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Market Overview The Thai IT market is the largest market in the South East Asia region and despite current economic headwinds is projected to grow at a CAGR of 9% over the 2009-2013 period. The total value of Thai domestic spending on IT products and services should reach US$4.9bn in 2009 and US$7.0bn by 2013.
The current economic outlook presents some risks, with a further sharp slowdown in economic activity in Q109 having an impact on IT spending. Tighter credit conditions will lead to deferred IT spending in the short term by consumers and businesses, and there were reports in H109 from vendors of slower sales and some IT projects being cancelled.
However, the view is that the fundamentals of growing affordability and low PC penetration, supported by government ICT initiatives, will keep the market in positive territory during the forecast period. In early 2009, a number of underlying indicators offered encouragement for overall IT spending, and there should be areas of opportunity, despite prevailing economic and political uncertainties.
Industry Developments In 2009 Thailand's government has outlined a number of projects to help close the digital divide. One potentially significant initiative from the ICT Ministry is to offer a special tax reduction to companies that donate their used computers to local communities.
Meanwhile, the government is also making plans to offer computers, as well as software applications, bundled with broadband services from government telecoms operators CAT and TOT. The ICT Ministry is currently negotiating with state-owned banks to offer special loans to users who participate in the programme.
The Thai government has announced a series of measures to support the local software industry. SIPA (Software Industry Promotion Agency) has led ‘Buy Thai First' campaigns to persuade local SMEs to buy Thai developed software, and has lobbied government to endorse tax incentives for local developers.
Competitive Landscape International vendors dominate the Thai brand PC market, with Acer and HP the leaders in terms of shipments, ahead of Dell, Lenovo and Toshiba. Unbranded ‘white boxes' still claim up to 50% of the local PC market, although this share has fallen from around 70% a couple of years ago. The sales of these generic products have received a boost from government-subsidised PC programmes.
Locally produced software vendors claimed around 20% of the Thai market in 2008. However, the government has announced an ambitious target to increase this share to 40% this year, and 50% in 2010.
Various measures have been announced to help advance the local industry. Some software MNCs reportedly had their investment plans on hold in H109 due to the uncertain political environment.
The growing IT services market continues to attract investment from global vendors such as IBM, HP and the big Indian vendors. The market is also characterised by the presence of a number of local systems integrators, which have built IT services offerings around portfolios of brands such as HP, SAP and IBM.
HP has said that it expects significant growth in Thailand in 2009.
Computer Sales Thailand's PC market will be worth around US$2.6bn in 2009, up from an estimated US$2.5bn in 2008, with government PC programmes helping to prevent stagnation in the market. The sale of notebooks is growing while the desktop market shrinks as a share of overall sales. Total PC revenues including notebooks and desktops are expected to rise to US$4.4bn 2013 at a CAGR of 8%.
The current economic and political uncertainty is likely to have a continued impact in 2009 on consumer segment demand, which has become a major market driver. Vendors and retailers are expected to cut price to stimulate sales, causing revenues growth, projected at just 1%, to lag volume sales. A number of factors should provide a boost, including a Government PC for Education programme, due to be launched later this year.
Software In 2009, Thai software sales are projected by BMI at US$544mn, and, despite the uncertain economic conditions, software CAGR from 2009-2013 should be in the region of 12%. With the economic and political crisis having an impact in both public and private sectors, some vendors and their local partners are likely to see a further slowdown in some business in 2009.
However, growing PC penetration, and new technologies and business models, including 3G mobile, WiMAX, and industry trends, such as software-as-a-service, Green IT and virtualisation, will represent growth areas in 2009. There is a growing emphasis on cost efficiency as enterprises look to enhance productivity through automating these and other functions. Thailand's software market is developing, despite the problem of software piracy, which still accounts for around 76% of software.
Services IT services spending is forecast to reach around US$1.1bn in 2009, up from US$1.0bn in 2008. The economic crisis and political uncertainty seems to have had an impact in 2009, with projects being put on hold. Sectoral CAGR is projected at 12% over the forecast period, as the market approaches US$1.8bn by 2013.
IT services accounts for around 22% of total IT spending. Over the past few years, deal size has increased in key verticals such as banking and telecoms. Despite the financial crisis, some elements of bank spending will be relatively immune, particularly those driven by regulatory compliance. Meanwhile, telecoms is another big spending IT vertical, with mobile operators investing to expand capacity and roll out new services.
E-Readiness Thailand internet penetration is set to reach 17% within BMI's five-year forecast period, from 15.6% in 2008. Broadband penetration will grow at a faster rate, to 17.2% in 2013 from just 3.4% last year, according to BMI estimates.
By 2009, the Thailand Internet Service Provider Association predicts that Thailand could see between 5mn and 10mn broadband subscribers, although the report has opted for a more conservative estimate of 2.2mn subscribers. The level of growth set to be experienced in the broadband sector will also be fuelled by the award of WiMAX licences. By 2013, 17% of the population could be subscribed to broadband services.
Thailand Information Technology Report Q4 2009: http://www.companiesandmarkets.com/r.ashx?id=PLX21TL48155648
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