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Argentina’s IT spending is forecast by BMI to grow at a compound annual growth rate (CAGR) of 13% over 2010-2014, with spending picking up in 2010 after a contraction in 2009. The IT market is expected to grow by around 10% in 2010. The consumer notebook segment should again be a growth area, thanks to tax concessions and lower prices.
The Argentine IT market is the second largest in Latin America. Despite the current economic crisis, the total value of spending on IT products and services should pass US$3.8bn in 2010 and approach US$6.2bn by 2014. Per capita IT spend is seen as rising from US$94 in 2010 to US$147 in 2014 as the market approaches levels last seen before the crisis of 2001. The market is dominated by the capital Buenos Aires, which accounts for 26% of household appliance sales, including computer hardware.
In 2010, government spending should be a growth area, after a quiet 2009 for government hardware tenders, with particular opportunities in the education sector. Key prospects for enterprise resource planning (ERP) implementations and systems upgrades will include companies focused on regional expansion and export-oriented industries.
Industry Developments
In April 2010, the Argentine government was preparing to launch a tender to provide 3mn PCs to public schools nationwide. The programme, called Conectar Ingualdad, was announced by President Cristina Fernández. The tender will be run through state social security agency ANSES, with the 3mn PCs due to be distributed in early 2011.
In October 2009, Argentina’s senate approved a controversial bill aimed at imposing new taxes on luxury items, including electronics products. The law doubled value added tax (VAT) on affected goods from 10.5% to 21%. However, after industry lobbying, notebooks and netbooks were excluded from the proposed tax. The government said that the intention behind the proposed tax hikes was to provide assistance to the electronics manufacturing hub of Tierra del Fuego.
Competitive Landscape
A previous PC tender, launched in August 2009, resulted in telecoms company Movistar winning the contract to supply 250,000 of Intel’s Classmate PCs to technical schools nationwide. A total of 13 companies bid for that contact, with Chinese giant Lenovo and a number of other vendors also meeting the technical requirements. The final decision came down to price, with the ARS938 per unit price for the Intel PCs proving the winner.
SAP Argentina, the leader in Argentina’s enterprise applications segment with around a 50% share, has said that its multi-country Latin American unit was on track to increase its market share in 2010. In H110, the company recorded a number of significant wins in the Argentine market, indicating that business confidence had strengthened. Anglo-Dutch consumer products giant Unilever adopted an SAP solution for its Latin American operations and said that it expected a return-on-investment (ROI) of US$1mn within 2.7 years.
A major area of opportunity for IT services vendors will be public and private sector organisation demand for help to utilise cloud computing solutions. Software giant SAP has formed an alliance with IBM, Linux systems integrator Red Hat and Argentine telecoms company Metrotel to offer hosted solutions in Argentina. Government is expected to be a key vertical and, in June 2010, Japanese giant NEC announced the launch of a cloud computing base general education system for the Ministry of Education in Argentina’s San Juan province.
Computer Sales
BMI projects that Argentina’s computer and accessories market will have a CAGR of around 11% over 2010-2014, reaching around US$3.1bn by 2014. Argentine sales of computer hardware are forecast to return to positive growth in 2010, as growing affordability combined with more credit options and tax concessions have driven sales. With PC penetration only around 24%, there is still plenty of growth potential and penetration is expected to rise to at least 28% by 2014. Going forward, drivers include affordable PC programmes for households and schools, as well as growing broadband penetration, retail channel expansion and the popularity of notebooks and netbooks.
Software Argentina’s software market is projected to be worth US$662mn in 2010 and software CAGR for 2010- 2014 is forecast at around 14%, despite the economic climate and high annual software piracy losses. This year should see a boost from systems upgrades deferred from 2009, when the economic crisis had an impact in public and private sectors.
Demand from small and medium-sized enterprises (SMEs) for ERP applications should continue to grow, particularly in relatively untapped provincial areas. The main functional category currently remains ERP solutions, estimated to account for more than 80% of the enterprise software total. However, vendors will increasingly look to applications such as customer relationship management (CRM) and business intelligence, where faster growth is projected.
IT Services
Argentina’s IT services market is forecast at around US$1.1bn in 2010, with a return to double-digit growth after a sharp deceleration because of the economic contraction in 2009. For a developing market, the percentage of Argentine IT market revenues generated by services is fairly typical at around 25%, although lower than some other countries in the region where the services share is already above 30%.
IT services revenues are expected to grow faster than the market as a whole, with CAGR for 2010-2014 projected at about 14%. Led by the financial, telecoms and public sectors, there is a trend towards bigger managed service and outsourcing deals in key sectors of the local market. However, traditional services such as desktop support are still the mainstay.
E-Readiness
Argentina has one of the most dynamic telecoms markets in the region, with a dramatic expansion in the number of mobile subscribers in the past few years. Fixed-line penetration is among the highest in Latin America, providing a good platform for strong growth in broadband services adoption.
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Original Source : – Information Technology Market
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