Asia Pacific IT market slowing in 2001

The growth of IT products and services in the Asia Pacific (excluding Japan) will fall sharply this year compared to 2000, according to new figures from IDC.

The market will grow at 15.4 per cent this year to reach a value of $US77.2 billion, according to IDC's Asia Pacific managing director, Piyush Singh.

This is a significant drop from last year when the market grew by 27.5 per cent.

Singh said the markets that drove growth last year - Hong Kong, South Korea, Malaysia and Singapore - are experiencing significant slowdowns in their economies this year and will be contributing less to regional growth.

He said the main factor supporting growth is the continuing strong performance of the Chinese market which will grow 25 per cent this year to be worth $29.3 billion, or 38 per cent of the total Asia-Pacific market.

The main factor supporting the growth figure is the continuing strong performance of the Chinese market, which will grow 25 per cent this year to be worth $29.3 billion, or 38 per cent of the total Asia-Pacific market.

Speaking at IDC's Directions conference in Singapore last week Singh said hardware remains the largest sector of the region's IT economy with more than 65 per cent of the market compared to 23.9 per cent spent on IT services and 11.2 per cent spent on software.

But software and services, he added, are among the fastest growing sectors of the Asia-Pacific IT market with year-on-year growth of more than 20 per cent. Only sales of data and communications equipment is growing faster.

Singh said the region should continue to display reasonable growth over the next five years with the compound annual growth rate (CAGR) in the IT market to be 17 per cent overall until 2005, when the market will be worth $146.4 billion.

Growth will range from a steady 25 per cent in China, down to 16.3 per cent in the 10 ASEAN (Association of Southeast Asian Nations) countries and just 9.7 per cent in the mature Australia and New Zealand markets.

Singh said another market to watch is India, which will grow at 27.4 per cent CAGR over the next five years, albeit from a low base.

The three fastest-growing sectors will continue to be packaged software, IT services and data communications equipment, followed by storage hardware, servers and PCs.

By 2005, China's IT market will be worth almost $50 billion, bigger than the next two largest markets combined, Korea and Australia. India will have overtaken Taiwan to become the region's fourth biggest IT market, Singh said.

Singh added five predictions for the IT market in 2001.

* Internet stocks will not recover this year, in the same way that PC stocks stayed low for some time after the 1983 market crash.

* investments in e-business will continue, as brick-and-mortar companies take up the slack from dotcom companies in driving the e-business market* e-commerce revenue in Asia-Pacific will rise rapidly, principally driven by large business, to reach almost $350 billion in 2004 from under $50 billion in 2001* wireless Internet use and mobile commerce revenue in Asia-Pacific will also grow rapidly, with 142 million mobile Internet users expected in 2004, up from 19 million today* two of the hottest areas for investment will be CRM (customer relationship management) applications and Internet security technology. The Internet security market will grow at a CAGR of 63 per cent through 2004.

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