Asia software market to see growth

Region's enterprise software segment is forecast to grow 3.1 percent, ahead of worldwide "flat" growth and Europe's negative growth, says Gartner.
Written by Victoria Ho, Contributor

While the global enterprise software market is forecast to remain flat this year, the Asia-Pacific region will continue to grow, albeit at a slower rate than previously forecast, according to Gartner.

In a report released Tuesday, the research firm said the region will grow at 7.8 percent this year, compared to a worldwide "flat" growth of 0.3 percent. However, 2009's projection for the Asia-Pacific region were revised from Gartner's previous December 2008 forecast of 15.4 percent.

"This 2009 growth, although positive, is the region's lowest rate--second only to the growth experienced in 1997 and 1998, during the Asian financial crisis," said the report.

Nonetheless, Gartner said Asia's growth will remain "well above" those of mature regions such as Europe, which is expected to go down by 5.6 percent this year. With its relatively lower IT penetration, the Asia-Pacific region holds more potential for investment and growth, the research house said.

The only other region to see growth in this market is Middle East and Africa, at 1.9 percent.

Matthew Cheung, Gartner's senior research analyst of software markets, further identified collaboration and data integration software segments to be in better shape to weather the economic storm. The OS market, though, is likely to be the worst performing.

Cheung told ZDNet Asia in an e-mail the Web conferencing and team collaboration software segment is projected to grow at a compound annual growth rate (CAGR) of 27.7 percent from 2008 to 2012, while data integration tools will grow at 26 percent over the same period. These "emerging" segments are expected to see good growth because they start out from a currently small base, he said.

In contrast, the OS market is likely to perform the worst because it is affected by "bad business and consumer sentiments", which are seeing sluggish PC and server hardware sales in the region.

A Hewlett-Packard executive recently noted, however, that in spite of the flat market, the company is expecting to see pockets of growth in countries in the region including China, Malaysia and Singapore, for its workstation business.

Asia to bounce back faster
Cheung said most anticipate the Asia-Pacific region to be "among the first" to bounce back from the global recession.

"In reality, most countries in [the region] are not technically in recession, [with] growth in 2008, though lower than [previously] forecast," he said.

Furthermore, being export-oriented, Asia will be "the first to ramp up manufacturing capacity" when demand from the United States and Europe rises again, so the uptick will be felt earlier in this region, the analyst said.

Ahead of the overall Asia-Pacific region, growth in China and India is expected to reach 5.9 percent and 4.3 percent, respectively, this year. Both figures were moderated downward from previous forecasts of 9 percent and 6 percent, respectively.

Gartner noted that the recession will highlight the importance of emerging Asia-Pacific markets as targets for IT revenue growth. Small and midsize businesses (SMBs) also present good potential because these companies are "increasingly realizing IT benefits, in an increasingly competitive market environment", the report stated.

According a fellow Gartner analyst last year, this growth potential may come from some SMBs taking advantage of the economic crisis to invest and grow their business.

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