Gartner picks IT market doubling

The New Zealand IT market is set to double to $US7.51 billion by 2005, says Gartner Research.

Despite a flat PC market, the researchers say the growth is being fuelled by a rapidly expanding IT services sector. Gartner estimates the New Zealand IT market at $US4.104 billion ($10 billion) in 2000, which compares with an $11 billion estimate released by Statistics New Zealand at the start of this month.

Gartner's figures and trends echo not only Statistics New Zealand numbers, but figures from IT research company IDC. Gartner says the New Zealand PC market slumped from $US444m ($1083m) in 1999 to $US384m in 2000, rising slowly to $US434m by 2005. After a dip last year the overall hardware market stays comparatively flat, rising from $US636m in 2000 to $US738m in 2005.

Services, software and telecomms will see the biggest growth, says Gartner. Consulting will grow from $US124m in 2000 to $US245m in 2005; education and training from $US69m to $US111m over the same period. IT management roughly triples from $US157m in 1999 to $US479m in 2005 and business process management also sees growth from $US134m in 1999 to $US289m in 2005.

Overall IT services will grow from $US1217m ($2970m) to $US2687m ($6556m) by 2005. Software sector growth is better than hardware; software infrastructure growth goes from $US45m in 1999 to $US150m in 2005, and applications from $US141m in 1999 to $US581m in 2005.

Telecomunications is the biggest IT market sector, whose growth matches that of services. According to Gartner, it will go from $US275m ($677m) to $US632m ($1540m) for equipment and from $US1189m to $US2503m over the same period.

Gartner spokesman Peter Wilson says New Zealand has a "mature" IT market compared with the rest of the Asia-Pacific region, with further growth being driven by e-business and new technology implementation and deployment. The government was not doing as much as other countries to help IT firms, he says, but it is "a heavy purchaser" of IT services. Outsourcing continues to grow, he says, but deals were relatively small and based on vendors taking business from other vendors.

The New Zealand ASP market is "sluggish" despite the bulk of Kiwi firms being the SMEs most suited to the model.

The recent Statistics New Zealand survey for ITANZ and the Ministry of Economic Development had estimated the total New Zealand IT market in 2000 at $11,133.3m, up 6.9% on 1999, also fuelled by outsourcing.

IDC country manager Dinesh Kumar says IT services are expected to have compounded growth of 9% over the next few years, growing from $1430m in 2000 to $1757m in 2004. Software figures are being revised but old estimates showed growth from $750m in 2001 to $864m in 2004.

"The leading services companies like EDS report strong revenue growth and a large number of service contracts were signed in late 2000," he says. The ASP model was just evolving and would also grow strongly.

IDC analyst Mark Cribbens disputed the 1999-2000 drop in the PC market, but agreed business would be flat in coming years.

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