2008-09-13 04:47:01 -
Argentina Information Technology Report Q3 2008 - a new market research report on www.companiesandmarkets.com www.companiesandmarkets.com/Summary-Market-Report/Argentina-Info ..
Market Overview The Argentine IT market is projected by BMI to be worth nearly US$4bn by 2012, with the consumer segment and SMEs fuelling growth. The IT market is the second largest in the Latin America region, but PC penetration is only around 22%, and the government is continuing efforts to expand computer penetration to under-served
segments of the population. The main drivers of PC sales are falling prices and greater availability of credit for lower income consumers, due partly to programmes like Mi PC and PC Abuela. Higher broadband penetration and the popularity of notebooks are other factors. Demand for IT products and services should grow at a CAGR of around 9% over the forecast period. Despite some continued weakness in IT investment by large companies, small and medium enterprises are building on earlier purchases with further investments in software and systems. The federal government is launching tenders for IT projects in areas such as customs and social security, while local governments, notably Buenos Aires, also have their own plans. The overall economic outlook is constructive, with the administrations objective being to maintain the high rate of economic expansion, while containing any risks of overheating. All the signs point to doubledigit PC sales growth in 2008, with resellers and retailers planning further investments this year. However, the market is constrained by significant income and geographical disparities, and the financial turmoil surrounding the US credit woes could have a negative impact on Argentinas economic growth outlook. Industry Developments Government policy is a key market influence. The customs agency hopes this year to launch a tender to replace its Sistema Maria legacy IT platform. The project, if it receives the go-ahead, would be worth an estimated US$90-100mn. Meanwhile, social security agency Anses recently said that it expects to save more than ARS2mn (US$636,000) in 2008 by using open source software. So far the transition has reportedly involved at least 8,000 computers. Regional governments are launching their own IT initiatives. Buenos Aires province recently rolled out an IT Action Plan 2008-2011. Provincial governor Daniel Scioli said that he wants to make the province a leading supplier of software and IT services. Meanwhile, Salta provincial government has also rolled out an ambitious e-development agenda which tackles issues such as digital signature and information security. Competitive Landscape Argentinas consumer PC segment is an increasingly important competitive battleground. Dell expects the consumer segment to account for 20% of its local sales in 2008. Across the Latin America region, the US giant has initiated a shift in focus from the enterprise segment to consumers. Meanwhile, recognising that availability of credit is an important driver for consumer demand, Lenovo has recently launched a credit programme for resellers. SAP, which has more than 50% of the enterprise applications market, saw local software sales grow 50% in 2007. According to SAP data, the company now has more than 450 clients in Argentina and saw contract wins rise 65% last year. In April 2008, rival Oracle announced a contract win from Dana Corporation, a major provider of automobile parts and systems in Argentina. In the IT services segment, global vendors such as IBM and Accenture have netted a growing number of large deals. Accenture recently implemented the first phase of a multi-million dollar solution for Telecom Argentina. IBM is also strong in key verticals such as Telecoms and Banking, and recently extended its major regional services contract with major telecoms company Telefónica, which is serviced from its Buenos Aires data centre. Computer Sales BMI projects that Argentinas computer and accessories market will have a CAGR of at least 8% over the 2007-2012 period. For 2007, market revenues were put at US$1.29bn, and they should approach the US$1.8bn mark by 2012. The consumer segment now accounts for around 50% of PC sales, and is expected to grow faster than the PC market as a whole in 2008. The main drivers are falling prices and greater availability of credit for lower income consumers, due partly to programmes like Mi PC and PC Abuela. The average price of a PC fell 2% last year. Another factor is growing broadband penetration. The consumer segment is expected to grow 80% in 2008, as compared with 50% for the corporate sector. Sales of notebooks accounted for more than 20% of unit sales in 2007. Software Argentinas software market is estimated to have been worth US$422mn in 2007, and the figure for 2008 is expected to come out at a little more than US$464bn. Software CAGR for 2007-2012 is projected at around 10%, despite high annual software piracy losses. Enterprise software accounts for around half of total software revenues. Demand from SMEs for ERP applications is growing, as many such companies build on earlier investments in infrastructure and basic systems. Investment by larger companies has been relatively weak since the financial crisis of 2001 however, but should start to recover, giving further impetus to the market. The main functional category currently remains ERP solutions, estimated to account for more than 80% of the enterprise software total. Demand will remain strong in the near-term due to the large potential market represented by SMEs in many parts of the country. IT Services Argentinas IT services market is estimated to have grown around 11% in 2007 to a value of just short of US$700mn, with similar growth expected in 2008. The percentage of IT market revenues generated by services is fairly typical for an emerging market, at around 25%, but is lower than some other countries in the region. However, IT services revenues are expected to grow faster than for the market as a whole, with CAGR for the 2007-2012 period in the low double-digit range. Some sectors will be in the forefront, notably financial services, and telecoms, which has generated a number of big contracts in recent months from companies such as Telecom Argentina and Telefónica. E-Readiness Argentina possesses one of the most dynamic telecoms markets in the region, with a dramatic expansion in the number of mobile subscribers over the past years. Fixed line penetration is also among the highest in the region, providing a good platform for strong growth in broadband services adoption. According to BMI estimates, the number of Argentine internet users reached 12.5mn in 2007, representing 32% of the population. The percentage of broadband subscribers in the general population was 5.7%, compared with 3.7% in Brazil.
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