Mon, Jan 02, 2006 - Page 10 News List

IDC predicts increase in IT spending

INVESTING Taiwanese firms are expected to splash the cash this year on IT systems, in contrast to last year when they remained extremely cautious, the research firm said

By Jason Tan  /  STAFF REPORTER

After local enterprises decided to tighten their information technology (IT) spending last year, investment is expected to rebound this year, driven by a healthier market outlook, the International Data Corp (IDC) said in a report.

"Firms were more prudent when it came to IT spending last year due to the sluggish macro-economic environment. However, we anticipate that spending this year will show 5.5 percent growth, a level similar to the worldwide figure," Terry Tsao (曹志堅), managing director of IDC Taiwan, said in a forecast report released last Thursday.

Last year, IT spending by Taiwanese firms declined 4.7 percent from a year earlier.

"Enterprises now realize that they should not miss out on investing in important IT segments, though they only have limited budgets. This will prepare them for coping with a surge in demand if the market picks up anytime soon," Tsao added.

The research firm expects that services and packaged software, coupled with smart handheld devices and network equipment will be the major segments driving enterprise IT spending this year.

Looking forward, IDC said that converged handheld devices, mobile data and notebooks will be some of the key trends for the local IT industry this year.

This will be a year when consumers will embrace integrated smart handheld devices.

According to IDC, fashionably designed gadgets with integrated functionality such as multimedia, digital camera and mobile phones will stimulate consumers' willingness to splash out.

"For example, conventional devices such as pure personal digital assistants will not be able to cater to market demands, as the rise of global positioning systems will widen consumer choices," the report said.

In addition, telecommunications operators will be able to reap higher revenues from mobile data services this year.

"To lure more subscribers to third-generation services, operators will aggressively push mobile data services such as mobile TV and video phones," it said.

According to IDC Taiwan, as the government is pushing the M-Taiwan (Mobile Taiwan) project, which is aimed at promoting seamless wireless broadband access in the country, related technologies such as WiMax will also help boost the usage of mobile data services.

The research firm also foresees that laptop volumes will account for over 30 percent of the total computer market size this year, as a result of declining average selling prices and the rising popularity of dual core and 64-bit architectures.

"Weight and functionality will be the two main factors when users consider upgrading to newer portable computers," it said.

For the monitor segment, it expects that shipments for 19-inch models and above will account for 30 percent of the market.

This indicates that larger-sized monitors will gain more momentum in the market due to dropping panel prices, according to IDC.

However, it cautions that the Taiwan's monitor market may experience its first negative growth since 2002.

"With the lack of factors to fuel demands, monitor shipments will report a marginal drop. Lower consumer demand for desktop computers and the already high penetration rate of liquid-crystal-display monitors are reasons for the decline," it said.

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