Venezuela Information Technology Report Q1 2011
Business Monitor International, February 2011, Pages: 54
The Venezuela 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 Venezuela's information technology industry.
BMI projects Venezuelan IT spending will grow from US$1.7bn in 2011 to about US$2.3bn by 2015. The steep devaluation of the bolívar for non-essential imports such as computers depressed Venezuelan IT spending in 2010 as consumers grappled with high inflation and the resulting erosion of real wages. In 2010 PC market growth lagged behind that reported elsewhere in Latin America due to the devaluation and negative economic environment.
However, there were still areas of opportunity with continued investment by small- and medium-sized enterprises (SMEs), due in part to a government tax subsidy. There will continue to be spending by the energy, retail and financial services sectors.
Venezuela is one of the smaller markets in its region, but a rather low PC penetration rate of less than 12% indicates the underlying potential for growth. Government policies such as the promotion of open source software will continue to shape the market. The private business sector will offer opportunities, as companies invest in service platforms and continued deployment of fixed and mobile broadband will help drive spending across several market segments.
In H110 Venezuela’s government organisations continued to work on developing open-source solutions for various sectors. Venezuela’s open-source IT development and investigation centre Cenditel announced in July it was working on a solution for agricultural industry processes such as watering systems. The aim of the solution is to monitor and control areas such as watering systems, as well as lighting and temperatures in indoor facilities. Meanwhile, Argentina’s INTI (Instituto Nacional de Tecnologia Industrial) said in August it was developing an open-source management software solution for SIGFAS, a state-run institution that manages state-sector factories in Venezuela.
As of October 2010, it was estimated that the government had purchased around 850,000 computers through its computers-for-schools programme. In 2010, the Venezuelan government aimed to supply schools with 350,000 low-cost netbooks. The government is also assembling its own laptops as part of its educational programme, Canaima Educativo.
Microsoft aimed to increase the amount of business generated from the Venezuelan government during its fiscal year 2010, which began in July 2009. Microsoft claimed to have achieved double-digit growth in Venezuela in fiscal 2009 and aimed to replicate this achievement in fiscal 2010. In 2009 Microsoft Venezuela created a new unit to focus specifically on public sector accounts.
Telecoms operators have emerged as a key channel for brand-PC sales in Venezuela. In 2010, Venezuelan mobile operator Digitel launched 3G services and hoped to build on its partnership with Chinese PC vendor Lenovo. In 2009, Digitel launched a broadband package bundled with a Lenovo netbook inclusive of a modem for 3G service. The packages cost VEB3,249 (about US$1,500).
Local PC vendor Siragon was the first company to launch netbooks in Venezuela. The company targeted netbooks as a priority as part of its plan to achieve 30% growth in revenues. The company estimated it was on course to sell 80,000 desktops and 50,000 laptops in Venezuela in 2009.
BMI projects Venezuela’s PC market growth will continue to offer growth opportunities, despite a difficult trading context in terms of currency devaluation and a sharp deterioration in consumer and business confidence. The market is expected to be worth US$1.2bn in 2011, with sales expected to approach the US$1.5bn mark by 2015. Computer hardware sales in some parts of the private sector have been supported by a tax subsidy for SME technology investments.
The Venezuelan computer hardware market should show positive growth over the five-year forecast period, with a projected compound annual growth rate (CAGR) of 9%. The current level of computer penetration is estimated at about 6% and is expected to reach almost 18% by 2013. The main long-term driver is greater affordability, partly as a result of cheap computer programmes and the government’s initiative to manufacture low-cost ‘Bolivarian’ computers.
Venezuela’s software market is projected at US$305mn in 2011. Software revenues are expected to hit negative growth in 2010 due to rapidly declining business confidence in the private sector, and a relatively high and apparently increasing software piracy rate. However, BMI forecasts the addressable market will grow at a CAGR of 9% to about US$448mn by 2015.
The market landscape is likely to be shaped by the government’s drive to promote open-source software. However, enterprises in sectors such as retail, distribution, telecoms, financial services and export companies should provide potential opportunities for proprietary software vendors. Meanwhile, the economic crisis encouraged smaller Venezuelan companies to look closer at cloud computing models such as software-as-a-service (SaaS.)
Venezuela’s IT services market is projected at US$265mn in 2011. By regional standards, the percentage accounted for by services in Venezuela’s hardware-dominated IT market is much lower than average, at about 16%. In many countries, such as Brazil, services account for more than 30% of spending. About 75% of demand will come from the large company sector, with the oil sector still significant, despite the fall in oil prices. Venezuela’s banks and telecoms operators also continued to spend in 2009 as they launched new platforms and services.
With the number of telecentres continuing to increase and the availability of internet services expanding, it is projected that internet usage will continue to rise at a strong pace in Venezuela. Wireline services seem to dominate, but there is potential for wireless broadband to become a significant driver of broadband growth.
Because of the low levels of internet access in the country, the Venezuelan government has generally been slow to launch e-services. The recent decision by the government in 2008 to launch a consultation on a new telecoms law to promote competition may drive progress. The country has fast-growing mobile penetration and has also been launching fixed-wireless services such as Wi-Fi and the Korean technology WiBro.
In 2008, Venezuela’s government conducted technical tests on different digital TV standards to decide which ones to adopt. The government expects to implement digital TV by 2012, with digital and analogue technologies coexisting for a five-year period. The tests involved a number of different standards, including integrated services digital broadcasting (ISDB) from Japan, digital video broadcasting (DVB) from Europe and a Chinese standard.
The government is committed to improving e-use in the public sector and reducing the digital divide. The development of e-infrastructure is also seen as one method to fight corruption in the public sector. Telecom Venezuela is working with the government on a project called Telepolítica, which involves using information and communication technology (ICT) for local development projects. In 2008 stateowned telecoms company Telecom Venezuela signed a co-operation agreement with the Comptroller General’s Office (CGR) and the National IT Institute (CNTI) to help build ICT infrastructure for the CGR and other public bodies.
Executive Summary
SWOT Analysis
Venezuela IT SWOT
Venezuela Telecoms Sector SWOT
Venezuela Political SWOT
Venezuela Economic SWOT
Venezuela Business Environment SWOT
IT Business Environment Ratings
Latin America
Table: Regional IT Business Environment Ratings
Latin America IT Markets Overview
Venezuela Market Overview
Government Authority
Background
Hardware
Software
Services
Industry Developments
Industry Forecast Scenario
Table: Venezuela’s IT Industry Indicators – Historical Data & Forecasts
Country Context
Table: Rural/Urban Breakdown, 2005-2030
Table: Consumer Expenditure, 2000-2012 (US$)
Internet
Table: Venezuela Telecoms Sector -- Internet -- Historical Data And Forecasts, 2008-2015
Macroeconomic forecast
Table: Venezuela – Economic Activity
Competitive Landscape
Hardware
Software And Services
Internet Competitive Landscape
Company Profiles
Sun Microsystems
Venezuela de Industria Tecnologica (VIT)
Country Snapshot: Venezuela Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
BMI Methodology
How We Generate Our Industry Forecasts
IT Industry
IT Ratings – Methodology
Table: IT Business Environment Indicators
Weighting
Table: Weighting Of Components
Sources
- Sun Microsystems
- Venezuela de Industria Tecnologica (VIT)
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