Peru Information Technology Report Q4 2008 - http://www.companiesandmarkets.com adds new report

2008-11-25 10:17:02 - Peru Information Technology Report Q4 2008 - a new market research report on www.companiesandmarkets.com

www.companiesandmarkets.com/Summary-Market-Report/Peru-Informati ..

Market Overview The Peruvian IT market should grow at a CAGR of 8% over the 2007-2012 forecast period, driven mainly by a buoyant economy, expanding retail sector, and lower tariffs and prices. The free trade agreement (FTA) with the US, and other similar trade agreements, will encourage many companies, particularly larger ones in the public sector, to invest in optimising systems. Recent data reveals a significant digital divide however, with Lima accounting for around 80% of national PC sales.



Peru’s IT market is one of the smaller ones in the Latin America region, but is attractive because an overall PC penetration rate of around 15% indicates plenty of room for growth. The value of total spending on IT products and services is expected to pass US$1bn by 2010. The economic context is positive, with GDP growth of 9.3% year-on-year (y-o-y) in Q108 as Peru continues to appear relatively insulated from global macroeconomic uncertainty.



Government accounts for around 10% of total IT spending, and the government will remain a support to the market with a number of programmes to drive PC penetration. The retail PC segment should continue to expand due to a greater range of tariff reductions, rising incomes and more flexible terms from retailers. Several other sectors offer particular opportunities for IT vendors, including banking and financial services, telecoms, retail, mining and SMEs.



Industry Developments Peru’s government continues to focus on ICT for development. The government has recently has relaunched a tender to roll out broadband to more than 1,000 rural communities. The tender was originally awarded to Telefónica last year, but then cancelled amid concerns about procedural irregularities. The contract is expected to initially connect 1,050 rural communities in Peru at a cost of around US$11.5mn.



In December the government said that it was ordering 260,000 laptops for schools from the One Laptop Per Child initiative. Meanwhile, the ‘Teachers of the 21st Century’ programme, launched at the end of last year, gives teachers the opportunity to purchase laptops at a reduced price. Teachers are eligible for favourable credit as well as a US$150 bonus, which allow them to purchase a laptop for an effective price of as low as 27 soles a month.



Another government priority is to strengthen the domestic software sector. The government is targeting US$100mn annual software exports by 2012, from US$25mn last year. The government expects that software and service exports will be around US$31mn in 2008.



Competitive Landscape Dell is the leader in the corporate PC segment, but is switching to a new focus on the retail sector through new partnerships and new product launches as it challenges the market leader HP. Dell has partnered with US retail giant Wal-Mart in several countries in the region, and is expected to expand this arrangement in 2008. Wal-Mart recently said that it was interested in opening supermarkets in Peru.



Turning to software, and market leader Microsoft has introduced sweeping changes to the structure of its operations in Latin America, with the introduction of a new Multi-Country Americas region encompassing Central America, Peru, Ecuador, Bolivia and Paraguay. Last year Microsoft’s Andean unit sold 1.4mn licences of its latest operating system Windows Vista. Some 400,000 of the licences were sold to the enterprise segment.



In 2008 IBM expanded its landmark IT services contract with telecoms operator Telefónica to provide technical support, backup and disaster recovery until 2011. The original landmark five year outsourcing contract with Telefónica, signed last year, covered a number of regional markets including Peru, and was worth up to US$54mn.



Computer Sales BMI projects that Peru’s computer and accessories market will grow at a CAGR of at least 7% over the 2007-2012 period and pass the US$500mn mark by 2012. Annual PC sales including notebooks are close to 600,000 units, and are increasing at around 20% a year. 2007 was a strong year for PC sales, with demand up from both retail and enterprise segments. Retail sales are still less than 10% of the market but recent distribution agreements by vendors and supermarket chains will drive this higher. Growing affordability has much to do with this. Laptop prices have virtually halved since 2006, when the average price was around US$1200, compared with around US$650 in 2008. However, desktops still accounted for more than 80% of sales last year. Demand outside the capital Lima is likely to fuel growth over the next few years.



Software Peru’s software market is estimated to have been worth US$98mn in 2007, and software CAGR for 2007- 2012 is projected to be in the region of 8%. Software demand has grown steadily, with the use of pirated software in the public sector dropping significantly in 2006 to around 40% of all software from 73% in 2003. A number of segments are expected to drive demand, including Health, Mining and Education.



Faced with more, and often larger, competitors, even smaller Peruvian exporters will want to reduce costs and gain competitiveness. There should be a demand to improve processes such as finance, accounting, sales and inventory. The majority of demand currently, in functional terms, is for ERP and supply chain management. There is a small but growing market for custom solutions.



IT Services Peru’s IT services market is estimated to have grown around 12% in 2007 to a value of around US$269mn. For a developing market, the percentage of IT market revenues generated by services is high at around 32%, although in line with the region and lower than for Brazil. Some 10% growth is projected by BMI for the IT services segment in 2008. In Peru, the growing level of investment in recent years in corporate management solutions is translating into demand for support and maintenance as well as more sophisticated IT services.



E-Readiness According to BMI estimates, the number of Peruvian internet users reached 6.3mn in 2007, representing 22% of the population. The percentage of broadband subscribers in the general population, however, was only 2.1%.



Recent data from Peru’s Statistics Institute, IENI, suggests that nearly 75% of internet users use a public access point. This compared with just 18.8% of users who use internet at home, and 12.1% at work.



Mobile telephony penetration is continuing to increase significantly, and was up to 45.02% in Q307, from 31.3% a year earlier.



The World Economic Forum ranked Peru 78th in the world in its most recent survey of ‘e-readiness’, but cited improvements in some institutions including Judicial, Police and Education.



Peru IT Sector SWOT