IDC sees local IT market recovery, transformation

MANILA, Philippines – The local ICT industry is getting out of the doldrums this year, according to market research firm IDC, which is quoting huge numbers — $3.14 billion and $3.81 billion — for total IT and telecommunication market spendings, respectively, by the end of 2010.

Despite these encouraging figures, IDC says there will only be modest growth across the various segments of the industry, which includes the end-users, the vendors, and service providers.

Jubert Alberto, IDC Philippines’ IT spending research manager, says the overall ICT landscape in the country is once again open to spending as both enterprise and consumer sectors turn to technology to meet their ever-evolving needs and objectives.

He adds that this will “impel vendors and service providers to expand their product and solution portfolio,” keeping in mind that investment motives are anticipated to shift from initial cost savings to long-term savings and efficiency.

IDC predicts that many enterprises in the Philippines will shift to an operating expense-based model and cut on capital expenditures. In line with this, end-users this year will also look for products with the functionalities and specifications they need and at relatively cheaper prices.

Driving the growth in IT spending for 2010 is the hardware sector, which accounts for an estimated 72.2 percent of the total market, projected to increase by seven percent year-on-year, on the back of six-percent recovery in total PC systems spending.

Spending on packaged software is predicted to contribute 7.5 percent, while services spending will account for 20.3 percent, as enterprises seek more long-term ICT initiatives.

Active spending on IT will extend outside Metro Manila. IDC says expanding to provincial markets is something vendors and service providers will push this year.

In addition, 2010 will see new and intensified vertical strategies and consultative selling among local vendors and service providers to win customers and fight off stiffer competition. In fact, more vendors this year will use social media networks to expand their marketing campaigns.

IDC expects more enterprises and SMEs to adopt Internet social media as a new avenue for marketing due to its cost effectiveness while also keeping their company websites to also interact with current and potential customers.

In the telecoms front, continued high demand for mobile phone devices and services as well as the accelerated adoption of mobile data and competitive pricing will take center stage this year.

Wireless broadband will continue to become popular this year, says IDC, particularly universal serial bus (USB) dongle-based portable broadband operating on 3G/High-Speed Downlink Packet Access (HSDPA) technology, which will pose serious competition to fixed broadband, especially xDSL.

IDC believes that the key elements for a surge in wireless broadband growth are in place such as the availability and affordability of certain models of notebooks and netbooks, which are expected to pave the way for the mass adoption of portable broadband in the country.

Smartphones will also become more ubiquitous this year. Shipments of smartphones for 2010 are expected to reach 1.36 million units, a 17-percent growth from 2009.

Features such as Internet access capability, e-mail access, and availability of downloadable applications would be the primary features that end-users would be looking for.

IDC expects that with the rise of smartphones, handset models that will be introduced in the near term will be equipped with more sophisticated applications through highly evolved operating systems.

Meanwhile, IDC anticipates a transformation in telecoms’ pricing strategies in the Philippines from per kilobyte to time-based pricing to meet increasing demand for data services.

The market for data services will be characterized by high competition, with telecom players introducing more products and services for data usage under a wider range of charging options to make mobile data services more appealing and affordable to broader user base.

IDC’s annual “Top 10 Predictions for the Philippines ICT Market” draws upon latest IDC research and a worldwide brainstorming exercise among over a thousand IDC analysts. This was followed by an extensive regional review to weigh in on key industry events, user trends, vendor strategies and economic measures, that promises to uniquely define the technology trends which would impact and drive the ICT market in the Philippines for 2010.

For the current year, the predictions are rosy at best, but IDC expects full IT market recovery to happen in 2011. –Alma Buelva (The Philippine Star)