Progressive broadband markets in Asia- Pacific

Excerpt from "Convergence in Developed AsiaPacific: Operator Strategies Move beyond Bundling to VAS" by Asia Pacific Insider Report (August 2013)

Executive summary: Progressive broadband markets in Asia- Pacific move beyond basic bundling

Advanced broadband markets in parts of Asia-Pacific show high adoption of fiber, multiplay and 3G+, setting the stage for convergence. Operators are looking to take advantage of convergence to reduce churn and introduce new value-added services.

Cloud and multiscreen access are becoming standard elements of bundles, providing access to content across a wide plethora of devices.

Smart living provides a next step beyond cloud and multiscreen VAS: 

• Home hub device penetration is increasing, and provides a portal to a range of services;
• Healthcare, surveillance and home automation provide new revenue opportunities for established players.

The Convergence in Developed Asia: Operator Strategies Move beyond Bundling Insider presents case studies on Chunghwa, NTT, PCCW, SingTel, StarHub and Taiwan Mobile, and examines how these different operators are approaching convergent offers.

Key findings

 Developed markets in Asia-Pacific, such as Australia, Hong Kong, Japan, South Korea, Singapore and Taiwan, have some of the highest rates of broadband service penetration, including for LTE, FTTB/H, household broadband and multiplay. Many operators in these markets are therefore moving beyond bundling strategies in order to develop new revenue streams.

 Bundling has become a fundamental part of all broadband operator propositions. Challenger operators tend to offer very attractive discounts in order to expand their customer base, while larger incumbents offer smaller discounts but highlight their reliable high-speed networks and broader coverage and more often differentiate themselves with value-added services. Furthermore, quadruple plays and the addition of mobile services to bundles are also becoming more important, while pricing and content strategies are being used to address specific market segments to boost overall adoption.

Value-added services such as cloud storage and multiscreen access are becoming standard components of broadband bundles. Most operators include some volume of cloud storage as part of their bundles, enabling different devices to access content. We believe that more and more operators will start charging for cloud storage as demand for data storage increases in line with multimedia usage.

 Very advanced operators such as PCCW and NTT are moving rapidly into the smart living space. This includes services such as healthcare, surveillance and home automation. Personal health monitoring devices are being used by NTT and PCCW to address the smart healthcare opportunity, while Chunghwa and PCCW are pushing home hub devices to increase their revenue opportunity and offer new types of services.

 Smart living services are a long-term opportunity requiring a commitment that will take time to provide a return. As such it is not a priority opportunity for all operators to pursue, particularly smaller challengers and operators planning to invest in markets with different levels of development.

Indonesia Information Technology Report Q3-2013

Excerpt from the article of 

Indonesia Information Technology Report

Indonesia - Q3 2013 Published Date: 01 Jul 2013

from Business Monitor International (BMI) 

The Indonesian IT market is forecast to be one of the outperforming markets globally in the medium term on the back of strong economic growth and an emerging middle class. Spending is expected to reach IDR 64.6trn  in 2013, up 16.3% from 2012. The retail market will be a major driver of growth, with PC penetration estimated at below 10% in 2012, meaning significant growth potential from first - time buyers and upgrades/personal devices. Continued strength in government spending will also support expansion of the market, boosting long-term growth potential.

Headline Expenditure Projections

Computer Hardware Sales: IDR45.9trn in 2013 to IDR65.4trn in 2017, at a CAGR of 10.4% in local currency terms. Rising incomes and the growing affordability of devices, combined with credit availability, will increase sales in the consumer segment.

Software sales: IDR7.8trn in 2013 to IDR13.0trn in 2017, a CAGR of 15.1% in local currency terms. Windows 8 sales will boost spending in 2013, although progress will depend on the success in bringing down illegal software use.

IT Services Sales: IDR11.0trn in 2013 to IDR17.2trn in 2017, with a CAGR of 13.1% in local currency terms. Forecast unchanged, with a key growth area being cloud services, which could be worth more than IDR12.1trn by 2017.

Risk/Reward Ratings: Indonesia's score was 47.5 out of 100.0. Indonesia remained in ninth position in BMI latest RRR table, below the Philippines but ahead of Thailand.

Key Trends

The tablet market is expected to experience rapid growth in 2013 as a wide range of low-cost Android-based tablets hit the market. Consumers have shown a clear preference for mobile computing devices, including netbooks and notebooks, but tablet adoption failed to take off prior to 2012 due the high price of devices, putting them out of reach for the majority of consumers. Higher specification devices are now becoming available at affordable prices, and, with PC penetration at under 10% in 2012, there is a large opportunity for tablets to be adopted as a first device, with consumers skipping ownership of a desktop or notebook. BMI believes OEMs from China, as well as local brands such as S Nexian will be the main beneficiaries of demand for low-cost devices. However, global vendors such as Acer have stated their intentions to target mid- and low-specification devices at the market in order to achieve growth.

Although the consumer story in Indonesia means the retail hardware market is set to remain the dominant theme in the Indonesian IT market, there are also opportunities for vendors to generate sales to the public and enterprise sectors. An active approach by the government to encourage IT development, led by the National ICT Council, should stimulate spending through a series of infrastructure and education initiatives. Meanwhile, according to government data, IT penetration in enterprises is low, particularly in the SME segment, representing a huge potential market. Modernization is driving spending on applications such as CRM, ERP and financial management in key sectors such as financial services, telecoms, utilities, government, retail and manufacturing.

eCommerce of Alibaba

Abstracted from "Alibaba Defines the New Face of eCommerce"

Posted by Martin Veitch, editorial director at IDG Connect, on July 12 2013

There are eCommerce companies that are convenient and very useful, but there are only a few that have changed the world. In this last, rarefied category, we might think of Amazon.com and, increasingly, Alibaba Group. The fact that Alibaba’s success has been more remarkable in its China homeland than elsewhere, and that its reputation outside China is primarily as a business-to-business phenomenon.

But even among laggards it surely won’t be long until its name becomes synonymous with the new face of eCommerce, rapid geographical expansion and supply-chain globalisation.

The Group is actually a remarkable empire where the numbers alone make heads spin. There is Alipay, a PayPal-like consumer payments system that is enormous in China and has 800 million registered members. Taobao is like eBay but highly customized for the Chinese market and responsible for over 94% of all consumer-to-consumer transactions there. 60% of all parcels delivered in China stem from Taobao orders and the marketplace hosts 800 million products and 500 million registered users. Tmall.com is the Amazon.com of China, providing both Chinese and foreign brands and selling to 500 million registered users.

Explaining the Alibaba Group world requires understanding of cultural nuance. For example, Chinese buyers tend to prefer to shop from malls rather than own-brand stores or sites and even big brands pursuing sales in China tend to follow, in part because of this tendency, in part because of the difficulties of selling to the enormous Chinese market which expects a distinct experience very different to the needs of many other large markets, and in part because of the data the platform generates for participants. Cash-on-delivery, overnight deliveries in cities and seven-day return policies also make China distinctive and it’s quite common for buyers to reject goods on delivery.

It was founded as recently as 1999 but Alibaba Group’s sheer scale and reach is placing it front and centre of the fundamental changes taking place in the way we work and trade.

Western companies find it hard to replicate the user experience designed for the Chinese consumer. Alibaba also offer very high-quality data analytics through research on product pricing and responsiveness and they're linked in to a fairly sophisticated delivery and logistics network. You can’t just take learning from other markets into this market so you have to hire or bolt on.

The broader commercial movement is towards partnering, outsourcing and franchising.  Channel dominance is becoming more important than product dominance in many markets. They are becoming offline platforms where they rent the space internally; they have access to brands and the margins they get are better. The world is moving back to platforms and away from brands unless those brands are very strong.

Alibaba Group is on a remarkable trajectory and its gross merchandise revenue of about $160bn per annum is already greater than Amazon and eBay combined.

While all eyes are on Alibaba to float at some point, the focus for the Group, is expansion in international markets: Turkey, Brazil, Russia, Australia, the US and Europe all offer growth spurts. That’s crucial because, while many have contended that China will have the last word on price for a long time to come, the rapid rise in her middle class could give Indonesia, the Philippines or another ‘Next Eleven’ country a chance to undercut.

And, while doubts remain on the Chinese line over intellectual property and geopolitical issues remain sensitive, the company is part of a tectonic and historic change in attitudes. People everywhere are going to stop viewing them as a threat and more as an opportunity. Anytime there is an opportunity, people tend to take a more favorable view and China is where the opportunity is.