Vietnam Information Technology Report Q1 2012 - new market research report

London 5/17/2012 09:32 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 Vietnamese IT market is estimated to report 17% growth in 2012. In January – August 2011, PC imports grew by a double-digit factor in dollar terms, but economic cooling measures are forecast to have an impact later in the year. Factors such as rising PC penetration, economic growth, a range of government ICT initiatives and a drive to develop Vietnams domestic IT industry will help to sustain continued expansion going forward.

An ambitious government IT plan for 2010-2020 should shape many segments of the Vietnamese IT market, while Vietnams improving information and communication technology (ICT) infrastructure will also drive growth. Vietnams gradual integration into global trade networks such as the Association of South East Asian Nations (ASEAN) and the WTO has helped to bring down prices and increase opportunities for importers.

The Vietnamese IT market is estimated to grow at a CAGR of 16% over the 2012-2016 period. The addressable domestic market for IT products and services is projected by BMI to reach US$4.9bn by 2016. An increasing number of Vietnamese companies have shown an interest in cloud services.

Industry Developments

According to Ministry of Information and Telecommunications figures, by November 30, 2011, 18 government ministries and branches, and 55 provinces and cities had spend more than 856bn dong to buy IT products. Hardware comprised 50% of this government IT spending, with the main products being PCs, fibre optic cables and copper cables.

In 2011, various Vietnamese government departments started to utilise cloud services. In July 2011, the Ministry of Education and Training (MOET) said that it had instructed local education and training departments to shift to cloud computing. Meanwhile the Ministry of Natural Resources and the Environment (MONRE) has put in place a strategy for more utilisation of cloud computing in IT applications.

The Vietnamese government has also unveiled ambitious plans for developing the countrys IT industry. The plans, which state a revenues target for the sector of between US$17bn and US$19bn in the next five years, include major investments to develop production centres in software, services, hardware and electronics. Revenues are projected at US$2bn from software sales, US$12.5bn from hardware, US$2bn from digital content, and US$1.5bn from IT services.

Competitive Landscape

2011 saw a steep decline in the popularity of netbooks, with former segment leader Sony withdrawing its products from the local market. Sonys P-series models, considered pioneers in the market, as well as the high-end Vaio W product, have both been withdrawn. Sony, like rival vendors such as Acer, Asus and Lenovo, is now focusing on tablets and ultrabooks.

Vietnams largest software company, FPT, has unveiled a major new restructuring plan which will consolidate five technology subsidiaries in a search for higher growth. The companys five subsidiaries; FPT Information System; FPT Telecom Corp; FPT Software; FPT Online and FPT Trading Group; will be merged, with the company either buying out minority shareholders or facilitating a share swap. In May 2011, FPT also announced a cloud-computing alliance with Microsoft.

Meanwhile IBM has made a series of recent investments in Vietnam, many related to cloud computing. IBM has created a cloud computing lab facility, and has enjoyed successes in this field in China, including a contract to provide a cloud computing platform for the Ho Chi Minh City government.

Computer Sales

BMI projects that sales in Vietnams computer hardware market will be worth around US$2.0bn in 2012, up from an estimated US$1.7bn in 2011. The main growth driver will be affordable notebooks. BMI projects growth of around 17% in the Vietnam PC market this year, similar to the growth rate estimated in 2010 when the market bounced back from the effects of the economic slowdown. PC penetration in Vietnam was estimated by BMI at about 18% in 2011. Notebooks are owned by an estimated 7% of the Vietnamese population. This points to significant growth potential for the local PC market, with the most potential being in rural areas. Currently Hanoi and Ho Chi Minh City are thought to account for in the region of 85% of notebook sales.

Software

In 2012, Vietnam software sales are projected by BMI to grow to US$238mn, and software CAGR for 2012-2016 should be in the region of 19%. Software spending comprises around 9% of total Vietnamese IT spending currently.

The market is expected to reach a value of around US$380mn by 2016, with steady growth in demand for licensed software from government, enterprise and household segments. Vietnams software market is developing, despite the problem of software piracy, which still accounts for around 85% of software, compared with 76% in neighbour Thailand.

Services

Vietnamese IT services spending is forecast to reach around US$494mn in 2012, up from US$409mn in 2011. The market has recovered after the economic crisis had an impact in 2009, with projects being put on hold. Sectoral CAGR is projected at 16% over the forecast period, as the market approaches US$881mn by 2016.

IT services now accounts for around 17% of total Vietnam IT spending. Over the past few years, the size of IT services deals has increased in key IT spending verticals. Growing demand for digital infrastructure projects in segments such as banking, telecoms, energy and government has attracted global IT services providers to invest more in Vietnam.

E-Readiness

Vietnams fixed-line infrastructure is unreliable and offers poor coverage. However, Vietnam has an exceptionally high penetration rate in the mobile market, reaching 126% at the end of 2009, and registering around 110.8mn subscribers. This has been aided by mobile network operators reducing tariffs to encourage growth of their respective subscriber bases, as well as increased investment in the expansion of infrastructure to areas outside major towns and cities. Demand for mobile broadband has also been accelerated by the changing lifestyles of consumers, who use the service for accessing the internet for work and leisure.

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