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Australia Information Technology Report Q1 2011
Business Monitor International, Jan 2011, Pages: 56
The Australia 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 Australia's information technology industry.
Market Overview
Australia’s IT market should continue to provide opportunities in consumer, government and business sectors in 2011, following a strong recovery in 2010.The total size of the domestic IT market is projected by BMI to increase from US$20.2bn in 2011 to US$25.5bn in 2015.
IT spending in 2011 should receive a boost from growing demand across IT spending sectors to take advantage of opportunities presented by cloud computing. In 2010 a wide range of leading Australian private and public sector organisations launched cloud initiatives.
Several factors underpin the forecast of a 6% 2011-2015 CAGR for the Australian IT market. Government tenders will drive considerable spending in years to come. Banks will continue to need to spend on regulatory compliance, and intense competition in the retail sector is spurring spending on customer relationship management (CRM) and back-office systems. Competition and new service platforms in the telecoms sector are driving that key IT spending segment.
Industry Developments
In November 2011, the Australian Senate passed a bill to restructure Telstra, to increase competition as Telstra’s infrastructure is incorporated in the new National Broadband Network (NBN.) The NBN project aims to connect 93% of the population by 2017 and rectify a situation where Australian broadband charges have been ranked the fifth most expensive among OECD countries.
In 2010, government projects in sectors such as e-government, healthcare and education drove significant opportunities for IT vendors. The Australian government announced plans for a standardised reporting system scheme, while the National E-Health Transition Authority has set the goal to create a paperless environment in Australia’s health sector, including public hospitals.
In 2010, national and state governments continued to roll out new initiatives, with the Victoria government investing more than US$150mn in IT in schools. Around 1,400 high schools were expected to benefit from the second phase of the government’s computers for schools project, announced in 2009.
Company News
In 2010, the release of Apple’s iPad opened a new competitive battleground, with rival vendors to Apple planning to release their own tablet devices. The iPad was officially launched in Australia in May 2010, and, by the end of the year, telecoms operators such as Telstra were competing to offer tablets bundled with data services. Telstra announced in October 2010 that it would release its own-branded tablet, called the T-touch Tab, which would run on its Next G network.
In 2010, software vendors are positioning themselves to take advantage of growing demand in Australia for cloud computing services. US Software-as-a-Service (SaaS) pioneer Salesforce.com has enjoyed growing success in the segment, with estimates that around 10 of Australia’s largest financial institutions, including ANZ Bank, use at least some Salesforce.com modules.
Vendors in the Australian market are investing in infrastructure to provide cloud computing services locally. IT services group CSC Australia planned to launch both infrastructure-as-a-service (IaaS) and a range of Microsoft SaaS from its local data centres. Meanwhile, Japanese IT leader Fujitsu announced in April 2010 that it would deploy a second IaaS offering from an Australian data centre.
Computer Sales
Australian computer hardware sales are projected at US$8.9bn in 2011 and, following a strong recovery in 2010, are forecast to grow at a 2011-2015 CAGR of around 4% to reach US$10.2bn by 2015. In the first three quarters of 2010, the PC market recorded double-digit shipments growth, compared with the same period of 2009.
More than 90% of Australian households now have a PC, but consumers appear willing to spend on upgrading their notebook computers; it is also becoming more popular to purchase a second household PC. Small business comprises more than 99% of all Australian businesses and slightly more than 50% of business PC sales.
Software
Software is expected to account for about 17% of the Australian IT market in 2011, with estimated spending of US$3.4bn. As the focus moves from hardware to services and solutions, the share of the market accounted for by software is forecast to rise by 2015, with businesses seeking greater leverage from their investments. Software sales are forecast to have a CAGR of around 8%, rising to US$4.7bn by 2015.
Given many businesses’ focus on controlling costs, cloud computing models have also grown in popularity and spread beyond initial core application areas. Over the forecast period, enterprise resource planning (ERP), CRM and other e-business products will be increasingly popular with the small and medium-sized enterprise (SME) market, as companies look to enhance productivity through automating essential functions.
IT Services
IT services are expected to account for about 40% of the domestic IT market in 2011, with spending of US$7.9bn. CAGR for the segment is estimated at 8% over 2011-2015. Demand picked up in H110 with the revival of several IT projects that had been shelved as a result of the economic slowdown, and IT services are forecast to be one of the most dynamic sectors of the Australian IT market.
In 2011, sectors such as government, telecoms, healthcare and banking should continue to supply demand for implementation, consulting and managed services. Regulatory compliance will continue to require spending by banks, and intense competition in the retail sector is spurring spending on CRM and backoffice systems.
E-Readiness
Many alternative Australian internet service providers (ISPs) are in the process of expanding the coverage of their ADSL networks. Other broadband service providers, including Unwired, are rolling out WiMAX networks, which will help to ensure greater choice and flexibility in the type of broadband connection available. Australia is above the OECD average in terms of businesses purchasing online (49% versus 33%) and selling online (27% versus 17%).
The central component of the Rudd government’s ICT strategy and overall domestic economic policy is the construction of a National Broadband Network. The programme is expected to drive economic growth and foster the creation of a digital economy. The government has projected GDP gains of 1.4% after five years from the broadband project. Tenders for the construction of the network were lodged in November 2008.
Despite these investment commitments, our outlook for Australian broadband growth continues to be cautious. This is based partly on delays that have characterised government and operator efforts to address the problem of low broadband coverage in rural parts of Australia. Meanwhile, fixed penetration rates in urban areas are already very high. The newly revised broadband forecast envisages broadband penetration rising to just over 37% at the end of 2009.
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