The Asia-Pacific IT market, excluding Japan, will rebound strongly this year after its disastrous performance in 1998, but overall sales will still be lower than they were in 1997, according to Dennis Philbin, managing director of market researcher International Data Corp (IDC) Asia-Pacific.
The level of recovery will vary from country to country, and across market sectors, Philbin said. He also pointed out that the Asia-Pacific IT landscape has changed significantly due to last year's market downturn.
"As the market recovers, vendors will find they are dealing with more savvy MIS [management information systems] managers, and must be prepared for more cautious buyers," said Philbin, speaking at the IDC Directions '99 conference here this week.
Total Asia-Pacific IT sales in 1998 were down 14.1 per cent to $US41.5 billion from the 1997 figure of $US48.3 billion. However, growth looks like it will pick up and sales, fuelled by a compound annual growth rate (CAGR) of 15 per cent, will reach $US84.8 billion in 2003, IDC estimates.
Software will show the fastest growth in 1999, with sales increasing by 21 per cent. PC sales, which fell more than 20 per cent across the region last year, will see a 10 per cent rebound, Philbin said.
"Software will make a big comeback this year, with good sales in ERP [enterprise resource planning], e-commerce and supply-chain management systems," he said. "PC shipments will rise rapidly, but unit prices will fall, holding revenues back."
The centre of gravity of the Asia-Pacific IT market has changed considerably due to the economic downturn, with the previously strong South Korean and ASEAN (Association of Southeast Asian Nations) markets weakening relative to the emerging China market and the solid Australian market, Philbin said.
"China and Australia will be an overall $US50 billion market in 2003, out of an Asia-Pacific total of $US85 billion.
"China, in particular, shows great potential because of its huge planned investments in infrastructure and its market underpenetration. The ASEAN market in total is interesting, but relatively small."
Australia currently has the largest IT market in the Asia-Pacific region, but by 2003 China's faster growth will propel its market value to $US30 billion, while Australia's market will be worth just under $US20 billion, according to IDC estimates.
By 2003, India will be the third-largest IT market in Asia-Pacific at around $US8 billion, followed by the markets of South Korea and Taiwan, both of which will be worth just over $US5 billion. CAGRs in the ASEAN country markets will vary from highs in Indonesia at 29 per cent, Vietnam at 21 per cent and Thailand at 17 per cent, down to slow growth of 3 per cent in Singapore and 9 per cent in the Philippines.
The rapidly growing Asia-Pacific Internet market is still up for grabs as end users have no clear preference for any one supplier, Philbin said.
According to an IDC end-user survey conducted last year, the Internet was seen as dominated by Microsoft and Netscape Communications and their battle for browser market share, with over 30 per cent of respondents saying they thought Microsoft was the most important vendor for corporate Web-based projects.
But an updated 1999 survey showed that respondents felt that the leading position of both companies has collapsed, with over 50 per cent of those polled saying that no particular company could be singled out as their strategic partner for large Web-based projects.
"There are lots of messages about the Internet being sent out there by vendors," said Philbin. "But the survey shows that those messages are not being received."
Philbin said that Internet-related vendors must consider the special needs of companies and consumers in Asia, as 51 per cent of Web sites by 2003 will use double-byte character sets, and of the four largest Web site markets by that time -- China, India, Australia and South Korea -- three will be largely non-English speaking, limiting opportunities for English-language business-to-business e-commerce.