The Thai IT market is the largest in the South East Asia region and, despite some ongoing risk factors is projected to grow at a CAGR of 9% over the 2011-2015 period. The total value of Thai domestic spending on IT products and services should reach US$6.4bn in 2011 an US$9.0bn by 2015. A national PC penetration rate of around 15% indicates plenty of untapped market potential, and particularly fast growth is forecast in upcountry areas.
The IT market is expected to grow about 13% in 2011, consolidating a recovery that was strong in 2010 despite a number of exogenous disturbances, including political disturbances and severe flooding. Cloud computing, social networking applications and tablets will all help to drive demand in 2011. BMI's view is the fundamentals of growing affordability and rising PC penetration, supported by government ICT initiatives, will keep the market in positive territory during the forecast period. There are a number opportunities including a Government PC for Education programme and growing interest in cloud computing, in which Thailand has been ranked one of the early adopter countries in the region.
Industry Developments
The government has announced a new fund to encourage Thai small and medium-sized enterprises (SMEs) to utilise cloud computing, which it sees as a cost-effective way for smaller companies to access IT. Government assistance will also be an important driver of this segment, with Thai SMEs eligible to receive between THB200,000-400,000 (up to US$13,000) to adopt cloud computing. Thailand has around 2.8mn SMEs.
The Thai government announced an ambitious target to increase the local software market share of Thai software companies to about 50% in 2010. The Thai government announced a series of measures to support the local software industry. SIPA (Software Industry Promotion Agency) has created a Buy Thai First campaign to persuade local SMEs to buy Thai-developed software, and encouraged the government to endorse tax incentives for local developers.
Competitive Landscape
In H111, Acer, Samsung and other vendors were cutting the prices of their tablet devices on the Thai market as they attempted to take market share from Apple's market-leading iPad. The iPad was not officially released in Thailand until Q410, but grey market versions had already proved popular. Meanwhile, Thai PC market leader Acer has targeted 20% growth in Thai market sales in 2011.
In April 2011, Microsoft launched a new partnership with telecoms giant True, which will offer access to Microsoft services via a new data centre. The cloud services will focus on digital content, email, communications and collaboration. Meanwhile in January 2011, Microsoft announced a tie-up with local software firm Senior Com to provide cloud computing services.
The Thai government has an ambitious target to increase the local software market share of Thai software companies to 40% in 2010, and 50% in 2011. Locally produced software vendors claimed around 20% of the Thai market in 2008.
Computer Sales
According to BMI projections, Thailand's computer hardware market will be worth about US$4.1bn in 2011, up from an estimated US$3.8bn in 2010. In 2011, the consumer segment is expected to continue its dominance and will comprise nearly two-thirds of the market. PC penetration of about 15% represents considerable latent growth potential.
The Thai PC market has matured and there is greater segmentation. There is also a first-buyer market for desktops, particularly in large provincial cities such as Chiang Mai and Hat Yan. However, even firsttime buyers have higher expectations concerning functionality and performance. The main driver of the computer market will be notebooks, which comprised nearly two-thirds of PC sales in 2010.
Software
In 2011, Thai software sales are projected by BMI at US$733mn and software CAGR from 2011-2015 should be in the region of 10%. The baht's appreciation reportedly allowed retailers to reduce local prices and this boosted vendors' sales of legal software in 2010. Growing PC penetration as well as new technologies and business models, including 3G mobile and WiMAX, and industry trends such as cloud computing are all market drivers.
There is a growing emphasis on cost efficiency as enterprises look to enhance productivity through automating these and other functions. Business intelligence software is another growth area, due to the issue of data proliferation. Thailand's software market is developing, despite the problem of software piracy, which still accounts for about 76% of software.
Services
IT services spending is forecast to reach about US$1.5bn in 2011, up from US$1.2bn in 2010. Sectoral CAGR is projected at 13% over the forecast period as the market approaches US$2.3bn by 2015. Vendors are focusing on opportunities developing from cloud computing and are expanding into smaller cities. IT services accounts for about 22% of total IT spending. Over the past few years, the size of deals has increased in key verticals such as banking and telecoms. Despite the financial crisis, some elements of bank spending will be relatively immune, particularly those driven by regulatory compliance. Meanwhile, telecoms is another big spending IT vertical, with mobile operators investing to expand capacity and launch new services.
E-Readiness
Thailand's internet penetration is set to pass 17% within BMI's five-year forecast period, from about 16% in 2008. Broadband penetration will grow from 2.3% in 2009 to 6.6% in 2014, according to BMI estimates.
By 2009, the Thailand Internet Service Provider Association forecast that Thailand could have between 5mn and 10mn broadband subscribers, although BMI opted for a more conservative estimate of 1.5mn subscribers. The level of growth in the broadband sector will also be fuelled by the award of WiMAX licences.
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