Census Bureau: Companies spend $251 Billion on network and computer tech

   US businesses spent $251 billion on information and communication technology equipment and computer software in 2006, an increase of a little over  6% from 2005, the US Census Bureau reported today. 

Not surprisingly the rapid pace of technological advances in computers, telephones, fax machines and electromedical apparatus and network gear, have resulted in these assets being replaced much more quickly than other types of equipment, the bureau said in its latest Information and Communication Technology Survey 

Many companies write off the full cost of these assets during the year of purchase rather than depreciating the cost over two or more years, the study found. Of the total spending in 2006 on information and communication technology equipment and computer software, or e-business infrastructure, noncapitalized spending accounted for $90.8 billion (36%), and capitalized spending accounted for $160 billion (64%). Noncapitalized spending in 2006 was unchanged from 2005, while capitalized spending increased almost 11%.

Noncapitalized expenditures are expenses for assets that have a useful life of more than one year and are written off in the same year in which they are made. Capitalized expenditures are expenditures for assets that have a useful life of more than one year and are usually depreciated, the bureau found. 

In the three categories of noncapitalized spending on e-business infrastructure, purchases of equipment accounted for almost $19 billion; operating leases and rental payments, $18 billion; and computer software expenditures, $54 billion, the survey stated. 

Other findings included:  

·          The largest share of noncapitalized equipment purchases, $13 billion, went for computers and computer peripherals, over 6% increase over 2005. 

·          The largest share of noncapitalized operating leases and rental payments, almost $12 billion, went for computer and computer peripherals. 

·          The largest share of noncapitalized computer software expenditures, almost $31 billion, went for purchases and payroll for developing software. The rest, $23 billion, went for software licensing and service/maintenance agreements. 

·          Two categories accounted for total capitalized spending on e-business infrastructure in 2006: purchases of equipment, $100.6 billion, an increase of 7% from 2005; and purchases and payroll for developing software, $59.3 billion, an 18.4 percent increase over 2005. 

·          In 2006, about 77% of noncapitalized spending and about 75% of capitalized spending was concentrated in five business sectors: information; finance and insurance; manufacturing; professional, scientific and technical services; and health care and social assistance. 

·          The information sector spent almost $63 billion on equipment and computer software in 2006, an increase of almost 14%  from 2005. That represented 25% of all spending in e-business infrastructure in 2006. Of the sector total, a little over 22%  went for noncapitalized expenditures; 80% went for capitalized expenditures. 

·          Spending in the finance and insurance sector for equipment and computer software totaled almost $49 billion. Of this amount, almost $21 billion went for noncapitalized spending and $27.5 billion for capitalized spending. The finance and insurance sector accounted for about 19% of total e-business infrastructure spending in 2006. 

·          The manufacturing sector spent $35 billion for equipment and computer software in 2006, an increase of almost 6% over 2005. Of this amount, almost $17 billion was for noncapitalized expenditures and $18 billion for capitalized expenditures. Manufacturing accounted for 14% of total e-business infrastructure spending in 2006. 

·          Spending for the professional, scientific and technical services sector totaled almost $26 billion in 2006. Of this amount, a little over $12 billion went for noncapitalized spending and almost $14 billion for capitalized spending. This sector accounted for 10 % of total e-business infrastructure spending in 2006. 

The bureau said the report is based on a random sample of about 46,000 companies with employees. Responding firms account for about 76% of the total e-business infrastructure spending estimate. 

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