2013-09-18 08:56:04 - New Computer Technology market report from Business Monitor International: "Argentina Information Technology Report Q4 2013"
The Argentine economic environment casts a shadow over the IT market, with depreciation of the peso and import restrictions affecting PC sales in 2012 and H113. Both imported PCs and nationally manufactured were affected, with the latter impacted by weak consumer confidence and a reliance on imported components. However, this does not seem to be putting off potential investors in the sector, as companies seem willing to overlook the economic situation in favour of the great potential. The scope for large increases in PC penetration, second device ownership, enterprise software penetration and cloud computing are some examples of sectors that show growth opportunities. E-commerce company, Mercado Libre and software development companies Epidata and Quadion, have stated that the large Argentine
IT market maintains its lustre despite the economic challenges. . Providing these short-term economic challenges can be navigated, we believe the Argentine market will grow rapidly, with rising PC penetration, including new form factors such as tablets and hybrids, and increased enterprise spending as confidence improves. Further, the market will benefit from deferred purchases/investment in 2012 and 2013.
Full Report Details at
- www.fastmr.com/prod/673267_argentina_information_technology_repo ..
Headline Expenditure Projections
Computer Hardware Sales: ARS12.1bn in 2012 to ARS14.5bn in 2013, +19.8% in local currency (but down 5.2% in US dollar terms). Forecast revised downwards due to macroeconomic factors, including domestic inflation and currency depreciation, as well as local reports of a decrease in PC unit sales.
Software Sales: ARS2.8bn in 2012 to ARS3.5bn in 2013, +23.9% in local currency terms (down 2% in US dollar terms). Small- and medium-sized enterprise (SME) demand for software and strong potential in enterprise resource planning (ERP) applications should maintain growth despite macroeconomic challenges.
IT Services Sales: ARS8.7bn in 2012 to ARS10.9bn in 2013, +26.4% in local currency terms (unchanged in US dollar terms). IT services revenue is forecast to be the outperforming segment in the market, with drivers including growth of the outsourcing industry and cloud computing demand from the SME segment.
Risks/Rewards Rating: Argentina's score was 57.9 out of 100.0 as it stayed in fifth in the Americas region in our latest RRR table. Argentina's low country risks score influenced its ranking as devaluation and inflation risks weighed on its score, while import restrictions also lowered the industry risks score, with both below the regional average.
Key Trends And Developments
The latest data from IT industry association CAMOCA show PC unit shipments fell off in 2012 as a result of the combination of several factors. The weak domestic economic situation is the most damaging factor, with persistent high inflation of 25% and BMI forecasting private final consumption will only increase by 0.5% in real terms in 2013, limiting retail demand. Further, depreciation of the peso raised the price of imported hardware, affecting both end products and locally produced hardware, which is still heavily reliant on imported components. The combination of these factors resulted in a decline of 25% in PC shipments in 2012 (including desktops, notebooks and tablets), even after factoring in the procurement of large numbers of netbooks for the education system. BMI expects the market to rebound as the economic environment improves in the medium term, which should coincide with greater efficiency and capacity for innovation on the part of domestic producers, which could enable to capitalise on deferred hardware purchases.
The Argentine software and IT enterprises chamber Cessi opened four international offices in April 2013, in order to boost local IT exports. The new offices are located in Austin, USA; Sao Paulo, Bogota and Mexico City and were selected after discussions with associated companies. Cessi indicated that this could be expanded further in 2014 if there are a minimum of five firms interested in the potential markets. This will help local IT firms wishing to expand their presence abroad, boosting exports to foreign markets and supporting companies in trade missions in other countries. Cessi reportedly expects software and IT exports to expand by about 11% in 2013, with the US, Brazil, Chile and Uruguay, representing 65% of the total. The US accounts for 45% of total exports, with Brazil, Chile and Uruguay averaging approximately 6-8% each.
Cloud computing is a dynamic area of the IT market with growing demand and increased competition in this segment should fuel further demand from end users to utilise this technology. Telefonica was among local market players to launch new cloud services for SMEs in 2012. In addition to cost savings, businesses will look to boost efficiency and increase flexibility of response to customer needs. There should be potential for ERP solutions in sectors such as energy and transport.
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