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Vietnam Information Technology Report Q4 2011
Business Monitor International, Oct 2011, Pages: 59
Business Monitor International's Vietnam 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 Vietnam's information technology industry.
MARKET OVERVIEW
The Vietnamese IT market is estimated to report 18% growth in 2011. In January – August 2011, PC imports grew by a double-digit factor in dollar terms, but economic cooling measures are forecast to have an impact later in the year. Factors such as rising PC penetration, economic growth, a range of government ICT initiatives and a drive to develop Vietnam's domestic IT industry will help to sustain continued expansion going forward.
An ambitious government IT plan for 2010-2020 should shape many segments of the Vietnamese IT market, while Vietnam's improving information and communication technology (ICT) infrastructure will also drive growth. Vietnam's gradual integration into global trade networks such as the Association of South East Asian Nations (ASEAN) and the WTO has helped to bring down prices and increase opportunities for importers.
The Vietnamese IT market is estimated to grow at a CAGR of 16% over the 2011-2015 period. The addressable domestic market for IT products and services is projected by BMI to reach US$4.3bn by 2015. An increasing number of Vietnamese companies have shown an interest in cloud services.
INDUSTRY DEVELOPMENTS
In 2011, various Vietnamese government departments have started to utilise cloud services. In July 2011, the Ministry of Education and Training (MOET) said that it had instructed local education and training departments to shift to cloud computing. Meanwhile the Ministry of Natural Resources and the Environment (MONRE) has put in place a strategy for more utilisation of cloud computing in IT applications.
The Vietnamese government has also unveiled ambitious plans for developing the country's IT industry. The plans, which state a revenues target for the sector of between US$17bn and US$19bn in the next five years, include major investments to develop production centres in software, services, hardware and electronics. Revenues are projected at US$2bn from software sales, US$12.5bn from hardware, US$2bn from digital content, and US$1.5bn from IT services.
In 2010 the Ministry of Education and Training continued to implement a national programme to supply 1mn affordable computers to Vietnamese schools by 2011. In January 2010, the Vietnam Post and Telecoms Group (VNPT) in Ho Chi Minh City launched a local version of the Computers for Education programme, which will provide teachers and students in the city with low-priced laptops and DSL broadband connections.
COMPETITIVE LANDSCAPE
Vietnam's largest software company, FPT has unveiled a major new restructuring plan which will consolidate five technology subsidiaries in a search for higher growth. The company's five subsidiaries; FPT Information System; FPT Telecom Corp; FPT Software; FPT Online and FPT Trading Group; will be merged, with the company either buying out minority shareholders or facilitating a share swap. In May 2011, FPT also announced a cloud-computing alliance with Microsoft.
In 2010, several Vietnamese enterprises announced plans to produce tablet PCs, and the first local product, from Hanel, was launched in Vietnam in October 2010. However, local manufacturers are likely to find it hard to compete with the iPad and rival products from other vendors, such as Samsung with its Galaxy Tab.
Taiwanese PC vendor Asus has launched a new partnership with local company FTP Distribution which has a nationwide network of 400 dealers. FTP, a member of FTP Trading Group, will distribute Asus products, with Asus planning to introduce the full range of its new products in Vietnam during Q211. Asus also plans to open between new service centres in Vietnam in 2011.
Computer Sales
BMI projects that sales in Vietnam's computer hardware market will be worth around US$1.7bn in 2011, up from an estimated US$1.4bn in 2010. The main growth driver will be affordable notebooks. BMI projects growth of around 17% in the Vietnam PC market in 2011, after strong growth in the first half of the year.
PC penetration in Vietnam was estimated by BMI at around 15% in 2010. Notebooks are owned by an estimated 7% of the Vietnamese population. This points to significant growth potential for the local PC market, with the most potential being in rural areas. Currently Hanoi and Ho Chi Minh City are thought to account for in the region of 85% of notebook sales.
Software
In 2011, Vietnam software sales are projected by BMI to grow to US$194mn, and software CAGR for 2011-2015 should be in the region of 21%. Software spending comprises around 9% of total Vietnamese IT spending currently.
The market is expected to reach a value of around US$412mn by 2015, with steady growth in demand for licensed software from government, enterprise and household segments. Vietnam's software market is developing, despite the problem of software piracy, which still accounts for around 85% of software, compared with 76% in neighbour Thailand.
Services
Vietnamese IT services spending is forecast to reach around US$409mn in 2011, up from US$342mn in 2010. The market showed signs of stabilisation in 2010 after the economic crisis had an impact in 2009, with projects being put on hold. Sectoral CAGR is projected at 18% over the forecast period, as the market approaches US$791mn by 2015.
IT services now accounts for around 18% of total Vietnam IT spending. Over the past few years, the size of IT services deals has increased in key IT spending verticals. Growing demand for digital infrastructure projects in segments such as banking, telecoms, energy and government has attracted global IT services providers to invest more in Vietnam.
E-Readiness
Vietnam's fixed-line infrastructure is unreliable and offers poor coverage. However, Vietnam has an exceptionally high penetration rate in the mobile market, reaching 126% at the end of 2009, and registering around 110.8mn subscribers. This has been aided by mobile network operators reducing tariffs to encourage growth of their respective subscriber bases, as well as increased investment in the expansion of infrastructure to areas outside major towns and cities. Demand for mobile broadband has also been accelerated by the changing lifestyles of consumers, who use the service for accessing the internet for work and leisure.
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