By EDU H. LOPEZ
2010 would be a year of recovery and transformation for the information and communications technology (ICT) market in the Philippines, according to IDC.
Total IT market spending would increase by 7.6 percent to reach US$3.14 billion by the end of 2010, and would succeed in regaining a 9.1% compound annual growth rate (CAGR) by 2013.
On the telecommunications front, spending is expected to record 7.7% growth in 2010, following the decline of 2.9% in year-end 2009. Telecommunications spending will increase and reach US$3.81 billion.
IDC expects the Philippine 2010 ICT market to post modest growth across various segments, driven by the transformation in business objectives, both from the vendor and service provider (SP) community and the end-user segments, corporate or small and medium enterprises (SMEs) and consumer.
Older and more established strategies such as verticalization, will be given a new twist, together with revolutionized business models, regionalization, and convergence of services, all in the aim of capturing the ever-changing requirements from the end users.
"Overall, the ICT landscape in the Philippines will be driven by recovery of the ICT spending psyche and activities and transformation of key business objectives of the enterprise sector, as well as the consumers’ ICT focus. Furthermore, the ever-evolving end user needs and objectives will impel vendors and SPs to re-examine key transformational strategies on marketing, consultative selling, and regionalization, as well as expansion and product and solution portfolio," says Jubert Daniel Alberto, Manager for IT Spending research at IDC Philippines.
The following are the Top 10 predictions that IDC believes will shape the ICT industry in the Philippines in 2010:
1. Philippine ICT spending will see modest growth
IDC expects that while full recovery will only happen in 2011, 2010 will provide the impetus for the ICT market to jumpstart the local ICT environment. Investment motives are anticipated to shift from initial cost savings to long-term savings and efficiency. Organizations are seen to prioritize investments that would minimize the total cost of ownership (TCO) and look beyond the initial cost outlay.
Driving the growth in IT spending for 2010 is the hardware sector, comprising an estimated 72.2% of the total market, is projected to increase by 7% year-on-year (YoY), on the back of 6% recovery in total PC systems spending.
Spending on packaged software is predicted to contribute 7.5%, while services spending will account for 20.3%, as enterprises seek more ONGlonger-term ICT initiatives.
Key to the telecommunications growth is the continued high demand on and pervasiveness of mobile phone usage and mobile devices, as well as the accelerated adoption of mobile data and market competition through competitive pricing.
2. 2010 will be the highest growth Year for Wireless Broadband
In 2010, the Philippine market will see the highest growth for wireless broadband, particularly universal serial bus (USB) dongle-based portable broadband operating on 3G/High-Speed Downlink Packet Access (HSDPA) technology, and will pose serious competition to fixed broadband, especially xDSL.
IDC believes that the key elements for a surge in growth are in place. These include the price of devices, including USB dongles, laptops, and mini-notebooks, having reached acceptable levels for mass adoption.
3. "Dongled" portable devices will up the mobility ante
IDC expects the presence of laptops and mini-notebooks to boost the adoption of portable broadband subscribers in the Philippines.
The availability and affordability of such devices is expected to pave the way for the mass adoption of portable broadband in the country. The continued proliferation of laptops and mini-notebooks in the market will set the landscape for such technologies adoption.
4. Smartphones will scale new heights
For 2010, IDC expects that demand for smartphones to reach new heights, as shipments are foreseen to reach 1.36 million units, a 17% growth from 2009.
Features such as Internet access capability, email access, and availability of downloadable applications would be the primary features that end users would be looking for. IDC expects that with the rise of smartphones, handset models that will be introduced in the near term will be equipped with more sophisticated applications through highly evolved operating systems (OSs).
5. Data services will revolutionize telecoms’ pricing strategies
IDC anticipates a transformation in telecoms’ pricing strategies in the Philippines from per kilobyte to time-based pricing to address the increasing demands for data services in the country.
The market for data services will be characterized by high competition, with telecom players coming up with more products and services for data usage, transforming data services into a market that offers wider range of charging options. This transformation will hasten the usage and practices of users, with mobile data services becoming more appealing and affordable to broader user base.
6. Economic recovery will drive a shift from the Capex to the Opex model
Given the impact of the recent global economic downturn on spending sentiments of enterprises, coupled with the need to maintain a high level of competitiveness and meet revenue targets with minimum expenditures, IDC predicts that many enterprises in the Philippines will shift to an Opex-based model and cut on Capex.
7. Use of social media technologies for marketing will intensify
In 2010, IDC expects a more enterprises and SMEs to adopt Internet social media as the new avenue for marketing due to its cost effectiveness. These companies will use the Internet more often as the venue to interact with current and potential customers. Solutions like signing up for a social community sites up to building and maintaining their own Web sites will be the tool that both enterprises and SMEs will ation strategies will revamp vendor focus ICT spending in the country will greatly be pushed by the anticipated robust expansion of ICT buying outside Metro Manila, especially as vendors and SPs are aggressively and constantly pouring in initiatives toward decentralization of ICT focus. In the time of overall recovery, penetrating the largely untapped provincial market will be the centerpiece of most vendors and SPs’ 2010 strategies.
9. Vertical consultative selling will transform vendor initiatives
While this strategy has been played out in the past several years, 2010 will see new and intensified verticalization strategies in the Philippines in the form of consultative selling. Though the traditional market approach is still effective, the level of competition has evolved over time. Each industry has a different set of needs and priorities in terms of IT spending. Therefore, vendors must be able to leverage products and services to meet the requirements of each industry.
10. End users will proactively seek "Bang-For-the-Buck" alternatives
In 2010, end users will be actively looking for products with the expected functionalities and specifications but at relatively cheaper prices. In line with the main aim of reducing total IT cost in the long term. The recovery theme that will hover in 2010 will drive end users to actively seek out products and solutions that would provide "bang-for-the-buck" benefits.