The economic downturn has affected many major sectors of the economy. Tech&U talks to IDC Asean research manager Jubert Daniel Alberto on its impact on the ICT industry.
| Alberto feels there will be cautious spending as uncertainty continues. |
Q: How do you see the impact of the economic slowdown on the local tech industry? What influences the performance?
A: While the manufacturing sector continued to drop because of the slowdown in export, and retrenchment continue to rise, the market is putting hopes on the RM60 billion stimulus package to “kick in” by second quarter of the year. For instance, the PC market is coming off a 20 per cent sequential drop in the fourth quarter of 2008, while the hardcopy peripherals market also saw 44 per cent drop.
Decline in performance was a direct offshoot of the global economic slowdown, which pulled down market sentiment especially for corporate end-users. Enterprises are cutting down on spending to stay afloat while consumers hold back unwarranted spending as issues of retrenchment and pay cuts became apparent at the start of this year.
Q: Which segments contributed significantly to the industry growth?
A: As the commercial market is cautious of spending, IDC expects consumer spending to cushion the overall drop in the market. Most companies, particularly banking and manufacturing, are spending wisely based on long-term strategies.
Q: Based on the result, what can you comment on consumer tech spending?
A: Given the right price and product specifications, consumers will buy. Vendors need to focus on striking a good balance between pricing and product positioning. Although consumers are likely to reduce spending on “luxury” products first, (as IT products such as PCs or printers have become a necessity), the full impact will only be felt if unemployment rate continues to rise and household savings fall below a comfortable level.
Q: How did Malaysia fare, compared to Singapore, Indonesia, Thailand and the Philippines?
A: Bleak market performance is hovering in these countries. Based on IDC’s Worldwide IT Spending Black Book, Feb 2009, hardware spending is set to decline in 2009 in Singapore, Thailand, Malaysia and Indonesia, driven by cautious spending. Thailand, for instance, is seen to achieve flat growth in 2009, with PC shipments expected to drop by less than five per cent the first quarter of this year compared to the same period of last year.
Q: Based on the first quarter performance, what is in store for the local ICT industry this year?
A: There will be cautious spending as further uncertainty continues. Prolonged usage of existing IT infrastructure will be another effect of the low market sentiment, while spending from public sector will remain weak, as the budget has shifted to economic stimuli rather than direct spending on IT infrastructure.
But lower spending on hardware also opens up opportunities for IT services, as companies try to mitigate absence of large projects through alternative solutions. Overall, prudent investments will be evident, but ICT players should still seek to maintain an aggressive stance through targeted focus and effective channel management. The government needs to come up with a stimulus package that would directly impact the local IT investment.
During this downturn, investment on IT infrastructure, such as broadband, are likely to stimulate employment and job opportunities while building up the country’s infrastructure in the next five years, which is a key factor in luring foreign direct investments.
Most governments in this region such as Thailand and the Philippines have continued to invest in ICT-related areas such as business process outsourcing, broadband and software development despite anticipating a slowdown in their economies.
A: While the manufacturing sector continued to drop because of the slowdown in export, and retrenchment continue to rise, the market is putting hopes on the RM60 billion stimulus package to “kick in” by second quarter of the year. For instance, the PC market is coming off a 20 per cent sequential drop in the fourth quarter of 2008, while the hardcopy peripherals market also saw 44 per cent drop.
Decline in performance was a direct offshoot of the global economic slowdown, which pulled down market sentiment especially for corporate end-users. Enterprises are cutting down on spending to stay afloat while consumers hold back unwarranted spending as issues of retrenchment and pay cuts became apparent at the start of this year.
Q: Which segments contributed significantly to the industry growth?
A: As the commercial market is cautious of spending, IDC expects consumer spending to cushion the overall drop in the market. Most companies, particularly banking and manufacturing, are spending wisely based on long-term strategies.
Q: Based on the result, what can you comment on consumer tech spending?
A: Given the right price and product specifications, consumers will buy. Vendors need to focus on striking a good balance between pricing and product positioning. Although consumers are likely to reduce spending on “luxury” products first, (as IT products such as PCs or printers have become a necessity), the full impact will only be felt if unemployment rate continues to rise and household savings fall below a comfortable level.
Q: How did Malaysia fare, compared to Singapore, Indonesia, Thailand and the Philippines?
A: Bleak market performance is hovering in these countries. Based on IDC’s Worldwide IT Spending Black Book, Feb 2009, hardware spending is set to decline in 2009 in Singapore, Thailand, Malaysia and Indonesia, driven by cautious spending. Thailand, for instance, is seen to achieve flat growth in 2009, with PC shipments expected to drop by less than five per cent the first quarter of this year compared to the same period of last year.
Q: Based on the first quarter performance, what is in store for the local ICT industry this year?
A: There will be cautious spending as further uncertainty continues. Prolonged usage of existing IT infrastructure will be another effect of the low market sentiment, while spending from public sector will remain weak, as the budget has shifted to economic stimuli rather than direct spending on IT infrastructure.
But lower spending on hardware also opens up opportunities for IT services, as companies try to mitigate absence of large projects through alternative solutions. Overall, prudent investments will be evident, but ICT players should still seek to maintain an aggressive stance through targeted focus and effective channel management. The government needs to come up with a stimulus package that would directly impact the local IT investment.
During this downturn, investment on IT infrastructure, such as broadband, are likely to stimulate employment and job opportunities while building up the country’s infrastructure in the next five years, which is a key factor in luring foreign direct investments.
Most governments in this region such as Thailand and the Philippines have continued to invest in ICT-related areas such as business process outsourcing, broadband and software development despite anticipating a slowdown in their economies.
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