South Korea Information Technology Report Q2 2016
BMI View: South Korea is an advanced IT market supported by high-value households and enterprises, as well as a broad ecosystem of ICT vendors and a conducive policy environment. IT spending growth slowed in 2015 as economic uncertainty resulted in weaker sentiment, but we expect a stronger medium term trajectory. IT sector developments will be important, with cloud computing and Internet of Things solutions expected to be an area of outperformance. We forecast a CAGR of 5.1% over 2016-2020.
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Computer Hardware Sales: KRW11.4trn in 2016 to KRW13.2trn in 2020, a compound annual growth rate (CAGR) of 3.8%. After contraction over 2013-2015, we believe a stronger consumer, ageing PC installed base and popularity of hybrid notebooks will return the market to growth over the medium term.
Software Sales: KRW6.4trn in 2016 to KRW8.1trn in 2020, a CAGR of 6.0%. Data analytics applications marked for outperformance, while SaaS should also deepen the underpenetrated small- and medium-sized enterprise application market.
IT Services Sales: KRW8.8trn in 2016 to KRW11.1trn in 2020, a CAGR of 6.2%. South Korea has a supportive policy environment, high quality network infrastructure and ecosystem of vendors that we believe will result in it being a regional leader for Internet of Things solution adoption.
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