Boston, MA -- (ReleaseWire) -- 04/14/2014 -- Hong Kong's emerging position as a regional data centre and cloud services hub helps to sustain growth above that seen in developed markets in other regions. The primary driver of cloud investment will be demand from Hong Kong's large financial services industry, and opportunities for regional expansion. Meanwhile, the high penetration of products in the retail market will mean relatively slower growth in spending, with Hong Kong having high penetration of traditional form factors - and the highest penetration of tablets in the world in 2013. We forecast IT spending in Hong Kong reaching HKD47.7bn in 2014, with growth of 6.3% in local currency terms. There is, however, downside to this outlook, with a potential hard landing in China likely to severely disrupt Hong Kong's economy and IT market.
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Headline Expenditure Projections
Computer Hardware Sales: HKD20.1bn in 2013 to HKD21.1bn in 2014, +5.4% in local currency terms. The decline in desktop and notebook sales should slow in 2014 as baseline upgrade demand volume comes closer; however, we also expect a slowdown in tablet growth due to high penetration rates.
Software Sales: HKD11.2bn in 2013 to HKD11.8bn in 2014, +5.9% in local currency terms. Enterprise software demand for complex deployments remains, but high penetration of basic deployments limits the overall growth rate.
IT Services Sales: HKD13.6bn in 2013 to HKD14.7bn in 2014, +8.1% in local currency terms. Cloud computing growth will make IT services the fastest growing segment of the IT market.
Key Trends And Developments
The Hong Kong retail hardware market is one the most developed globally. There is high penetration of traditional PC form factors, high levels of multiple device ownership and high penetration of tablets. Given this maturity, Hong Kong could prove a testing ground for hardware market dynamics in other markets over the medium term. BMI expects the stabilisation of desktop and notebook volumes will begin in 2014 as they approach the replacement baseline, while we are also forecasting a slowdown in tablet volumes. The unanswered questions surround the extent to which consumers will continue to accept short replacement cycles for tablets, and whether Microsoft partner vendors can produce hybrid devices at mass market price points to capitalise on multi-functional devices.
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