IDC Predicts Continuing Disruptions across the APEJ ICT Industry for 2008, Driving Double Digit Growth and New Market Segmentation

Singapore and Hong Kong, December 12, 2007 – In its annual look at the year ahead, IDC predicts that the Information and Communications Technology (ICT) spending and growth for the Asia/Pacific (excluding Japan) region will be fuelled largely by continued disruption with dynamic market changes driving new or more focused segmentation in vertical markets.

“In particular, government spending will accelerate due to digital inclusion and new digital demands from a more savvy population,” said Graeme Muller, Head of IDC’s Asia/Pacific Predictions Committee. “While governments will typically lead digital inclusion efforts, strong participation from ICT vendors is expected as part of their corporate social responsibility programs.”

IDC predicts the ICT market in Asia/Pacific excluding Japan (APEJ) to reach US$154 billion in 2008, a 10% rate of growth over 2007. Together, China and India will contribute close to half of the region’s total IT spend in 2008, with India being the fastest growing country worldwide in terms of overall IT spending in 2008 over 2007.

The following are the top 10 key IDC predictions that will shape the ICT industry in APEJ in 2008:

1. China and India double digital growth drives IT market in the region
GDP growth rates in China and India are forecasted to range between 9% and 10% for both countries in 2008. Increasingly, the SMB segment in these two countries is adopting more IT solutions as a strategic business differentiator. Vendors need to adjust their existing models to cater to this group of customers who may have drastically different business operations from their larger competitors.

2. Product vendors tap into the profitable end of their services business
With decreasing margins of hardware products and consistent growth in the IT services market, vendors are looking at their services business to drive into new segments and grow wallet share in their customer base. End-user demand for IT services is a key driver of this phenomenon as they are more willing to pay for high value premium services directly as their IT environments become more complex.

3. Business Intelligence market shaken by consolidation and convergence
The Business Intelligence (BI) software market was marked with major acquisitions in 2007, notably by large software vendors from non-BI backgrounds. These disruptions will alter the competitive landscape and affect the positioning and go-to-market strategies in 2008 as new segments appear from these new delivery models. In addition, BI is increasingly being packaged and sold as part of a larger solution that better targets customers’ needs, accelerating the evolution of what IDC calls Intelligent Process Automation (IPA). While consolidation and convergence are expected to contribute to some downward pricing pressures, IDC expects the overall BI market in APEJ to continue growing positively in 2008.

4. Digital marketplace accelerates the uptake of enterprise collaboration
As the gap between personal and business communication narrows, there is an emerging focus on web 2.0 and unified communications (UC) solutions for the enterprise. The need for constant presence and enhanced collaboration for more effective communication and workflows are key in driving the adoption of UC applications at the workplace. The workplace is now giving way to virtual workspaces, where UC and Web 2.0 will provide the necessary tools. IDC believes that 2008 will be the year where these services will truly gain traction in the enterprise space.

5. Green IT emerges in Asia/Pacific
With increasing concerns over global warming and climate changes, the focus has turned to Green technologies and environmental protection in the ICT industry. It is not surprising that while corporate social responsibility is an important reason for companies to adopt Green IT, the underlying motivation is that of cost savings. The challenge for vendors remains that of demonstrating both the business case for Green IT to end users as well as sustaining a Green supply chain. IDC believes that the greenness of ICT vendors is going to become more important as purchasing criteria for end-user organizations

6. iPhone to drive demand for multimedia phones
The converged devices space is expected to become more competitive in 2008, with Apple’s iPhone and new devices from players such as Nokia and RIM, further stimulating the demand and driving the multimedia phones market. Beyond the growth of music phones as well as the inevitable decrease in prices, a variety of access capabilities will find their way into mobile phones and further encourage the downloading of music content over the air, while supporting peer-to-peer mechanisms. IDC predicts that entry of such a new disruptive force will stimulate an already hot market into new levels of segmentation and growth and drive demand for the multimedia device.

7. The battle of wireless broadband supremacy: HSDPA vs WiMAX
Growing demand for wireless broadband access; fixed and mobile, will result in a fierce and complex competition for market share by the carriers and providers. With differing rates of broadband and mobile penetration for both the matured and emerging economies, IDC expects a battlefield of HSDPA vs WiMAX in the space.

8. ITSM and ITILv3 drive convergence of business and IT consulting
End users are seeking IT engagements that are more “business-outcome oriented” to ensure greater efficiency and agility for their projects. Thus vendors are expected to deliver according to the IT Service Management (ITSM) and the latest version of ITILv3 which specifies the strategy of IT within the organization and alignment with business processes and outcomes. IDC believes that the ability to provide a mix of IT and business consulting will be critical for vendors wishing to act as strategic advisors to their clients throughout 2008 and beyond.

9. ICT markets in Emerging Asia continue to grow despite political risk
IDC predicts that combined IT spending in the ASEAN ICT market will exceed that of even India, and become an important market for ICT investment in 2008 and beyond. For the emerging South Asia markets, consisting of Bangladesh, Pakistan and Sri Lanka, 2008 looks promising as government initiatives aimed at improving their country's IT infrastructure improves business environment and attracts foreign investments. Elections are scheduled for 2008-2009 in these countries and despite political uncertainties and natural disasters, IDC believes that solid government support, and heightened vendor focus, ICT development in this region will continue to accelerate.

10. Government digital inclusion drives public sector IT spending
IDC expects to see a proliferation of projects that combine the efforts and resources of public, private and civil society stakeholders to tackle the digital divide. With strong political will, accompanied by available funding, 2008 is expected to be the year where governments lead the way in deploying technologies to extend connectivity and build towards a society of digital inclusion.

IDC Predictions 2008 for the ICT markets in APEJ draws upon latest IDC research and a worldwide brainstorming exercise among IDC's 900+ analysts. This was followed by an extensive regional review to weigh in on key industry events, user trends, and vendor strategies that promise to uniquely define the ICT market in APEJ in 2008.

Webcast on IDC's Asia/Pacific Predictions 2008
To find out more about IDC's Asia/Pacific Predictions for 2008, please register at http://www.idc.com.sg/webcast/WCASIN-071212.asp to listen to the Webcast presented by Graeme Muller, Head of IDC’s Asia/Pacific Predictions Committee, which will be available from Dec 12 onwards.

For more information about purchasing the research, please contact Elizabeth Shunmugam at +603-2169-7536 or eshunmugam@idc.com.

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