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Wed, Dec 08, 2004 - Page 12 News List

Region to outspend globe for IT

FORECASTS Gartner announced it expects spending by China and India to help the Asia-Pacific region achieve 7.6 percent growth in IT spending next year

AFP , SINGAPORE

Information technology-related (IT) spending by Asia-Pacific firms is tipped to grow by a world-beating 7.6 percent next year to almost US$210 billion, industry research house Gartner said yesterday.

Global spending, in comparison, is projected to increase 5.4 percent next year to nearly US$1.75 trillion, Gartner analysts told a media briefing.

Gartner regional vice president for telecommunications, Bertrand Bidaud, said the projections, which exclude Japan, showed the regional IT sector was in a very healthy state, spearheaded by the booming Chinese and Indian economies.

"You can see that Asia-Pacific is growing significantly faster than the rest of the world," Bidaud said.

According to Gartner, regional corporate spending on hardware will grow 6.3 percent next year to US$36.9 billion, with software up 12.4 percent to US$5.6 billion.

Spending on telecommunications will jump 7.5 percent to US$132.5 billion and IT services will expand 8.4 percent to US$33.6 billion.

China will lead the region in terms of hardware spending while India will be the largest spender on software, according to Gartner regional vice president for software research, Ian Bertam.

Bertram said regional IT users were much more educated about how they could deploy the right technology to aid their business operations.

"Overall, we are now in a much more mature phase of the IT industry," Bertam said.

"We have now moved into a phase where the buyer is much more in control of their destiny rather than the vendors being in control ... people understand usage of technology a lot more."

In the telecommunications sector, the region will remain among the fastest growing in the world in terms of mobile users with an additional 140 million people expected to subscribe to a cellular network service. This will be up 14 percent from a year earlier.

Gartner, however, warned that the region's telecom operators, just like their counterparts elsewhere, must reduce dependency on voice as the main revenue generator.

"The voice [service] as a standalone product will disappear from the markets," Bidaud said.

"Next year, carriers will get serious about generating new revenues ... they know that if they don't, the pressure [on revenues] will get very strong."

In the personal computer (PC) sector, Gartner expects a major shake out globally with three of the top 10 vendors expected to exit the market as revenue growth comes to a standstill.

"Price competition will intensify as vendors struggle to maintain growth in a harsh market environment characterized by weak replacement activity and the growing importance of emerging markets," Gartner said.

The PC divisions of US technology giants Hewlett-Packard and IBM are especially vulnerable if margins and profitability continue to come under pressure, it said.

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