Thailand Information Technology Report Q1 2012 - new market research report

London 5/17/2012 09:08 AM GMT (TransWorldNews)

The price of this market report covers 4 quarterly reports on this sector. This quarterly report will be downloadable instantly as a PDF document, with the 3 remaining reports delivered at regular intervals throughout the year.

The Thai IT market is the largest in the South East Asia region and despite a serious impact from the recent floods that will continue into 2012, is projected to grow at a CAGR of 11% over the 2012-2016 period. The total value of Thai domestic spending on IT products and services should reach US$6.2bn in 2012 and US$9.3bn 2016.

The Thai PC market received a severe impact from the recent floods, with vendors and IT distributors estimating that sales were down by 20-40% in Q411, compared with previous forecasts. Consumer IT spending is likely to remain affected by the floods throughout 2012, as tens of thousands seek to regroup after the devastation. However, business demand may recover more rapidly, due to post-flood insurance payments.

Over BMIs five-year forecast period, a national PC penetration rate of around 18% indicates plenty of untapped market potential, and particularly fast growth is forecast in upcountry areas. A number of factors should support momentum, including a government plan to provide 800,000 tablet computers to Grade 1 school children, and small and medium-sized enterprise (SME) informatisation initiatives. There are a number opportunities including cloud computing, in which Thailand has been ranked one of the early adopter countries in the region.

Industry Developments

In Q411, Thailand was hit by severe floods, estimated to be the worst for 50 years. In addition to the serious human cost of the floods, the floods also caused disruption to the IT sector. As Thailand is the major hard-disk drive (HDD) producer in the world, this also had implications for the global IT market. Around 25% of the worlds HDD production plants are situated in or around Bangkok.

In August 2011, Thailands revealed plans to distribute iPads to Prathom One (Grade 1) schoolchildren across Thailand. The distribution of the devices will be accompanied by instruction for both teachers and students in how to use the devices as learning tools. It has been estimated that the procurement could be in the order of 800,000 devices.

The government has announced a new fund to encourage Thai SMEs to utilise cloud computing, which it sees as a cost-effective way for smaller companies to access IT. Government assistance will also be an important driver of this segment, with Thai SMEs eligible to receive between THB200,000-400,000 (up to US$13,000) to adopt cloud computing. Thailand has around 2.8mn SMEs.

Competitive Landscape

The floods of Q411 had a severe impact on all PC vendors, and led to major downward revisions of Thai market shipment forecasts. Taiwanese notebook giant Acer forecast that its sales would be down by 30% in Q411, compared with previous forecasts. Acer said that it would intensify its focus on upcountry markets to compensate for disruption to the key Bangkok market. Meanwhile, US PC vendor Dell said that it had made a 20% downwards revision to its Q411 Thailand shipments forecast, as a result of the floods.

In H111, Acer, Samsung and other vendors were cutting the prices of their tablet devices on the Thai market as they attempted to take market share from Apples market-leading iPad. In summer 2011, Lenovo launched two new tablet devices in Thailand, aimed at the corporate sector, which is expected to be a growth opportunity in 2012. Meanwhile, Japanese vendor Toshiba said that it would not participate in the governments tablets for schools programme, ostensibly due to concerns about corruption.

In 2011, Microsoft announced the target of doubling the revenue of its Thai operating unit by 2015, driven by a new consumer lifestyle products division to be launched soon. In April 2011, Microsoft launched a new partnership with telecoms giant True, which will offer access to Microsoft services via a new data centre. The cloud services will focus on digital content, email, communications and collaboration.

Computer Sales

According to BMI projections, Thailands computer hardware market will be worth about US$3.8bn in 2012, with single-digit growth from an estimated US$3.6bn in 2011. The market is expected to continue to feel an impact from the severe flooding of Q411, which dragged the PC market into negative growth territory for FY11.

The Thai PC market has matured and there is greater segmentation. There is also a first-buyer market for desktops, particularly in large provincial cities such as Chiang Mai and Hat Yan. However, even firsttime buyers have higher expectations concerning functionality and performance. The main driver of the computer market will be notebooks, which comprised nearly two-thirds of PC sales in 2011.

Software

In 2012, Thai software sales are projected by BMI at US$800mn, despite the uncertain economic conditions, and software CAGR from 2012-2016 should be in the region of 10%. Growing PC penetration as well as new technologies and business models, including 3G mobile and WiMAX, and industry trends such as cloud computing are all market drivers.

There is a greater emphasis on cost efficiency as enterprises look to enhance productivity through automating these and other functions. Business intelligence software is another growth area, due to the issue of data proliferation. Thailands software market is developing, despite the problem of software piracy, which still accounts for about 76% of software.

Services

IT services spending is forecast to reach about US$1.6bn in 2012, up from US$1.5bn in 2011. The market stabilised in 2011 after being affected in 2009 by the economic crisis as projects were put on hold. Sectoral CAGR is projected at 16% over the forecast period as the market approaches US$2.7bn by 2016. IT services accounts for about 24% of total IT spending. Over the past few years, the size of deals has increased in key verticals such as banking and telecoms. Despite the financial crisis, some elements of bank spending on IT 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 launch new services.

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