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Chile Information Technology Report Q4 2009Published by: Business Monitor International Published: Oct. 15, 2009 - 53 Pages Table of Contents
AbstractMarket OverviewBMI has downwardly revised its Chile IT market forecast following negative PC market trends in H109.Chilean IT spending is now expected to dip into negative growth territory in 2009 before recovering togrow to around U$3.1bn in 2013, from US$2.0bn this year. The Chilean IT market is one of the mostdeveloped in the Latin American region and, despite current economic headwinds, is projected to grow ata compound annual growth rate (CAGR) of 11% over the 2009-2013 period. The economic outlook in 2009 remains a difficult one for IT vendors, with the slowdown in economicactivity hitting IT spending. Tighter credit conditions have led to consumer and business caution, withsome replacement spending postponed, and the political climate in an election year may cause delays inroll-outs of government projects. There are still areas of opportunity, however, particularly governmentspending on education and small and medium-sized enterprises (SME) informatisation programmes. Chile's development as an offshoring location will attract more investment in IT services, with sectorslike retail, distribution, financial services, telecoms and healthcare all offering opportunities. While onlyaround one-tenth the size of Brazil's IT market, Chile will remain an attractive market for vendors. Industry Developments Government spending on information and communication technology (ICT) projects is expected to rise inH209, with project roll-outs delayed from earlier in the year and stimulus spending to revive a slowingeconomy. The government has announced a number of flagship projects this year, but funds dispersementwas often slow due to the political climate in an election year and economic headwinds. Spending isexpected to pick up in the second half of the year. Among major projects launched in 2009 was the Enlaces programme to provide IT for schools. Theprogramme, led by Chile's education ministry, involved the set-up of a US$3.7mn fund to subsidise ITpurchases for more than 2,000 schools throughout the country. Schools will be able to use the fund toacquire education software and devices, with standards and prices established by the ministry. SME informatisation is a government priority. In 2008, the Chilean government launched a majorprogramme to promote IT use among SMEs. The programme, backed by the economy ministry, wasbudgeted at CLP3.0bn, with CLP1.8bn coming from the government and the remainder from regionalgovernments. The programme is particularly targeted at SMEs that operate in the food, agriculture andtourism industries. Competitive Landscape HP has predicted double-digit growth in Chilean sales in the next few years. The company has anagreement with Chilean telecoms company Entel by which Entel will sell HP 3G laptops bundled with itsown 3G services. HP hopes to sell 30,000 laptops by this channel in 2009. Meanwhile, Acer wasimplementing its multi-brand strategy in Chile, where it has launched its eMachines brand. Lenovo had abundling agreement with triple-play (fixed telecoms, broadband and mobile) service provider VTR. In the summer of this year, Microsoft laid the groundwork for the launch of its new operating system,Windows 7, with the release of the software's enterprise version in August. Microsoft dominates theChilean operating system market segment, despite a piracy rate of 68% and growing interest in opensource software. In 2009, Microsoft revealed plans to develop an ecosystem of local softwaredevelopers to develop solutions for the public sector. Global IT services vendors continue to expand their presence in the Chilean market. Companies such asTata Consultancy Services (TCS), Evalueserve and Oracle have all set up IT services operations in Chile.In September this year, UST Global and General Electric (GE) said that it expected to employ 1,000professionals at the IT offshoring center to be located in Calparaiso. Meanwhile, US healthcare ITsolutions specialist InterSystems will invest US$10mn in its Chilean operations. Hardware BMI forecasts that Chile's computer and accessories market will have a CAGR of around 10% over the2009-2013 period. However, BMI has downwardly revised its market projections for 2009 following astream of negative data from H109. PC sales in 2009 are now forecast at US$712mn, down fromUS$768mn in 2008. Despite the challenging trading conditions in 2009, growth should resume in 2010with spending passing the US$1bn mark by 2013. In Q209, there were signs of the contraction in the market slowing down, but H109 PC shipments werestill estimated to be down by a low single-digit factor year-on-year (y-o-y). The main driver of the declinewas desktop sales, which were down by around 30% in H109 as businesses deferred replacementpurchases. Notebook sales continued to grow even in the difficult first quarter of the year; however, mostof the growth was driven by low-cost netbooks, meaning that PC revenues contracted by more than unitshipments. Software Chile's software market is projected to be worth US$313mn in 2009, with flat or slightly negative growthcompared with 2008. Software CAGR for 2009-2013 is projected at around 13%. There are expectedareas of opportunities in 2009, particularly in the government sector, with the roll-out of tenders that weredelayed from earlier in the year. In H109, a slowdown in export markets and tighter credit conditions crisis reportedly led some companiesto look to defer systems updates, but other companies saw IT as a means of achieving greater efficienciesin difficult times. Piracy was estimated to account for 68% of software in 2008, up 1% on the 2007 level,despite a sustained government campaign to reduce this. IT Services Chile's IT services market is projected at around US$828mn in 2009 and is expected to grow at a 12%CAGR over the 2009-2013 forecast period. The percentage of IT market revenues generated by servicesis currently around 37%, high by emerging market standards but similar to other countries in the region,such as Brazil. The majority of demand, around 75%, still comes from the large company sector, butsmaller companies are now becoming more sophisticated in their demand. The economic situation is likely to have an impact this year on spending in some verticals, but in manycases spending will be viewed as strategic rather than operational. Led by the financial, telecoms andretail sectors in particular, there is a trend towards bigger managed service and outsourcing deals in thelocal market. E-Readiness The government is planning to increase Chile's broadband options by auctioning 3G mobile and WiMAX.For 2008-2009, the government has allocated US$80mn to support projects aimed at boosting internetcoverage. The telecommunications regulator Subtel also planned to launch a new universal access fund in2008. In general, Chile enjoys some of the best telecommunications infrastructure in South America. The WorldEconomic Forum ranked Chile 31st in the world in its most recent survey of 'degree of preparation toparticipate in and benefit from information and communications technology', the highest ranking in theLatin American region. However, the report concluded that Chile's e-development was held back by somefamiliar failings including an inefficient government bureaucracy and over-regulation. Get Full Details About This Report >> |
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