Philippines Information Technology Report Q2 2012

BMI expects the Philippines IT market will grow by around 7% in 2012, slower than in 2011. BMI has downwardly revised its 2011 market estimate after the PC market contracted sharply due largely to exogenous factors such as the floods in Thailand. Over our five-year forecast period, the Philippines IT market should achieve regional outperformer status. The Philippines has lower PC penetration than many other Asian countries and offers correspondingly high growth potential over the forecast period, particularly with support from government ICT programmes.
Headline Expenditure Projections Computer hardware sales: US$1.8bn in 2011 to US$1.9bn in 2012, +5% in US dollar terms. Forecast in US dollar terms downwardly revised due to the expected impact in H112 of the HDD shortage linked to the floods in Thailand.
Software sales: US$320mn in 2011 to US$349mn in 2012, +9% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modification, but growing adoption of cloud solutions by the Philippines business process outsourcing (BPO) industry could provide a new phase of momentum. IT services sales: US$786mn in 2011 to US$866mn in 2012, +10% in US dollar terms. Forecast in US dollar terms downwardly revised due to analyst modification, with businesses expected to retain an emphasis on getting the most out of existing investments.
Risk/Reward Ratings: The Philippine's score was 43.7 out of 100.0 with low a low IT Market score dragging down Potential Returns. The Philippines took seventh place in our latest RRR table, but has potential to rise over time due to rising PC penetration.
Key Trends & Developments 􀂃 Demand from outside Manila will continue to drive market expansion in 2012. More vendors, such as Lenovo and Toshiba, are signing up new distributors and opening stores nationwide. Cebu is seen as a gateway to provinces in Visayas and Mindanao. Meanwhile, PCs for schools programmes will be another driver for the Philippines computer market.
􀂃 The government will continue to push an e-government agenda in areas including customs, health, elections and education. Meanwhile, the government's digital agenda, aimed at boosting computer penetration, also continued to be implemented.
􀂃 The HDD shortage and weak export markets could act as a market restraint in 2012. However, the recent wage rise for civil servants have helped to facilitate consumer spending on big-ticket items such as PCs. Remittances, a key source of income, held up better than expected during the global economic slowdown but the more expensive peso has moderated their impact.