Gartner: Asia's IT spend to grow faster than global numbers in 2006

The research firm also predicts that China will have the largest English-speaking population by 2008, leading to direct competition with India.
Written by Staff , Contributor

The growth of IT spending in the Asia-Pacific region will outstrip worldwide figures next year, while China will have the largest English-speaking population by 2008, predicts research firm Gartner.

In a report that outlines its key predictions of upcoming market trends, Gartner projected that total global enterprise IT spending will reach US$1,768 billion in 2006, growing at compound annual growth rate (CAGR) of 4.5 percent from 2004 to 2009.

In comparison, enterprise IT spending, which includes hardware, software, telecommunications and IT services, in the Asia-Pacific region will reach almost US$210 billion in 2006 at a CAGR of 7.5 percent over the same period.

Dion Wiggins, Gartner's vice president and research director, also predicted that the language barrier China currently faces would be removed by 2008, enabling Chinese companies to work in a wider range of markets and segments. This would lead to direct competition with India, and the decline of Hong Kong's importance as the traditional gateway to China, in favor of Beijing and Shanghai.

"While English will become the preferred language of business in China, the context will remain Chinese and cultural barriers will remain," Wiggins noted, in a media statement. "It is important for enterprises to recognize these barriers and address the issues they represent."

Singapore is tipped to benefit from China's ability to overcome the language barrier, noted Wiggins, as the city-state had long positioned itself as a business partner of China. As China's proficiency in English and foreign business practices develop, so do opportunities for foreign businesses, he said.

IT and IP development
Gartner also believes IT development in the Asia-Pacific region is "coming of age", with Asian companies leading development in areas of consumer technology, mobile broadband content and associated business models. The rapid maturing of IT development in China and India, according to the research firm, will lead to an increase in trade between the two countries, resulting in firms gaining competencies that can be applied across emerging markets globally.

"As research and development (R&D) across the region gears up, we see intellectual property protection following suit," Wiggins said. "The percentage of GDP (gross domestic product) spent on R&D is rising rapidly, particularly in China, toward OECD (Organization for Economic Co-operation Development) levels and technology/IP value chains are emerging."

"This will provide the incentive for Asian companies with multinational intent to put additional pressure on governments to enforce IP protection, and support IP creation at home," he explained.

Open-source software (OSS) will also compete directly with commercial software in many segments of the enterprise market, particularly in the small and midsize business (SMB) segment.

As the adoption rate of OSS rises, particularly in China and India, Gartner believes that by 2010 it will account for 20 percent of the global software market, displacing over US$100 billion in revenues from traditional software vendors.

Noted Wiggins: "It is no longer relevant to ask if IT organizations will shift to a strategy of maximizing the value of open source. Organizations and vendors that ignore the potential threats and opportunities of OSS will increasingly find themselves at a competitive disadvantage."

Rising consumer power
Gartner also underscored the importance of consumer technology--a market trend which enterprises cannot afford to ignore, Wiggins said.

"Dismissing graphical user interfaces as toys and the Internet as 'not ready for prime time' are classic examples," he said. "The trend continues today with technologies such as instant messaging and games, and in the future, Web 2.0. If history repeats itself, we are ignoring important technologies today that will have enterprise impact in the future."

Consumer technology that Gartner has earmarked for enterprise adoption in the coming years include 3-dimensional graphics, rich media and consumer-oriented Web sites such as Amazon, eBay and Google. These, said Gartner, are emerging as platforms capable of delivering services to support business processes.

"This trend is being driven faster and further in the Asia-Pacific region which is both the major producer of consumer technology and, in certain parts of the region, highly tech-savvy," Wiggins said. "We expect to see increasingly innovative design and business models emerge in Asia as we move along the trend line of 'sold in Asia' to 'made in Asia' to 'designed in Asia' to 'dreamt up in Asia'."

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