IDC Philippines' top 10 predictions for 2007: Innovation, redefinition and expansion

January 26, 2007

Manila, Philippines, January 26, 2007 – According to IDC's Philippine Top 10 Predictions, 2007: Innovation, Redefinition, and Expansion, Doc#PH383102P, the Philippine information and communication technology (ICT) market will be marked by concerted efforts from ICT players to innovate, redefine, and expand. Innovation will take place among business models, offerings, and product portfolios while redefinition of primary objectives and business strategies are also expected to occur. ICT players will also ensure expansion in IT spending and areas of business opportunities through various innovative programs aimed at gaining control of a larger piece of the market. Such key trends will be done to ensure profitability in a market that is expected to witness hypercompetition as well as various disruptions.

IDC presents the following predictions for 2007:

1. Information and Communication Technology (ICT) Spending Shows No Signs of Letting Up

IDC predicts that both IT and telecommunications spending in the country will see over 10% growth in 2007. The hardware category is projected to account for 67% of the total IT spending, pushed by the expected growth in personal systems. IT services and software categories will expand by 14.2% and 10.5%, respectively. Wireless service sector will lead the telecommunications spending, expected to make up almost 68% of the total market pie.

2. The Philippine Cyberservices Corridor – Pathway to the Future

The Philippine Cyberservices Corridor project will help spur ICT-related activities in areas outside key urban centers in the coming years. While it may not necessarily lead to a significant increase in IT spending due to reallocation of IT budgets, the significance lies in the fact that these other largely untapped areas will now be given the relevant support and consideration since these areas are good alternatives and highly capable ICT locations.

3. Philippine IT Brain Drain – Brain Gain for Southeast Asian Countries

Export of ICT professionals to ASEAN countries will accelerate, further deepening IT brain drain in the country. IDC believes that the policy review should be in order, as worker migration could gradually develop into a shortage of qualified professionals or a labor supply death by export.

4. Digital Gadgets – Still on the Go

Adoption of digital gadgets will penetrate beyond mainstream audiences. Devices like mobile phones focusing on integration, still digital cameras harboring high-end features, handhelds possessing more functionality, along with LCD monitors and MP3 players, will become a common sight among more consumers.

5. Small Business Means Big Business

Hyper-competition among branded and whitebox vendors in the SMB space will further intensify, with focus on achieving a proper balance between service and support and cost.

6. Server Hardware – Breaking Out of the Box

Bundling of security and storage solutions will drive growth in the server market, as complementary products put higher premium on server spending. Such scheme is seen to ease out the inhibiting factors of fairly prohibitive prices and perceived setup complexity.

7. Consumer Penetration via Enterprises

ICT players will move into consumer penetration via enterprises, in order to capture potential "second-round" buyers and loyal patrons. ICT product corporate packages intended for employees' personal/home usage is a good alternative selling venue, providing attractive pricing for consumers and bridging possible gaps within remuneration packages.

8. Verticalization – Information and Communication Technology Players Put the Spotlight on Target Industries

Verticalization strategies will be on vendors' top agenda in 2007. The verticalized approach will be manifested in marketing strategies; tailoring, mixing, and remixing of product offerings; and product positioning, as buying behaviors differ based not only on company sizes, but also on vertical segmentations.

9. The Philippine Business Process Outsourcing Industry – Will This Sunshine Industry Continue to Shine?

IDC believes that 2007 will be an acid test for this much-heralded industry. The Philippine BPO industry will reposition itself as "quality of service (QoS) destination" rather than a pure "cost-reducing destination", to veer away from the emergence of PRC, Vietnam and Easter European countries.

10. Fixed-Mobile Convergence Gets Push from Carriers and Manufacturers

Carriers and manufacturers push fixed mobile convergence, driven by the growing adoption of verticalized models among ICT players. The shift to FMC will likewise trigger more restructuring and changes in business models as well as the network infrastructures of carriers.

"The 2007 spending will center on overall IT consolidation, building a secure IT environment, and reducing the total cost of IT. These factors will drive the need for vendors to innovate their existing product portfolios, redefine their business strategies, and expand to new and unchartered business areas. ICT players that are not jumping out of the box will be left out while enterprising players who are keen on exploring new ideas while keeping a focal view of end-user buying behaviors, competitive dynamics, technological movements, and macroeconomic indicators will gain needed market traction," says Jubert Daniel Alberto, senior analyst, Peripherals and Consulting Research, IDC Philippines.

This IDC study presents IDC's top 10 predictions for the Philippines for 2007. These important future trends and events, which resulted from the collective opinions of IDC's industry experts, are also guaranteed as significant insights that will require executive attention and will consequently drive strategic choices for the year ahead.

Contact

Chong Chee Kian
Events & Marketing Executive
Tel: +603-2169-7521
Fax : +603-2163-5098
Email:ckchong@idc.com