Asian IT slump fails to abate, IDC reports

Asian IT slump fails to abate, IDC reports

The IT industry in Southeast Asia will remain in a slump for the rest of this year, but selected countries and well-positioned vendors will see an improvement in 1999, according to predictions from IDC.

Total IT spending in Asian countries will contract by around 20 per cent this year in US dollar terms, according to IDC. Even in local currency terms, Thailand, the Philippines, and Indonesia will post negative or near-zero growth. Only Malaysia and Singapore will show spending growth in local currencies of above 10 per cent in 1998.

IDC also predicted that software and service companies are liable to fare better than their hardware counterparts given the current market situation, with end users going ahead with projects but trimming their budgets.

In many cases, that means staying with older hardware or increasingly turning to lower-end PCs.

"There is a strong move in the region to sub-$US1000 PCs, and this is a permanent shift," said Dennis Philbin, managing director of IDC Asia-Pacific.

"Local players that lack scale, and smaller clone vendors are the likely losers in this environment." Philbin said that hardware sales into the consumer market would be especially hard hit, and vendors relying on that market would be strongly impacted.

IDC predicted there will be a return to IT spending growth in Southeast Asia in 1999, when the companies which have survived the crisis will begin to prosper again.

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