This points to significant growth potential for the local PC market, with the most potential being in rural areas.. The market is expected to reach a value of around US$360mn by 2015, wi
Trang 2Business Monitor International
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TECHNOLOGY REPORT Q1 2011
INCLUDES 5-YEAR FORECASTS TO 2015
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: January 2011
Trang 4CONTENTS
Executive Summary 5
SWOT Analysis 8
Vietnam IT Sector SWOT 8
Vietnam Telecoms SWOT 9
Vietnam Political SWOT 10
Vietnam Economic SWOT 11
Vietnam Business Environment SWOT 12
IT Business Environment Ratings 13
Asia IT Market Overview 17
IT Penetration 17
Vietnam Market Overview 24
Government Authority 24
Background 24
Hardware 25
Software 27
Services 30
Industry Developments 32
Industry Forecast Scenario 35
Table: Vietnam IT Sector (US$mn unless otherwise stated) 38
Internet 39
Table: Telecoms Sector Internet Historical Data And Forecasts 39
Macroeconomic Forecast 41
Vietnam – Economic Activity 43
Competitive Landscape 44
Hardware 44
Software 45
IT Services 49
Internet 51
Company Profiles 52
FPT Software 52
BMI Methodology 53
How We Generate Our Industry Forecasts 53
IT Industry 53
IT Ratings – Methodology 54
Table: IT Business Environment Indicators 55
Weighting 56
Table: Weighting Of Components 56
Sources 56
Trang 6An ambitious government IT plan for 2010-2020 should shape many segments of the Vietnamese IT market, while Vietnam’s improving information and communication technology (ICT) infrastructure will also drive growth Vietnam’s gradual integration into global trade networks such as the Association of Southeast Asian Nations (ASEAN) and the WTO has helped to bring down prices and increase
opportunities for importers
The Vietnamese IT market is estimated to grow at a CAGR of 12% over the 2011-2015 period The
addressable domestic market for IT products and services is projected by BMI to reach US$3.3bn by
2015
Industry Developments
In November 2010 the government pledged to invest US$8.5bn over the next ten years in the ICT sector Meanwhile, the government’s campaign to attract more foreign IT companies to invest in Vietnam
received a boost with the announcement that Hewlett-Packard (HP) would set up a wholly-owned firm
in Vietnam in early 2011 The government hopes to attract US$5bn of foreign investment into the IT industry by 2015
The Vietnamese government has unveiled ambitious plans for developing the country’s IT industry over the next five years The plans, which state a revenues target for the sector of between US$17bn and US$19bn in the next five years, include major investments to develop production centres in software, services, hardware and electronics Revenues are projected at US$2bn from software sales, US$12.5bn from hardware, US$2bn from digital content, and US$1.5bn from IT services
In 2010 the Ministry of Education and Training continued to implement a national programme to supply
1mn affordable computers to Vietnamese schools by 2011 In January 2010, the Vietnam Post and Telecoms Group (VNPT) in Ho Chi Minh City launched a local version of the Computers for Education
programme, which will provide teachers and students in the city with low-priced laptops and DSL
broadband connections
Trang 7Competitive Landscape
In November 2011 Microsoft signed an extension of a deal with the Vietnam government to purchase licensed software for government organisations The original 2007 agreement had covered all 63
provincial authorities, 24 ministries and enterprises where the state has a stake of more than 50%
Multinational brands dominate the Vietnamese PC market, with HP the top-selling PC brand in 2009,
ahead of Acer HP’s sales have been boosted by government and education sector projects, as well as by its strategy to target the consumer segment Other multinational PC vendors including Dell, Toshiba and Asus have enjoyed strong recent growth in the booming market
Vietnam has around 10,000 firms currently licensed to provide IT services, but only one-third are actually operating The MOCI is currently developing a draft decree to map out policies to help the IT industry grow The decree will stipulate procedures and operational requirements for firms providing IT services
Computer Sales
BMI projects that sales in Vietnam’s computer hardware market will be worth around US$1.5bn in 2011,
up from an estimated US$1.4bn in 2010 BMI projects growth of around 11% in the Vietnam PC market
in 2011, after the market showed signs of a rebound in 2010
PC penetration in Vietnam was around 9.6% in 2007, according to World Bank figures, and in 2010 was
estimated by BMI at around 15% Notebooks are owned by an estimated 7% of the Vietnamese
population This points to significant growth potential for the local PC market, with the most potential being in rural areas Currently Hanoi and Ho Chi Minh City are thought to account for in the region of 85% of notebook sales
Software
In 2011, Vietnam software sales are projected by BMI to grow to US$205mn and software compound
annual growth rate (CAGR) for 2011-2015 should be in the region of 15% Software spending comprises around 10% of total Vietnamese IT spending
The market is expected to reach a value of around US$360mn by 2015, with steady growth in demand for licensed software from government, enterprise and household segments Vietnam’s software market is developing, despite the problem of software piracy, which still accounts for around 85% of software, compared with 76% in neighbor Thailand
Services
Vietnamese IT services spending is forecast to reach around US$348mn in 2011, up from US$306mn in
Trang 82010 Sectoral CAGR is projected at 12% over the forecast period, as the market approaches US$551mn
by 2015
IT services now accounts for around 18% of total Vietnam IT spending Over the past few years, the size
of IT services deals has increased in key IT spending verticals Growing demand for digital infrastructure projects in segments such as banking, telecoms, energy and government has attracted global IT services providers to invest more in Vietnam
E-Readiness
Vietnam’s fixed-line infrastructure is unreliable and offers poor coverage However, Vietnam has an exceptionally high penetration rate in the mobile market, reaching 126% at the end of 2009, and
registering around 110.8mn subscribers This has been aided by mobile network operators reducing tariffs
to encourage growth of their respective subscriber bases, as well as increased investment in the expansion
of infrastructure to areas outside major towns and cities Demand for mobile broadband has also been accelerated by the changing lifestyles of consumers, who use the service for accessing the internet for work and leisure
Trang 9SWOT Analysis
Vietnam IT Sector SWOT
Strengths The domestic IT market is in a rapid growth phase, with trade liberalisation and
growing affordability driving projected double-digit growth of notebook computers
Expanding ICT infrastructure and internet penetration will continue to drive demand for
IT products and services
Vietnam’s gradual integration into the global trade network via its accession into trade organisations such as ASEAN and WTO as well as bilateral agreements with Japan and China
Weaknesses IT spend per capita much lower than in neighbour Thailand, reflecting a much lower
GDP and GDP per capita
Low levels of access to credit and budgets restrain spending by SMEs
Highly cost-sensitive market, with 75% of software provided by lower-cost local software vendors
High level of software piracy at 85%, although it has fallen in the last few years
Opportunities High PC market growth potential particular in rural areas due to overall low PC
penetration rate of 15%
Vast and relatively under-penetrated rural market presents a significant growth opportunity as the government rolls out measures to boost rural connectivity and incomes
National IT Plan will drive spending on IT utilisation in areas like government, taxation and education
e- SMEs have much potential to increase spending on basic solutions, including customer relationship management and security
One Teacher-One Computer programme aims to deliver 1mn computers to schools by
Threats Continued depreciation of the dong against the US dollar would increase the pressure
on Vietnamese distributors of foreign IT goods.
Falling prices may further undermine margins and profitability after steep discounting
in 2009.
The implementation of the China-ASEAN free trade agreement means that established multinationals will face a growing challenge from low-cost Chinese vendors in the Vietnamese market
Trang 10Vietnam Telecoms SWOT
Strengths Fixed-line penetration levels and internet user rates are high in major urban centres
such as Ho Chi Minh City, Hanoi, Danang and Haiphong
Competition exists in fixed-line and internet access markets; VNPT faces competition from several other state-owned companies and two privately-owned operators
High levels of literacy and other demographic factors bode well for strong and continued demand for wireline services over the next few years
Weaknesses Vietnam’s fixed-line and internet access markets are both dominated by
state-controlled operators, VNPT and Viettel
Although alternative broadband infrastructures are currently being explored, broadband growth continues to be dependent on DSL
Low fixed-line penetration rates in rural regions limit the scope for DSL broadband growth
Internet user growth is slowing, despite the limited access to internet infrastructure in much of rural Vietnam
Broadband tariffs remain high, creating a barrier for low-income subscribers to access
Opportunities The privatisation of VNPT could help to bring about increased investment revenues
and the arrival of new skills
On a national level, broadband penetration rates remain low; this means that the sector has considerable growth potential
VNPT plans to invest US$1bn in 2009, in order to upgrade its broadband networks and expand its international internet bandwidth
Significant opportunities exist to develop alternative broadband technologies, including WiMAX and fibre
WiMAX services are currently being trialled with a view to licensing a number of WiMAX service providers in the near future; WiMAX internet services have the potential to raise the level of internet user penetration in rural parts of Vietnam
Draft Bill of Law on Telecommunication has been put forward for discussion at the National Assembly Steering Committee If passed, the bill will allow private companies
to build network infrastructure for the first time and will open up the telecoms market to foreign investors
Threats Fixed-line sector may enter a period of decline, with potentially negative consequences
for ADSL growth
As the market for mobile data services grows, this could have potentially negative consequences for the growth of fixed broadband services
Slower economic growth in 2009 and 2010 could undermine wireline investment and expansion plans
Trang 11Vietnam Political SWOT
Strengths The Communist Party government appears committed to market-oriented
reforms, although specific economic policies will undoubtedly be discussed at the 2011 National Congress The one-party system is generally conducive to short-term political stability
Relations with the US are generally improving, and Washington sees Hanoi as a potential geopolitical ally in South East Asia
Weaknesses Corruption among government officials poses a major threat to the legitimacy of
the ruling Communist Party
There is increasing (albeit still limited) public dissatisfaction with the leadership’s tight control over political dissent
Opportunities The government recognises the threat that corruption poses to its legitimacy,
and has acted to clamp down on graft among party officials
Vietnam has allowed legislators to become more vocal in criticising government policies This is opening up opportunities for more checks and balances within the one-party system
Threats The slowdown in growth in 2009 and 2010 is likely to weigh on public
acceptance of the one-party system, and street demonstrations to protest economic conditions could develop into a full-on challenge of undemocratic rule
Although strong domestic control will ensure little change to Vietnam’s political scene in the next few years, over the longer term, the one-party-state will probably be unsustainable
Relations with China have deteriorated over the past year due to Beijing’s more assertive stance over disputed islands in the South China Sea and domestic criticism of a large Chinese investment into a bauxite mining project in the central highlands, which could potentially cause widescale environmental damage
Trang 12Vietnam Economic SWOT
Strengths Vietnam has been one of the fastest-growing economies in Asia in recent years,
with GDP growth averaging 7.6% annually between 2000 and 2009
The economic boom has lifted many Vietnamese out of poverty, with the official poverty rate in the country falling from 58% in 1993 to 20% in 2004
Weaknesses Vietnam still suffers from substantial trade, current account and fiscal deficits,
leaving the economy vulnerable as the global economy continues to suffer in
2010 The fiscal picture is clouded by considerable ‘off-the-books’ spending
The heavily-managed and weak dong currency reduces incentives to improve quality of exports, and also serves to keep import costs high, thus contributing
to inflationary pressures
Opportunities WTO membership has given Vietnam access to both foreign markets and
capital, while making Vietnamese enterprises stronger through increased competition
The government will in spite of the current macroeconomic woes, continue to move forward with market reforms, including privatisation of state-owned enterprises, and liberalising the banking sector
Urbanisation will continue to be a long-term growth driver The UN forecasts the urban population to rise from 29% of the population to more than 50% by the early 2040s
Threats Inflation and deficit concerns have caused some investors to re-assess their
hitherto upbeat view of Vietnam If the government focuses too much on stimulating growth and fails to root out inflationary pressure, it risks prolonging macroeconomic instability, which could lead to a potential crisis
Prolonged macroeconomic instability could prompt the authorities to put reforms
on hold, as they struggle to stabilise the economy
Trang 13Vietnam Business Environment SWOT
Strengths Vietnam has a large, skilled and low-cost workforce that has made the country
attractive to foreign investors
Vietnam’s location – its proximity to China and South East Asia, and its good sea links – makes it a good base for foreign companies to export to the rest of Asia, and beyond
Weaknesses Vietnam’s infrastructure is still weak Roads, railways and ports are inadequate
to cope with the country’s economic growth and links with the outside world
Vietnam remains one of the world’s most corrupt countries Its score in Transparency International’s 2009 Corruption Perceptions Index was 2.7, placing it in 22nd place in the Asia Pacific region
Opportunities Vietnam is increasingly attracting investment from key Asian economies, such
as Japan, South Korea and Taiwan This offers the possibility of the transfer of high-tech skills and knowhow
Vietnam is pressing ahead with the privatisation of state-owned enterprises and the liberalisation of the banking sector This should offer foreign investors new entry points
Threats Ongoing trade disputes with the US, and the general threat of American
protectionism, which will remain a concern
Labour unrest remains a lingering threat A failure by the authorities to boost skills levels could leave Vietnam a second-rate economy for an indefinite period
Trang 14IT Business Environment Ratings
Table: Regional IT Business Environment Ratings
Limits Of Potential Returns Risks To Realisation Of Returns
IT Market
Country Structure Limits
Market Risks
Country Risk Risks
IT BE Rating
Regional Ranking
Hong Kong 48 95 65 70 87 80 69.4 3 South Korea 52 75 60 75 71 72 63.8 4
Scores out of 100, with 100 highest The IT BE Rating is the principal rating It comprises two sub-ratings, ‘Limits Of Potential Returns’ and ‘Risks To Realisation Of Returns’, which have a 70% and 30% weighting respectively In turn, the ‘Limits’ rating comprises Market and Country Structure, which have a 70% and 30% weighting respectively and are based upon growth/size/maturity/govt policy of IT industry (Market) and the broader economic/socio-demographic environment (Country) The ‘Risks’ rating comprises Market Risks and Country Risk, which have a 40% and 60%
weighting respectively and are based on a subjective evaluation of industry regulatory and IP regulations (Market) and the industry’s broader Country Risk exposure (Country), which is based on BMI’s proprietary Country Risk ratings The ratings structure is aligned across the 14 industries for which BMI provides Business Environment Ratings
methodology and is designed to enable clients to consider each rating individually or as a composite, which the choice depending on their exposure to the industry in each particular state For a list of the data/indicators used, please
consult the appendix at the back of the report Source: BMI
BMI’s Asia IT Business Environment Ratings compare the potential of a selection of the region’s
markets over our forecast period through to 2015 Our Q111 ratings reflect our consideration of the political and economic risks, as well as risks associated specifically with IT intellectual property (IP) rights protection and the implementation of state spending projects
Across the Asia Pacific region, the onset of the global economic recovery and an upwards trend in
consumer confidence has led to improved trading conditions for IT vendors The Philippines was the only market to rise in our Q111 our rankings, but many markets recorded stronger-than-expected y-o-y growth
in computer shipments in 2010
Trang 15Australia retains its top regional rating this quarter The market received a boost from the confirmation that the new government will continue to implement the National Broadband Network project, which will drive the development of Australia’s digital economy and feed demand for PCs Government tenders will also generate opportunities in years to come in areas such as education, e-government, transport and healthcare
The smaller, but mature, IT markets of Singapore and Hong Kong take second and third spots
respectively in our ratings table, due primarily to their high Country Structure scores Computer sales were strong in Hong Kong in 2010, as the economy recorded positive growth following a contraction in
2009 Hong Kong continues to offer IT investors opportunities associated with its growing links to the vast Chinese market Both Hong Kong and Singapore are expected to emerge as cloud computing hubs, due to growing interest in cloud computing in the region
Singapore benefits from high broadband penetration and initiatives such as the government’s ambitious Intelligent Nation 2015 plan and the standard operating environment IT services spending will be
boosted by the continuing boom in IT-enabled services such as call centres and back-office financial services Other promising sectors for IT services include healthcare, as the government launches a series
of initiatives to develop health technology
On the downside, the continued restructuring of both economies to a more service-oriented model may limit long-term growth prospects, although this also brings opportunities in sectors such as financial services and banking Businesses will probably remain cautious and value-focused over the short term
BMI forecasts per capita IT spending in South Korea, fourth place in the table, will rise from US$780 in
2011 to US$1,000 by 2015, with South Koreans increasingly choosing to spend on IT products due to a substantial increase in their disposable incomes Consumers appear willing to upgrade their PCs and there
is also a trend for households to own more than one computer There will be many key growth areas, including cloud computing and IT outsourcing, which are expected to show a strong demand trajectory
Malaysia keeps its fifth place in our regional ratings in Q111 IT spending growth will be driven by a rise
in the PC penetration level from around 35%, rising incomes and a hi-tech-focused national development plan The subsidised rollout of a high-speed broadband network will address a relative lack of ICT infrastructure outside the Klang Valley There are also increasingly attractive opportunities in the IT services area as the government implements measures to make Malaysia a growing regional services and outsourcing hub
In China, factors such as the vast potential rural market, government spending and demand from key verticals such as telecoms should drive growth Over the forecast period, expectations about China’s long-term economic growth will drive IT investments Key sectors include telecoms, government, energy,
Trang 16social security, education and transport However, there are still risks associated with IP rights protection and piracy and a lack of business environment transparency Pressure on hardware prices is also a risk in the current environment
Vietnamese IT demand, although with a rather smaller market than that of its leading neighbor to the north, is expected to have several long-term drivers going forward Vietnam’s improving ICT
infrastructure will facilitate the development of the nation’s IT market in a country with just 15% PC penetration Government digital divide programmes to boost internet and digital utility in rural areas will help boost addressable market growth and open PC ownership to a growing number of rural inhabitants Vietnam’s gradual integration into global trade networks such as ASEAN and the WTO has helped to bring down tariff barriers and prices as well as increase opportunities
In the Philippines, the IT market will be driven by further growth in the local IT and business process outsourcing (BPO) sector The Philippines has a lower PC penetration than many other Asian countries and the IT market offers correspondingly high growth potential over the forecast period However, there are challenges such as labour shortages and rising wages
India was another country to record impressive y-o-y computer sales growth of approximately a third in H110 The potential is obvious, with less than 2% of the population owning a computer – about 20% of the level in China Realisation of this long-term growth potential depends on fundamental drivers such as increasing India’s low computer penetration, rising incomes, falling computer prices and the
government’s ambitions to connect the country’s vast rural areas to the rest of the world
The last three markets in our regional ratings have low scores due primarily to business environment factors, despite considerable growth potential In Thailand, the fundamentals of growing affordability and low PC penetration should keep the market in positive territory during the forecast period A number of factors should also support momentum, including the government’s PC for Education programme and 3G mobile and WiMAX broadband service rollouts
Similarly, with ICT penetration of only about 20% and development restricted to richer areas such as
Java, the Indonesian IT market has much growth potential BMI expects the Indonesian market to be one
of the region’s fastest growing over the five-year forecast period The SME sector will drive demand for basic hardware and applications as enterprises look to enhance productivity
Sri Lanka’s IT market has benefited from the restoration of peace and improvements in the security situation which have helped to release pent-up demand for IT solutions The country had felt the effects
of instability over the years, from disruption of distribution channels and a flourishing grey market to underdeveloped telecoms infrastructure However, the market will feature on IT vendors’ radars as one of the best potential growth prospects in South Asia Computerisation has only just got started in
Trang 17government services and major public and private sector organisations remain largely underpenetrated in terms of basic enterprise software
Trang 18Asia IT Market Overview
IT Penetration
Across Asia, government ICT initiatives and growing affordability will drive increases in PC penetration
during BMI’s five-year forecast period While some cities and regions stand out, there is an unbalanced
pattern of regional development, with PC penetration in countries such as Singapore being above 50%, while in other countries such as Indonesia, it is less than 2%
The two Asian leaders, China and India, embody the region’s growth potential, as computer ownership remains the preserve of a minority in both countries In China, PC penetration was only around 18% in
2008 – although it was far higher in cities such as Shanghai and Beijing – and projected to pass 30% overall by 2014 In India, less than 2% of people own a computer However, some 45% of the population
is under 25, which provides a promising demographic context for increased PC ownership
Lower price will help to drive higher PC penetration in developing markets The average price of a PC in India has nearly halved over the past few years, and rising incomes and greater credit availability will continue to bring computers within the reach of lower-income demographics
Around the region, affordable computer programmes continue to find favour with governments In 2009, China launched a subsidised PC initiative aimed at rural residents Australia’s computers for schools programme had provided almost AUD260mn of computers by the end of 2009 In Indonesia, penetration
of around 2% could double by 2013 if government initiatives are followed through The Indonesian government is also rolling out new e-learning initiatives, with a target of raising the current 1:3,200 ratio
of PCs to students in public schools to 1:20
A similarly broad range is found with respect to internet penetration The highest levels of internet penetration are found in South Korea, Hong Kong and Australia, with estimated 2010 narrowband
penetration rates of 74.3%, 73% and 67.7% respectively Singapore has by far the highest rate of
broadband penetration, which was estimated at 154% in 2010 Meanwhile, the Philippines has the lowest level of internet usage, with just 6.6% narrowband and 4.9% broadband penetration estimated in 2010
The fastest growth is expected in Indonesia, where narrowband penetration is projected to leap from 30%
in 2010 to 61.2% by 2014 India is now above 20% narrowband penetration despite a lack of fixed-line infrastructure, and this should reach 30% by 2014 Fast growth is also projected for Sri Lanka, where penetration is projected to increase from 10.9% to 21.6% by 2014
Trang 19Some 48.3% of Malaysians had internet access in 2010 Across the region, government programmes are
an important driver of ICT penetration The Chinese government has a five-year plan to make the internet available in every administrative village in central and eastern China and every township in the west
Dial-up technology is still the dominant access method in many states However, even in developing markets, the number of broadband subscribers continues to gain ground steadily In China, broadband penetration is on course to reach 34.3% by 2015, surpassing narrowband penetration of 33.6% In India, where the government designated 2007 as ‘the year of broadband’, penetration should increase eightfold
to reach 8% by 2013 from around 1% currently This is far below government targets, however
Singapore will also see continued strong growth in broadband penetration, which is projected to reach 202% by 2015
Meanwhile, the growth of Wi-Fi coverage
will be one driver of notebook sales in
places such as Hong Kong, where the
government has committed another
HKD200mn to the deployment of a Wi-Fi
network covering more than 200 public
venues
IT Growth and Drivers
Most Asian IT markets are expected to
report stronger growth in 2010 Across the
region, 2010 should see IT spending a
boost from systems upgrades deferred
from the previous year, although much
will depend on business confidence In some cases, companies had IT budgets that were not spent due to economic uncertainty, and in H110 vendors reported a pick-up in project flows
Strong fundamental demand drivers of IT spending meant that there will be continued opportunities Key factors common to most markets include cheaper PCs and reform in sectors such as telecommunications and finance, as well as government initiatives
In the largest market, China, an expansion in consumer credit, as well as a commitment to modernisation
in sectors such as education, healthcare and manufacturing, will help to sustain market growth BMI
expects China’s IT market growth to be maintained by an expansion into the western region, rural areas and lower-tier cities, as well as growing demand from small and medium-sized enterprises (SMEs) IT spending will also receive a boost from government spending and IT projects associated with the
Shanghai World Expo in 2010
2010 IT Market Sizes
US$mn*
* estimate Source: BMI
Trang 20The long-term potential of India’s IT market is plain: less than 3% of people in India own a computer (about one-fifth of the level in China), meaning particular potential in the lower-end product range India’s IT market appears to be positioned for a strong recovery in 2010 thanks to an improving economy and stronger consumer sentiment as well as government support for modernisation in lagging sectors It is estimated that around 5% of India’s 7.5mn SMEs could implement a technology solution in 2010
Meanwhile, India’s business process outsourcing industry is growing at around 40% per annum and will continue to generate opportunities for
vendors of IT products and services
The Philippines is one of the countries
currently benefiting from low-priced PC
programmes (PC4ALL), which provide
opportunities for vendors to penetrate the
low-income segments Other regional
computer sale drivers over the forecast
period include education, lower prices, IP
telephony, cheaper processors as well as
notebook entertainment and wireless
networking features Meanwhile, in
Indonesia, the basic demographics of
rising computer penetration and growing
affordability should drive growth SMEs
represent a growth opportunity, as currently only around 20% of Indonesian SMEs are estimated to make use of IT Compliance with government and international regulations will be a driver in financial,
manufacturing and other sectors
In more developed markets such as Hong Kong and Singapore, robust retail sales led the way in early
2010 as spending recorded positive growth following a contraction in 2009 In Hong Kong, consumer
spending is expected to remain strong in 2010, as evidenced by the positive early reception for Apple’s
iPad IT market growth will be driven by government IT spending as well as cross-border trade and operation
co-The largest IT market in the region is, unsurprisingly, China, estimated at US$92.5bn in 2010, trailed distantly by Australia (US$19.4bn), India (US$16.1bn) and South Korea (US$16.1bn) Singapore’s IT market (including communications) is the largest as a proportion of national GDP (2.66%), followed by Hong Kong (2.07%)
IT Market Sizes As % Of National GDPs
2010-2014
Source: BMI
Trang 21The fastest-growing IT markets over the forecast period look set to be Sri Lanka and India, with
2010-2014 compound growth of 109% and 104% respectively, driven by increasing PC penetration China is
third, with the IT market growing by an estimated 64% over BMI’s five-year forecast period
Sectors And Verticals
Regional IT markets remain hardware-centric, with hardware accounting for 42-71% of total spending in all markets in 2010 However, spending on software and services will grow faster Notebook sales are growing much faster than the PC market as a whole, with growth driven by falling prices and more features
BMI expects a trend of rising hardware
investment to establish itself over the next
few quarters The PC market contracted in
many markets in H109, following a
slowdown towards the end of 2008
However, growth had returned in most
markets by the end of 2009 Sales of
Microsoft’s Windows 7 operating system
and new Intel core technology also have
the potential to help trigger a new cycle of
hardware upgrades in 2010, although
much will depend on business confidence
In mature markets such as Australia and
Singapore, PC sales are dominated by replacement sales In the former, upgrades are estimated to account for at least 80% of business purchases and more than 50% in the case of households More than 90% of Australian households now have a PC, but consumers have appeared willing to spend on upgrading their notebook computers, and it is also becoming more popular to purchase a second household PC Indeed, around 30% of households have more than one PC
In less developed markets, demand from under-penetrated rural areas, affordable computer programmes and growing broadband penetration should generally drive growth In much of emerging Asia, demand from smaller towns and rural areas will provide the main source of growth, along with replacement of desktops with notebooks SMEs will be one of the strong growth segments over the forecast period, with SME demand for servers and networking equipment a significant growth opportunity
In both emerging and more mature markets, the growing popularity of broadband will help to support
computer sales China Telecom is among regional telecoms companies to have rolled out PC bundling
offers as part of its broadband packages The Australian government’s National Broadband Network plan
IT Markets Compound Growth
2010-2014f, %
f = forecast Source: BMI
Trang 22should drive development of Australia’s digital economy and services such as online banking and
shopping
Meanwhile, a wave of 3G launches across the region should also provide a stimulus to sales of notebooks,
with Vodafone Hong Kong among service providers offering 3G/HSPA USB modems bundled with
their 3G services However, netbooks and notebooks face competition from other form factors such as
smartphones – from Palm, Research in Motion, Apple and other vendors – and tablet notebooks,
spearheaded by Apple’s iPad
Due in part to high levels of piracy, software’s share of IT spending is relatively low, ranging from
11-25% among countries covered by BMI Efforts are being made to tackle the issue of piracy, but despite
government crackdowns in China and the Philippines, software piracy remains above 70% in most of emerging Asia
Across the region, there is a growing trend for smaller companies to seek greater efficiency by using IT to improve productivity and reduce costs (including labour costs) In general, ERP and other e-business products still dominate the enterprise software market, but vendors are also looking to other areas such as CRM and business intelligence, where faster growth is possible
The economic slowdown may have encouraged companies to consider cloud computing solutions such as software-as-a-service (SaaS) The hosted application model may already account for between one-fifth and one-quarter of China’s software revenues SaaS has also enjoyed steady growth in the Hong Kong market over the past three years with, according to vendor estimates, around 8% of local enterprises now use an SaaS security solution Improved broadband infrastructure will assist the popularisation of the rented software model in markets such as Indonesia
Trang 23Market Structure (% Of Total IT Market)
f = forecast Scores out of 100 Source: BMI
New platforms and services in the telecoms field is a driver for that key IT spending segment, where an industry restructuring with the advent of 3G mobile services has led to more competition Meanwhile, expanding technology adoption in the logistics industry and public transport will be a source of IT
services projects Sectors such as hospitals and real estate will also provide opportunities
The IT services segment accounts for 17-40% of spending in the Asian markets covered by BMI The
global economic slowdown and credit tightening had an impact on projects in some verticals, but in 2010,
a brightening business climate should mean more opportunities in key IT-spending verticals such as financial services, telecoms, government, healthcare and logistics
Government spending will account for a larger share of spending in many markets In China, government stimulus packages have helped to drive IT-related investments, while in Singapore, government ICT projects such as SOE2 provide significant opportunities, with the government planning to invest around SGD1.73bn in ICT projects in its last fiscal year through March 2010 Australia’s National E-Health Transition Authority has targeted the creation of a ‘paperless environment’ for the health sector and was also expected to launch a standardised reporting system scheme in 2010 Meanwhile, the Hong Kong government’s Digital 21 initiative will continue to generate spending
Regionally, hardware deployment services remain the largest IT services category, with other
fundamental services including system integration, support systems, training, professional services, outsourcing and internet services Main spenders across the region include banks and financial institutions
as well as governments Even in emerging markets such as India, IT vendors are having to pay more
Trang 24attention to value-added services such as technical support and product troubleshooting, or basic IT and hardware consulting
In many countries, the number and size of local outsourcing deals are increasing Outsourcing could account for as much as 30% of China’s IT services spending by 2013, while in India there have been
some large contracts such as that awarded by Idea Cellular to IBM Singapore – where the government
was to tender a major outsourcing contract in 2008 – and Hong Kong have both seen a trend towards larger outsourcing projects in the public and private sectors
Trang 25Vietnam Market Overview
Government Authority
Government Authority Ministry of Information and Communications (MIC)
The Ministry of Information and Communications (MIC) is the main Vietnamese policymaking and regulatory body in the fields of IT, although its brief also covers a number of other areas such as
telecommunications, broadcasting and publishing
The MIC’s major functions include proposing and drafting laws, regulations and development plans related to IT and other policy areas The current national framework for IT is the Strategy for IT
Development, which was approved in 2005 and covers the 2010-2020 period
Background
The Vietnamese IT market, including computer hardware, packaged software and IT services, was valued
at US$1.9bn in 2010 Vietnam IT spend per capita, at around US$21 in 2011, is considerably lower than the US$178 estimated for ASEAN neighbour Thailand However, IT spend per capita is expected to grow
to US$35 by 2015
Computer hardware, including desktops, notebooks, and accessories, is the largest IT market segment in Vietnam, accounting for around 73% of spending in 2010 Packaged software was valued at US$178mn that year, equivalent to around 10% of spending IT services and outsourcing comprised 17% of spending
Tariff reform, expanding internet infrastructure, a growing economy and government programmes will all play a part in driving Vietnamese IT market growth over our five-year forecast period Vietnam has a relatively good IT and telecommunications infrastructure, with particularly high mobile telecoms
penetration However, with PC penetration at just 15%, there is still a large portion of the population that
do not participate in the digital society and are unable to afford the latest IT products
The household sector, which accounts for only around 10% of the IT market currently, should increase its share by 2015 The country’s vast, under-penetrated rural market offers the most PC market growth potential, with Hanoi and Ho Chi Minh City accounting for most sales currently, also presents a
significant growth opportunity as the government rolls out measures to boost rural incomes
The government sector is a key segment of the Vietnamese IT market and comprises about 30% of national IT spending Public IT spending by around 7,000 government organisations at national,
Trang 26provincial and municipal levels will provide important opportunities to vendors A number of
programmes exist to increase IT utilisation in areas like e-government, e-taxation and education The national IT plan has regional components, focused on northern, eastern and southern regions
The private sector accounts for around 60% of IT demand and both domestic and foreign enterprises are investing in IT to boost performance Large corporations are more likely to buy software from top-tier vendors, but SMEs account for the majority of Vietnam’s 400,000 enterprises and are increasingly a target for multinationals There is a lot of potential for Vietnamese enterprises of all sizes to increase spending on basic solutions, including customer relationship management (CRM) and security
The Vietnamese IT market remains constrained by high levels of grey market activity, and particularly by software piracy, which accounts for around 85% of installed software However, the rate has come down from 95% in the last two years due to a more proactive government approach to the problem
The government has set an ambitious target of 14% annual growth for the ICT sector, with total turnover
to reach US$50bn by 2014 US$14bn is to come from hardware and US$5bn from software
Telecommunications is projected to account for half the total, or US$25bn
Hardware
BMI projects that sales in Vietnam’s computer hardware market will be worth around US$1.5bn in 2011,
up from an estimated US$1.4bn in 2010 The main growth driver will be affordable notebooks BMI
projects growth of around 11% in the Vietnam PC market this year, after the market showed signs of a rebound in 2010
In H110, overall PC sales were estimated to have achieved double-digit growth, compared with the same period of period of 2009 The growth was driven mainly by imported laptops, with shipments up by around one-third both sequentially and y-o-y Desktop sales, however, remained in negative growth territory A return to growth in Q210 followed a disappointing first quarter of 2010, when notebook sales were slower than expected The relatively sluggish sales were attributed in part to price cuts in 2009 These meant that traditional Lunar New Year holiday season price discounting had less appeal to
consumers than previously
Trang 27Going into H210, growth received a boost in August with back-to-school sales, and summer retail
promotions Sales of PCs picked up as new vendors enter the market while others roll out new models, allowing for double-digit growth for FY10
However, a number of headwind will potentially combine to limit growth, including government cutbacks and continued caution in the business segment The depreciation of the dong will also restrain demand by leading to higher prices for imported laptops Vendors reported the number of first-time buyers in the market was currently limited, with most sales coming from purchases of typically lower-priced second computers
PC penetration in Vietnam was around 9.6% in 2007, according to World Bank figures, and in 2010 is
estimated by BMI at around 15% Notebooks are owned by an estimated 7% of the Vietnamese
population, which points to significant growth potential for the local PC market, with the most potential being in rural areas Currently, Hanoi and Ho Chi Minh City are thought to account for around 85% of notebook sales
In 2009, imports received a boost following cuts in import tariffs on finished electronic products Growth
in 2009 was being driven by the consumer segment, with government and business spending having slowed due to the effects of the economic crisis In contrast, Vietnamese retail sales posted an impressive 21.5% y-o-y growth in January-April 2009, with local consumers apparently more optimistic than their peers in many other Asian economies
The spread of fixed and mobile broadband services will spur purchases of mobile PCs as connectivity
devices As elsewhere, telecoms operators such as Viettel are emerging as significant distribution
channels for notebooks as vendors seek tie-ups Going forward, government programmes are expected to make a significant contribution to computer sales In August 2009, the Vietnamese government
announced a national programme to supply 1mn computers at favourable prices to Vietnamese schools by
2011 Multinational IT vendors such as Acer, Intel and Microsoft were all participating in the
programme Desktops will retail under the programme at around US$161, or about half the usual price The computers will come loaded with educational software and with broadband connections
The programme received reinforcement with the launch in Ho Chi Minh City in January 2010 of a
programme entitled One Teacher-One Computer The programme, which has support from the VNPT and
the Ministry of Education and Training, will provide laptops at a price that is VND800,000 below the market price Discounts of up to 80% for schools and 30% for teachers will also be offered on VNPT’s broadband service packages Laptop prices were expected to fall by 10-15% in 2009, boosting sales In H109, the effects of recent cuts in duty were apparent in electronics retail stores, with leading brands of notebooks selling at notable discounts to their 2008 prices In 2008, VAT on electronic products was raised from 5% to 10%, but that hike has now been reversed and much of the benefits seemed to have
Trang 28been passed on to consumers At local electronics and home appliance retail centres, prices for popular
notebooks models by vendors such as HP, Sony and Dell had been reduced by 7-12%
The ietnam PC market had slowed to about 8% growth in 2008, with high interest and inflation rates and currency instability meaning that consumers and SMEs cut back on spending to save money However, sales showed some signs of recovery in H208 and growth is expected to be about 18% in 2009
In H208, vendors turned the situation around with promotions for the back-to-school period and new models that were launched to capitalise on the traditionally higher demand in the second half of the year The biggest threat to continued growth was inflation, which peaked at around 27% in 2008 and made computer products less affordable An easing of inflation should see sales growth pick up again
The main driver of sales is notebooks, for which the addressable market was estimated at more than 900,000 units in 2009 Vendors and retailers reported double-digit growth for notebooks in the first half
of 2010 Notebooks were responsible for around 40% of PC sales, but should pass 50% within the
forecast period In particular, LCD-screen notebooks are forecast to grow at an almost triple-digit rate over the next year Vendors are promoting small form factor netbooks, but, this segment will face strong competition from low-end notebooks with more features, as well as from smartphones, tablet notebooks, and specialist devices such as e-readers
Software
In 2011, Vietnam software sales are projected by BMI to grow to US$205mn, and software CAGR for
2011-2015 should be in the region of 15% Software spending comprises around 10% of total Vietnamese
IT spending The market is expected to reach a value of around US$360mn by 2015, with steady growth
in demand for licensed software from government, enterprise and household segments
Vietnam’s software market is developing, despite the problem of software piracy, which still accounts for around 85% of software, compared with around 76% in neighbouring Thailand While high, the 85% rate represents a drop from 95% in 2007, as the government has gradually implemented a stricter regulatory framework As usual, the problem is more one of enforcement rather than a lack of legal provisions In November 2011 the government provided a boost to legal software usage by signing an extension of a deal with Microsoft to purchase licensed software for government organisations The original 2007 agreement had covered all 63 provincial authorities, 24 ministries and enterprises where the state has a stake of more than 50%
In the past year, the government has appeared to take a more active stance towards enforcement of copyright regulations Decree 47.2007.NP-CP, which became effective in June 2009, allows for a penalty
of up to VND500mn (around US$28,000) for instances of software piracy In April 2010, it was
Trang 29announced that Bach Khoa Internet Security Centre (or BKIS) and Lac Viet Computer Joint Stock
Co had become the first Vietnamese firms to join the Business Software Alliance, a global software
industry association that focuses on copyright issues
The Vietnamese software market remains highly cost-sensitive, with around 75% of the market served by lower-cost local software vendors Local software dominates the market for government and SME
segments However, larger Vietnamese companies are more likely to buy higher-priced software from multinationals, which have around 25% of the market Vietnamese customers are demanding a higher level of support for software compared with a few years before
Growing PC penetration, as well as new technologies and business models including 3G mobile and WiMAX, and industry trends such as software-as-a-service (SaaS) and open source will provide areas of Vietnamese software market growth going forward Most demand remains for on-premises subscription models, due to the greater perceived security and degree of control However, as internet infrastructure improves in Vietnam, there should be more demand for alternative models such as SaaS and other cloud computing services
In 2011, migrations to Microsoft’s new Windows 7 operating system should continue to have a positive impact on software revenues, although much will depend on consumer and business confidence
Microsoft officially introduced Windows 7 in Vietnam in early November 2009, with the programme
being installed in PCs sold at leading electronics distributors such as Nguyen Kim, Tran Anh, Phong
Vu and Dang Khoa Microsoft will introduce a Vietnamese version of Windows Live and has announced
a list of Vietnamese software programmes that are compatible with Windows 7 including Vietnamese font programmes, dictionaries and accounts software There should also be a boost from systems
upgrades previously delayed as a result of the economic situation
2010 saw a pick-up in demand for software with investments in sectors such as government, banking, telecoms and real estate Some vendors and distributors saw a slowdown in 2009 due to global economic headwinds.The economic downturn may have added to the forces driving interest in open-source software due to its perceived lower cost and access to codes The economic downturn has led businesses and customers to look more closely at open-office-type open-source software, as well as free services such as Google Docs, which are funded by advertising Once again, a key issue and precondition for the more widespread adoption of open source will be the development of a support infrastructure
There is still a lot of potential for Vietnamese enterprises to increase spending on basic solutions,
including CRM and security According to estimates by the Ho Chi Minh Computer Association, the local market for ERP software was forecast to grow to VND700bn (US$46.3mn) in 2010, from
VND700bn (US$46.3mn) in 2010 Government support for ICT development should provide a
framework for growing utilisation of software in both public and private sectors