chart above we see the percentages of respondents who say they are Very Satisfied with their current cell phone - broken out by manufacturer. We note that Palm (22%) again ranks at the bottom in terms of customer satisfaction.

Going Forward: iPhone Has Momentum

Among respondents planning to buy a new smart phone in the next 90 days, better than one-in-three (35%) say they'll purchase an Apple iPhone - a whopping 12-point jump in planned purchases since the previous ChangeWave survey in January 2008.

RIM (29%) comes in second - down 3-points from previously, while Palm (3%) has taken yet
another big hit, falling 5-points.

The Apple uptick may be at least partially attributable to the recent flurry of announcements regarding the iPhone's Software Development Kit. A total of 10% of respondents say this new development has made them More Likely to buy an iPhone in the future.

Mobile OS - The Androids Are Coming?

We also asked respondents in our smart phone survey which mobile operating system they'd like to have on the phone they plan on buying. As expected, the consumer market is dominated by the popular RIM and Apple smartphone operating systems.

Note that the Google Android OS isn't being offered yet to the general public, and it's still too early to gauge its full impact. However, the current survey begins to shed some initial light on the smart phone market potential for the Android.

While just 2% of respondents say they're Very Likely to use the Android operating system, another 15% say they're Somewhat Likely - indicating there is some consumer interest in the latest Google brainchild.

However, based upon the quickly evolving RIM vs. Apple competitive landscape - and the fact that both companies have high customer satisfaction ratings - the likelihood of Google's new smartphone software competing against either the Blackberry or Apple iPhone operating systems seems farfetched at this point.

Rather, the Android's potential niche market would appear to lie within a handful of second tier players such as HTC. But with top-rated smart phone manufacturers RIM and Apple sucking up all the oxygen in this extraordinarily competitive market, the current survey suggests that Google's entry into the space will be anything but easy.

Service Providers: It's a Two-Pony Contest

In addition to the RIM vs. Apple battle, there is also a two-horse race among cell phone providers - with Verizon (VZ) (31%; up 1-pt) and AT&T (T) (29%; up 1-pt) jockeying for the top spot in current market share.

In terms of planned buying going forward, AT&T (28%; up 3-pts) appears to be getting a bump-up based upon Apple's recent flurry of announcements. When Apple planned buying goes up among consumers, so does AT&T by virtue of their exclusive carrier agreement with Apple.

Verizon (22%), on the other hand, shows a 1-pt uptick in planned buying.

As the smart phone wars rage on, one thing has become eminently clear: Consumers are in love with fruit flavors - especially Apples and Blackberries.

Jim Woods co-wrote this article

Related Article:
RIM Dominates the Corporate Smart Phone Market (February 26, 2008)

Web Explosion

2008-04-01T13:29:27Z

April 1, 2008

The use of streaming video over the web has more than doubled in the past year, as sites like YouTube and Facebook show no signs of slowing. Similarly, file sharing software has led to an explosion in the amount of large files transmitted over the Internet.

Internet Service Providers (ISPs) and networking companies have struggled to keep pace - and a recent ChangeWave survey of the computer networking industry suggests far more rapid growth lies ahead.

Case in point, nearly two-in-three industry respondents (26%) think the delivery of streaming video has significantly increased the demand for networking technology/products, while 38% say it's caused a moderate demand increase.

In response to escalating demand pressures, some ISPs have resorted to questionable tactics to curb file sharing and online video watching.

Comcast (CMCSA) recently admitted they had blocked file-sharing technologies from San Francisco's BitTorrent and others because the company felt they were using up too much bandwidth. But in an abrupt about face, they now say they'll work with BitTorrent to find better ways to transmit files over the Internet.

Who wins big time from the scramble to modernize an outdated internet backbone? Cisco (CSCO) of course - along with the big fiber carriers like Verizon (VZ) FiOS and AT&T (T) U-Verse. Who loses? ISPs with outdated networks and inadequate bandwidth to keep up with explosive demand.

Wii Gamble Still Paying Off

2008-04-01T13:20:24Z

April 1, 2008

Nintendo's Wii gamble continues to pay off handsomely according to ChangeWave's latest consumer survey - with demand for the company's video console greater than that of its two competitors combined.

In case you're unfamiliar with the Wii, users actually perform the physical motions when playing a game. So in tennis, players literally swing their arm like they were holding a tennis racket - bringing real-life movement and excitement to the game, not to mention exercise.

That attribute alone has spurred demand for the Wii among older generations of customers, along with the more traditional demographics for video consoles.

Even midst the current economic uncertainty, Wii demand remains super strong according to ChangeWave's February 2008 survey - with 8% of consumers saying they plan on buying one over the next 12 months.

In comparison, going forward the PlayStation 3 and the Xbox garnered 2% and 1% respectively.

PC Spending Heads South

2008-03-25T18:53:31Z

Latest ChangeWave Surveys Show Slowdown in Personal Computer Sales

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By Paul Carton
March 25, 2008

PCs ain't selling like they used to.

That's the conclusion drawn from two recent ChangeWave surveys which show the economic slowdown is knocking back demand for personal computers. And our February surveys of consumers and businesses clearly show deteriorating PC sales going forward.

Over The Next 90 Days...

Only 8% of the 4,427 consumers surveyed by ChangeWave in late February say they'll be buying a laptop in the next 90 days - the lowest level of consumer laptop demand in the past 12 months.

The same trend was seen in desktop PC purchases, with just 6% saying they'll be buying one - also a low for the year.

Things weren't any better on the corporate side, where PC buying has also slowed precipitously. In February, only 73% of 2,204 corporate respondents said their company plans on buying laptops in the next quarter - down 4-pts from a year ago. It's the same pattern for desktops, with corporate purchases down 5-pts.

Given such big declines, which computer manufacturers will be hurt most?

Apple Still Relatively Strong

Despite the slowing PC environment, planned purchases of Apple (AAPL) Macs remain relatively strong.

Looking at the next three months, Apple remains the leader among consumers who plan to buy a laptop (31%) - down just 2-pts from the all-time high recorded in our previous survey. Apple planned desktop purchases (28%; down 1-pt) are also near record levels.

Importantly, Apple's numbers are up more than 50% from a year ago.

Corporate planned Mac purchases are also at or near record highs, as laptops (7%) were unchanged from previously, while desktops (6%) fell just 1-pt.

And in a clear sign PC buyers like what Apple is doing, our survey showed the company continues to set the standard for customer satisfaction.

Among corporate respondents using the Leopard operating system, over half (53%) report they are Very Satisfied. This compares to a 40% Very Satisfied rating for Windows XP Pro users, and a dismal 8% Very Satisfied rating for Microsoft Vista Business (8%).

Clearly, the Leopard OS is a crowd pleaser.

Dell: Back To The Future

Dell's (DELL) fortunes going forward are far different than Apple's.

Our previous consumer PC survey showed Dell with a small uptick in planned consumer buying, but that rise appears short lived - they are once again losing traction going forward. Planned purchases of Dell laptops (28%; down 2-pts) and especially desktops (32%; down 4-pts) are considerably weaker than in our previous survey.

Dell is also plagued by a downturn in planned corporate PC buying for next quarter, with desktop (32%; down 3-pts) and laptop (32%; down 1-pt) purchases falling to new lows.

"It's like déjà vu, all over again," Yogi Berra famously said, and that's what it looks like as Dell once again resumes its market share slide.

H-P Weak, But There's a Twist

Hewlett-Packard (HPQ) also wasn't spared in our surveys, as they are experiencing weaker PC sales going forward - led by a big drop in consumer planned buying of desktops (18%; down 5-pts) and laptops (19%; down 2-pts).

On the corporate side, planned purchases for H-P desktops fell 1-pt to 17%, while laptops dipped 2-pts to 14%.

One thing in H-P's favor, however, is their strong sales overseas (nearly 70% of their total sales) - where the current slowdown is likely having less of an impact. Note that our ChangeWave surveys focus mainly on the U.S. market.

When we did ask respondents living outside the U.S. about Hewlett-Packard planned purchases, H-P registered higher market share numbers for consumer desktops (22%), corporate desktops (20%) and corporate laptops (17%).

But despite the couple of bright spots in our surveys, it's clear that overall visibility in both consumer and corporate PC purchasing is on the decline.

Here is a video version of the survey results:

Jim Woods co-wrote this article.