2013-12-27 09:08:56 - New Computer Technology market report from Business Monitor International: "Argentina Information Technology Report Q1 2014"
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 sector's substantial potential. The scope for large increases in PC penetration, second device ownership, enterprise software penetration and cloud computing are examples of sectors that have growth opportunities.
Full Report Details at
- www.fastmr.com/prod/754457_argentina_information_technology_repo ..
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. The market will also benefit from deferred purchases/investment. 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 of 56.8 out of 100.0 in BMI's Risk/Reward Ratings, places it sixth in the Americas region. Argentina's low Country Risk score influenced its ranking, 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 government has introduced new tax incentives that aim to boost local software development companies. A similar promotion scheme established in 2008 has thus far enrolled 320 software companies, and the government hopes the new incentives will attract a further 500 firms by 2019, when the incentives scheme is due to end. Argentina's software sector has historically lagged behind its hardware and services sectors, and BMI believes the government is making a concerted effort to redress the balance.
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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