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Thailand Information Technology Report Q2 2011
The Thai IT market is the largest in the South East Asia region and, despite ongoing political uncertainty, is projected to grow at a CAGR of 9% over the 2011-2015 period. The total value of Thai domestic spending on IT products and services should pass US$6.7bn in 2011 and approach US$9.4bn by 2015. As the economy expands, a national PC penetration rate of about 15% indicates plenty of untapped market potential, particularly in upcountry areas.
The IT market is expected to grow about 5% in 2011, consolidating a recovery that was strong overall in 2010 despite a number of exogenous disturbances, including political disturbances and severe flooding. Cloud computing, social networking applications and tablets will all help to drive demand in 2011.
BMI’s view is the fundamentals of growing affordability and low PC penetration, supported by government ICT initiatives, will keep the market in positive territory during the forecast period. There are a number of drivers including a Government PC for Education programme and growing interest in cloud computing, in which Thailand has been ranked one of the early adopter countries in the region.
The government has announced a new fund to encourage Thai SMEs to utilise cloud computing, which it sees as a cost-effective way for smaller companies to access IT. Government assistance will also be an important driver of this segment, with Thai SMEs eligible to receive between 200,000 – THB400,000 (up to US$13,000) to adopt cloud computing. Thailand has around 2.8mn small- and medium-sized enterprises SMEs.
In 2010 vendors were left assessing the effects of a number of exogenous effects on the market, including political disturbances and severe flooding. The political crisis in Bangkok and other major cities in H110 had an impact on consumer IT demand, particularly in Bangkok, which accounts for about half of national consumer IT spending. Government and business demand held up relatively well, but during the troubles some vendors reported their customers were delaying IT purchase decisions by one or two months.
The Thai government announced an ambitious target to increase the local software market share of Thai software companies to about 50% in 2010. The Thai government announced a series of measures to support the local software industry. SIPA (Software Industry Promotion Agency) has led Buy Thai First campaigns to persuade local SMEs to buy Thai-developed software and lobbied the government to endorse tax incentives for local developers.
A notable development in 2010 was the emergence of tablet notebooks, spearheaded by Apple’s iPad. The iPad did not receive its official release in Thailand until Q410, but grey market versions had already proved popular. The official versions of the iPad that were available in Thailand included the 16, 32, and 64GB WiFi and 3G versions, with prices ranging from THB15,900 to THB25,900
In 2011, market leader Acer has targeted 20% growth in Thai market sales, has earmarked an 2011 IT market budget of around THB400mn, up from THB350mn in 2010. Meanwhile, Lenovo also plans to spend substantially to increase its share of the Thai PC market, with a marketing budget of around THB200mn in 2010, as it targets a 10% PC market share in 2011.
Microsoft targeted growth of 12% in fiscal 2011, compared with 13% in fiscal 2010. As of Q410, sales of Microsoft’s Windows 7 in the Thai market were estimated at about 800,000, 50% higher than for the previous Windows Vista operating system in an equivalent period. Meanwhile in January 2011, Microsoft announced a tie-up with local software firm Senior Com to provide cloud computing services to the Thai market.
According to BMI projections, Thailand’s PC market will be worth about US$4.1bn in 2011, up from an estimated US$3.8bn in 2010. In 2010, the consumer segment is expected to continue its dominance and will comprise nearly two-thirds of the market. PC penetration of about 15% represents considerable latent growth potential.
The Thai PC market has matured and there is greater segmentation. There is also a first-buyer market for desktops, particularly in large provincial cities such as Chiang Mai and Hat Yan. However, even first time buyers have higher expectations concerning functionality and performance. The main driver of the computer market will be notebooks, which comprised nearly two-thirds of PC sales in 2010.
In 2011, Thai software sales are projected by BMI at US$772mn and software CAGR from 2011-2015 should be in the region of 10%. The baht’s appreciation reportedly allowed retailers to reduce local prices and this boosted vendors’ sales of legal software in 2010. Growing PC penetration as well as new technologies and business models, including 3G mobile and WiMAX, and industry trends such as cloud computing are all market drivers.
There is a growing emphasis on cost efficiency as enterprises look to enhance productivity through automating these and other functions. Business intelligence software is another growth area, due to the issue of data profileration. Thailand’s software market is developing, despite the problem of software piracy, which still accounts for about 76% of software.
IT services spending is forecast to reach about US$1.5bn in 2011, up from US$1.2bn in 2010. However, sectoral CAGR is projected at 12% over the forecast period as the market approaches US$2.3bn by 2015. Vendors are focusing on opportunities developing from cloud computing and are expanding into smaller cities.
IT services accounts for about 22% of total IT spending. Over the past few years, the size of deals has increased in key verticals such as banking and telecoms. Despite the financial crisis, some elements of bank spending will be relatively immune, particularly those driven by regulatory compliance. Meanwhile, telecoms is another big spending IT vertical, with mobile operators investing to expand capacity and launch new services.
Thailand’s internet penetration is set to pass 17% within BMI’s five-year forecast period, from about 16% in 2008. Broadband penetration will grow from 2.3% in 2009 to 6.6% in 2014, according to BMI estimates.
By 2009, the Thailand Internet Service Provider Association forecast that Thailand could have between 5mn and 10mn broadband subscribers, although BMI opted for a more conservative estimate of 1.5mn subscribers. The level of growth in the broadband sector will also be fuelled by the award of WiMAX licences.
Thailand IT Sector SWOT
Thailand Political SWOT
Thailand Economic SWOT
Thailand Business Environment SWOT
IT Business Environment Ratings
Table: Asia Pacific IT Business Environment Ratings
Asia IT Markets Overview
Thailand Market Overview
Industry Forecast Scenario
Table: Thailand, IT Sector, 2006-2015
Table: Telecoms Sector – Internet – Historical Data & Forecasts, 2008-2015
Table: Thailand – Economic Activity, 2006-2015
Wireline (Fixed-Line And Broadband) Developments
Table: Wireline Developments, 2008-2009
Country Snapshot: Thailand Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2030
Section 3: Labour Market And Spending Power
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Non-Agricultural Wages, 2001-2012
How We Generate Our Industry Forecasts
IT Ratings – Methodology
Table: IT Business Environment Indicators
Table: Weighting Of Components
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