Boston, MA -- (ReleaseWire) -- 09/21/2012 -- BMI View: South Korean IT spending is expected to reach US$18.7bn in 2012, up 5%, with consumer and business segment IT growth expected to moderate as its economy remains subdued throughout the year. However, South Koreans have experienced a rapid increase in per capita incomes (in US dollar terms) in recent years, and as the economy remains on a solid growth track, despite a forecast deceleration in 2012, we believe South Koreans will increasingly choose to spend on IT products due to a substantial increase in their disposable incomes. There will be a number of key drivers and growth trends including cloud computing, IT outsourcing and industry-specific software applications.
Headline Expenditure Projections
Computer hardware sales: US$4.5bn in 2011 to US$4.5bn in 2012, +0% in US dollar terms. Forecast in US dollar terms is unchanged, but form factors such as tablets will provide growth areas in 2012, as well as Microsoft's Windows 8 operating system
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Software sales: US$6.3bn in 2011 to US$6.6bn in 2012, +6% in US dollar terms. Forecast in US dollar terms unchanged, with the trend in the South Korean software market being towards specialised verticalspecific application packages.
IT Services sales: US$7.1bn in 2011 to US$7.6bn in 2012, +6% in US dollar terms. Forecast in US dollar terms unchanged as vendors and service providers are investing heavily in the cloud computing market.
Risk/Reward Ratings: South Korea's score was 64.5 out of 100.0. South Korea ranks fourth in our latest Asia RRR table, behind Australia, Singapore and Hong Kong, but still ahead of China, Taiwan and the Philippines. The country also benefited from a relatively high Country Structure score of 75.
Key Trends & Developments
- South Korean government agencies are adopting cloud computing and The Ministry of Public Administration and Security is investing in cloud technologies for national computing resources. The Ministry of Knowledge Economy has launched a study of how to combine green IT with cloud platforms. New cloud computing offerings, which should fuel further demand from companies to utilise this technology and drive investment in data centres.
- Demand from the financial segment should also be a growth area, with financial services institutions investing in more customer-orientated strategies and streamlining complex operating environments. Growing demand for cloud computing services will also generate opportunities and investments in data centres.
- IT spending in export-dependent South Korea will remain vulnerable to continued uncertainty in the global economy. We see consumer demand decelerating in 2012 because of mounting consumer debt and we have revised our forecast downwards. Corporate IT spending should also moderate, due to a weaker outlook for the export sector in 2012, and a forecast slowdown in China.
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