Excerpt from the article of
Indonesia Information Technology Report
Indonesia - Q3 2013 Published Date: 01 Jul 2013
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.
