Thailand Information Technology Report Q3 2012

Thai IT spending is expected to reach US$6.7bn in 2012, up 9%, with cloud computing, social networking, applications, ultrabooks and tablets all helping to derive demand for IT products and services. The impact to the local PC market from the disruption of local production of HDDs caused by the 2011 Thailand floods continued into H112, with PC sales down by around 10% in Q112. However, a national PC penetration rate of around 18% indicates plenty of untapped market potential, and particularly fast growth is forecast in upcountry areas, where 80% of Thai people live. Currently around 70% of the Thai IT market is accounted for by Bangkok, but new IT malls are opening across the country.

Meanwhile, data proliferation is being driven by an expanding range of devices, including tablets and smartphones, and is fuelling spending on business intelligence and database solutions.

Headline Expenditure Projections Computer hardware sales: US$3.8bn in 2011 to US$4.1bn in 2012, +8% in US dollar terms. Forecast in US dollar terms unchanged, but tablets are expected to provide a growth area in 2011, with potential sales of 1mn units.

Software sales: US$799mn in 2011 to US$871mn in 2012, 5% in US dollar terms. Forecast in US dollar terms unchanged, despite the problem of software piracy, which still accounts for about 76% of software.

IT Services sales: US$1.5bn in 2011 to US$1.7bn in 2012, +16.0% in US dollar terms. Forecast in US dollar terms unchanged, with government initiatives helping to drive development of the cloud services market.

Risk/Reward Rating: Thailand's score was 39.9 out of 100.0. Thailand ranked tenth in the Asia region in our latest RRR table, ahead of Indonesia, but behind the Philippines and Malaysia. The country's overall ranking was brought down by a relatively low Country Risk score.

Key Trends & Developments

Government will be in the vanguard of driving cloud computing adoption in Thailand, which is expected to grow at a triple-digit rate through 2016. In March 2012, the government launched its cloud computing service, with a three-month pilot expected to be followed by national implementation. The government has also initiated a serious drive to encourage SMEs to take advantage of cloud computing cost efficiencies to increase their utilisation of IT.

A number of factors should support momentum in the hardware segment, including a government plan to provide 800,000 tablet computers to Grade 1 schoolchildren. Consumer demand will still continue to be the main IT market growth driver, owing to economic growth and rising income levels. Amid fierce competition, aggressive promotions and new products are likely to be unveiled by retailers, resulting in pressure on margins.

We expect Thai enterprise spending to receive a boost in 2012 from post-flood insurance payments. However, consumer IT spending is likely to remain affected by the floods throughout 2012, as tens of thousands seek to regroup after the devastation, resulting in a reduction of disposable income for IT purchases. The production shortages have also led to a short-term increase in notebooks prices, reversing a previous trend of decline.