Boston, MA -- (ReleaseWire) -- 05/05/2014 -- BMI View: The Brazilian IT market is the largest in Latin America and is expected to continue its solid growth, driven by a growing middle-class population and government initiatives to boost overall spending.
However, our expectations have been tempered by short term concerns regarding the Brazilian consumers, burdened by high debt levels. We expect that more significant monetary tightening, as well as continued currency weakness will temper household spending in 2014. We forecast Brazil IT market spending will reach BRL58.03bn in 2014, an increase of 8.4% from BRL53.53bn in 2013. This reflects our strong expectations for the market, with first-time buyer and upgrade/replacement demand for PCs, strong demand for tablets (including procurements for education), and enterprise and government modernisation and falling costs of equipment.
Headline Expenditure Projections
- Computer hardware sales: BRL22.22bn in 2013 to BRL23.73bn in 2014; up 6.8% in real terms. A weaker consumer outlook will be a drag on growth, but overall the market remains in good health, with demand for tablets boosting growth.
- Software sales: BRL9.42bn in 2013 to BRL10.27bn in 2014; up 9.0% in real terms. Company modernisation initiatives to improve competitiveness and lay the foundations for expansion are driving investments in IT.
- IT services sales: BRL21.89bn in 2013 to BRL24.02bn in 2014, up 9.7% in local currency terms. We expect demand for cloud computing to be the leading driver of sales growth while the nascent machineto- machine communications market shows signs of taking off, particularly in utilities and e-health verticals.
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Key Trends And Developments
The hardware market continues to expand rapidly as rising incomes and government initiatives drive unit growth. At the same time there is also a major shift underway as tablets account for a growing share of total sales in the hardware market. The tablet market was slow to take off, as import tariffs on finished products meant the success of Apple's iPad globally was not replicated locally in a price sensitive market. However, in 2012 the arrival of high quality Android tablets at much lower prices, including from local players, began to drive growth. Investment by major international vendors in local production facilities will intensify the dynamic of competition and drive prices down further.
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