Market Report, "Thailand Information Technology Report Q3 2010", published

July 28, 2010 - PRLog -- The Thai IT market is the largest in the South East Asia region and, despite ongoing political uncertainty, is projected to grow at a CAGR of 12% over the 2010-2014 period. The total value of Thai domestic spending on IT products and services should pass US$5.5bn in 2010 and US$8.8bn by 2014. Despite current political uncertainties, a national PC penetration rate of around 15% indicates plenty of untapped market potential.

The political crisis in H110 had an impact on consumer IT demand, particularly in Bangkok, with sales down by around 15% in March, as the political crisis worsened. The downturn followed strong growth in the first two months of the year, which indicated strong underlying demand. Retailers reported a steady improvement in consumer sentiment in the last four months of 2009.

BMI's view is that the fundamentals of growing affordability and low PC penetration, supported by government ICT initiatives, will keep the market in positive territory during the forecast period. There are a number of drivers, including a Government PC for Education programme, launched in H209. Other positive factors include 3G mobile and WiMAX broadband service roll-outs, and aggressive vendor and channel promotions.

Industry Developments

The political crisis in Bangkok and other major cities in H110 had an impact on consumer IT demand, particularly in Bangkok, which accounts for around half of national consumer IT spending. Retailers in Pratunam's Pantip Plaza and Ratchaprasong district, which together account for more than 30% of the IT business in Bangkok, reported a drop in sales of around 15% in March 2010, as the political crisis worsened. Government and business demand held up relatively well, but during the troubles some vendors reported that their customers were delaying IT purchase decisions by one or two months.

In 2009, Thailand's government outlined a number of projects to help close the digital divide. One potentially significant initiative from the ICT Ministry is to offer a special tax reduction to companies that donate their used computers to local communities. Meanwhile, the government also revealed plans to offer computers, as well as software applications, bundled with broadband services from government telecoms operators CAT and TOT. The Ministry of ICT is currently negotiating with state-owned banks to offer special loans to users who participate in the programme.

The Thai government has announced an ambitious target to increase the local software market share of Thai software companies to 40% this year, and 50% in 2010.The Thai government has announced a series of measures to support the local software industry. SIPA (Software Industry Promotion Agency) has led 'Buy Thai First' campaigns to persuade local small and medium-sized enterprises (SMEs) to buy Thaideveloped software and has lobbied the government to endorse tax incentives for local developers.

Competitive Landscape

International vendors have taken a dominant position in the Thai brand PC market. Sales of international brand PCs exceeded local products for the first time in 2009, according to data from the National Electronics and Computer Technology Centre (NECTEC). International brand PCs are forecast by NECTEC to take 75% of the brand PC market in 2010, with local products being left with just 25%.

In 2009, Acer achieved the number one spot in the Thai PC market, with 18% growth over 2008. Meanwhile, in 2010, Dell plans to at least double its revenues from the consumer segment in Thailand and said that it will continue to invest aggressively in the local market. The company plans to double its marketing budget in 2010 and build on its cooperation with Thailand's largest IT superstore, IT City, expanding to more than 2,000 retail outlets by the end of 2010.

As business demand appeared to pick in H110, vendors were planning to invest to expand the enterprise software market. Global enterprise resource planning (ERP) software leader SAP wants to triple its local market share by 2010, based on its core ERP software. Meanwhile, US rival Oracle said that it will focus more on the mid-sized sector in 2010, targeting companies that wish to take a step up to professional software from ad-hoc use of Excel and custom programs. Enterprise software specialist SAS Software Thailand has announced a target to more than triple its local business and workforce within the next three years.

Computer Sales

According to BMI projections, Thailand's PC market will be worth around US$3.0bn in 2010, up from an estimated US$2.6bn in 2009. In 2010 the consumer segment is expected to continue its dominance and comprise nearly two-thirds of the market. Strong demand from the consumer PC segment was the main PC market driver in 2009 as consumers accounted for around 60% of IT spending. PC penetration of around 14% represents considerable latent growth potential, and total hardware revenues including notebooks and desktops are expected to rise to US$5.5bn 2014.

Software

In 2010, Thai software sales are projected by BMI at US$609mn, despite the uncertain economic conditions, and software CAGR from 2010-2014 should be in the region of 15%. With the economic and political crisis having an impact in both public and private sectors, some vendors and their local partners saw a slowdown in some businesses in 2009.

Services

IT services spending is forecast to reach around US$1.3bn in 2010, up from US$1.1bn in 2009. The economic crisis and political uncertainty had an impact in 2009, with projects being put on hold. However, sectoral CAGR is projected at 14% over the forecast period, as the market passes US$2.2bn by 2014.

E-Readiness

Thailand internet penetration is set to pass 17% within BMI's five-year forecast period, from around 16% in 2008. Broadband penetration will grow to 6.6% in 2014 from 2.3% in 2009, according to BMI estimates.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.