With Thailand's economy in a slowdown, International Data Corporation (IDC) Thailand is still predicting Thai IT market revenue growth of 10 per cent in 1997 from last year's 41.6 billion baht ($US1.6 billion).
Pavadee Kananurak, research manager of IDC Thailand, cites the economic slump as the reason for the conservative figure.
Another important factor, she said, is that the IT industry needs a push from the government, which needs to be more serious about IT implementation. The government should be the biggest IT user in the country, but its current spending amounts to only 20 per cent of the overall IT market spending, said Pavadee.
The government's IT budget for this year was set at 9.0 billion baht, but this was before the announcement of budget cuts which may yet affect the government's IT spending. More than half of the budget is supposed to go to the education sector, and 10 per cent to university affairs, 9 per cent to finance, 7 per cent to communications, 4 to health and 12 for other government sectors.
IDC's estimates of last year's market place single-user systems (including PC, workstation) as accounting for 57 per cent of the total market. Servers are estimated to have accounted for another 13 per cent, with associated multi-user system products (including storage and printer servers) at 12 per cent, data communications (including LAN hardware, data communication equipment covering hub, router and switching) at 4 per cent, and packaged software at 14 per cent.
IDC has reported PC sales for 1996 to have reached 321,000 units with a value of 21.6 billion baht. Desktops, notebook and PC servers account for 91 per cent, 6.7 per cent and 2.4 per cent of the sales respectively. For 1997, the projection for PC sales stands at 398,100 units. Growth is expected to be seen in the second half of this year driven by the opening of bids for government projects and the introduction of new technologies like Intel's Pentium II processor. This year, low-end PC servers are predicted to gain more marketshare as well with better price-performance.
In the server operating system space, Unix still dominated the market last year with 765 systems shipped, at a value of $52.2 million, led by Sun Microsystems, IBM and Hewlett-Packard, while NT systems registered sales of 1023 units valued at $20.2 million.
Looking at the local vendors, IDC Thailand commented on what they see as an inevitable merger of computing, communication and content in Thailand. Telecommunications companies are concerned about building high-speed digital transmission backbones and managing high-quality public distribution systems. This will help them play a big role in providing not only communication services, but will also fuel growth into related markets.
Presently, telecommunications companies like United Comm-unications (UCOM), Jasmine International and Shinawatra Computer & Communications (SC&C), are moving into the IT market as systems integrators, and network managers. The advantages of their financial strength, infrastructure base and business clout allows them to step into related businesses like computers without any difficulty.
Mergers and alliances are also expected as computer companies record slow growth in this volatile market, noted IDC. Mergers and alliances seem to be the only way for these companies to remain competitive.
More than a good price
Moving on to more regional trends, IDC commented that in Asian countries PCs remained the hottest commodity, but increased competition has forced vendors to offer value in their products in order to earn the loyalty of clients, especially large corporate sites.
A survey done by IDC among 2750 commercial respondents in selected Asian countries revealed that post-sales support has edged pricing as the prime consideration when buying name-brand PCs. The ability to customise a PC's configuration was marginally less important than the price point.
"Buyers are now sensitive to what type of warranty and service you can offer them, aside from good price," said Pilippe de Marcillac, senior vice-president of worldwide research.
In Thailand, it is evident that vendors recognise this necessity. Compaq, HP and Digital Equipment have increased, and are still planning to expand, their sales and service channels in an effort to preserve leadership and gain revenue from services.
IDC said earlier that the presence of direct sales pioneer Dell Computer would also trigger customers' attention into the quality of service PC suppliers provide. This is because Dell promotes its post-sales support infrastructure as one of the main selling points for its products.
Post-sales support is also becoming an important differentiation for name-brand PCs as clones compete effectively on technology and price points, said IDC.
Thai Java apps needed
Localising Java-based application for thin clients is one of the critical components for boosting the NC alliance's marketing framework in Thailand. At the first IT Forum recently, hosted by Thailand's IT Press Club and entitled "NC vs NetPC", Sun and IBM Thailand both acknowledged that a serious promotion of the NC concept could not be done unless Thai applications are ready.
According to Supot Chokewareeporn, marketing manager of IBM's Network Computing business unit, the company has already formed marketing teams to take care and study the markets for NC as well as NetPC. However, from his point of view, the NC seems to have a more solid status than NetPC at the moment.
Local language applications
It is expected that after the launch of Thai applications, another two to three years is required for the market to develop and be ready for the new technology.
Akara Sucharitakul, a technical consultant from Sun, agreed that local language is the most important thing for marketing the NC. To localise Java applications, the company has pointed out that Sun and other vendors need to put in an extra effort. For the main part of localisation, Sun's JavaSoft subsidiary will take care of Java applications development while vendors will have to support Thai language on their own operating systems.
It is expected that a Thai version Java application will come to the market late this year. Presently, Sun has developed applications in European languages like German, French and Spanish, while in this region it has launched both Mandarin and Taiwanese. A Korean version will soon follow.
Oracle believes that a customer's decision whether or not to deploy NC will depend on how much they are used to the old system and how much they are ready to migrate their applications.
At present, the company has joined with the Samart Group, a local Thai company that is strong in both the telecommunications and IT industry, to create the NC-Lab. The NC-Lab's purpose is to develop a system to support the electronic commerce market.