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Singapore Information Technology Report Q1 2010
Business Monitor International, Jan 2010, Pages: 54
The Singapore Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Singapore's information technology industry.
Market Overview
Singapore’s IT spending is projected to grow faster in 2010, building on momentum from a pick-up in consumer spending in the second half of last year. The addressable market is forecast by BMI to increase from US$5.1bn in 2010 to around US$5.9bn in 2014, as significant government information and communication technology (ICT) investment partly offsets more sluggish growth in enterprise IT spending.
In 2010, consumer spending is expected to be reinforced by a revival in business IT hardware spending. PC shipments growth picked up in the third quarter of 2009, led mainly by consumer demand, while the corporate segment remained slow. A recovery in business IT spending could start in Q110, with a surge prior to the end of many company’s financial years in March.
The IT market will benefit from ambitious government ICT programmes in 2010, such as the government’s Standard ICT Operating Environment (SOE) project, which is already budgeted and well established. With the Intelligent Nation 2015 (iN2015) plan placing IT at the heart of the government’s strategy to improve competitiveness, complex government tenders will drive considerable spending in years to come in areas such as education, e-government, transport and healthcare.
Industry Developments
The Singaporean government announced plans to invest around SGD1.73bn in ICT projects in the current financial year through to March 2010. 392 new projects were to be put out to tender, with 40% of the planned projects expected to be worth more than SGD500,000. Key projects include the SOE programme for schools (being supervised by the Ministry of Education), a content and management system by the Defence Science and Technology Agency (DSTA) and the Ministry of Home Affair’s BorderWatch System.
The 2009 Singapore budget pledged an additional US$4bn for healthcare, including US$200mn specifically earmarked to develop a better electronic health record system. The first phase of the electronic health record system implementation was due to start in November 2010. The system, part of the government’s IN2015 ICT masterplan, will cover hospitals and doctors in both the public and private sectors.
In 2009, the government continued to roll out its ambitious cross-governmental SOE initiative. As of Q309, four agencies had begun actual implementation of SOEasy, while 30-50% of public officials were estimated to have begun to utilise the centralised services.
Company News
Last year, Chinese PC vendor Lenovo launched a structural reorganisation that resulted in the creation of two business units focused on mature and emerging markets, respectively. In September 2009, the company signed a three-year agreement with Singapore’s Sentosa resort island to supply desktops and notebooks. Meanwhile, US giant HP announced its intention to try and capture customers from Sun Microsystem, following the latter’s acquisition by software giant Oracle. Sun has a significant customer base in Singapore that makes an attractive target for HP.
Microsoft hopes that the release of its Windows 7 operating system in October 2009 will boost its local sales. Early signs were promising, with leading IT retailer Challenger predicting that Windows 7 would become Microsoft’s fastest-selling operating system in the Singaporean market. The launch of Windows 7 was not in time for the roll-out of the major SOEasy government project, but agencies due to implement SOEasy next year could potentially move onto the platform.
The software-as-a-service (SaaS) model is on the rise in Singapore, boosted by the city state’s excellent telecoms infrastructure. In 2009, Indian IT services giant TCS launched a campaign to promote its ‘IT as a Service’ to small and medium businesses in Singapore. Meanwhile, HP and SCS led a consortium that was awarded the major Grid Service Provisioning project by the Infocomm Development Authority of Singapore (IDA). The project was to enable delivery of pay-on-demand online services through the National Grid.
Computer Sales
Singapore spending on IT hardware is projected at around US$2.24bn in 2010 from around US$2.19bn in 2009. PC shipments growth picked up in the third quarter of 2009, led mainly by consumer demand, while the corporate segment remained sluggish. In 2010, consumer spending is expected to be reinforced by a revival in business IT hardware spending. The launch of the Windows 7 operating system also has the potential to help trigger a new cycle of hardware upgrades in 2010, although much will depend on business confidence.
According to the latest report from the IDA, 74% of Singaporean households now have a PC and, following demand growth of close to 20% over 2001-2005, this level of saturation would be expected to act as a constraint. However, consumers have appeared willing to spend on upgrading their notebook computers and there is a trend for households to own more than one unit. Given an expected 300% growth in broadband penetration by 2013, the increasing number of products and services available on the internet will be a major driver of demand for computer hardware.
Software
Spending on software is projected at around US$823mn in 2010 from around US$776mn in 2009. Software accounted for about 16% of the domestic IT market last year. As the market focal point evolves from hardware to services and solutions, the share of IT spending accounted for by software should rise to nearly 18% by 2014, with enterprises seeking greater leverage from their investments. Over the forecast period, enterprise resource planning (ERP), customer relationship management (CRM) and other e-business applications will find increasing popularity with the small and medium-sized enterprise (SME) market as enterprises look to enhance productivity through the automation of essential functions. Meanwhile, the launch of Microsoft’s new Windows 7 operating system has the potential to have an impact.
IT Services
In 2010, the IT services sector is projected to be worth around US$2.0bn. IT services compound annual growth rate (CAGR) is expected to be 5% over 2010-2014. IT services accounted for around 40% of the domestic IT market in 2009 with spending of US$2.5bn forecast for 2014. Regulatory compliance will continue to require spending by banks and investment by foreign banks is spurring new technology investments by local players. Competition in the telecoms field is a driver for that key IT spending segment, where deregulation has led to new entrants. Meanwhile, expanding technology adoption in the logistics industry and public transport will be a source of IT services projects.
E-Readiness
The National Broadband Network (NBN) is at the core of the government’s iN2015 initiative. The contract for the first phase of the project, which will link businesses, schools, hospitals and homes, involves 45% of the network being rolled out within three years and the entire network by 2012. The IDA recently said that, within two years, 60% of homes and offices should have access to the network. The second phase of the project will place emphasis on pervasiveness and the provision of wireless access at affordable rates. The project is expected to lead to 68% broadband penetration by 2012. The NBN will be capable of offering high speeds of 1Gbps or more and aims to provide affordable broadband for 95% of all homes and businesses by 2012.
Reviewing one year of the landmark iN2015 plan in 2007, Minister for Information, Communications and the Arts, Dr Lee Boon Yang, said that much progress had been made but much remained to be done.
Key Issues For Investors - Further government-enforced reductions in labour costs and mandatory corporate contributions to pensio
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