Networking sales grow amid slump in IT infrastructure market in Brazil
The IT infrastructure market in Brazil has seen a decline of 15.2% with revenues of $1.4 billion in 2019, with consistent decline predicted for 2020 but networking spend continues to rise, according to research.
This year, analyst firm IDC expects a major impact on the country's infrastructure market due to the Covid-19 outbreak. The expectation so far is for an 8.5% decline compared to 2019.
Some projects that should have happened in 2019 were pushed to early 2020 - those initiatives will save the performance of the sector in the first quarter, according to IDC. However, the analyst noted that the impact of the pandemic will be strong in the second quarter, sending the market into a tailspin.
Coronavirus
The networking segment, especially when it comes to routers for large operators, is predicted to perform well in 2020 despite the generally negative forecast for infrastructure. This is due to the demands arising from increased remote working during the coronavirus outbreak.
"In the third quarter [of 2020] we can already expect a recovery, albeit slow, with normalization of business predicted for the fourth quarter", says IDC analyst Thomas Campos, on general predictions for this year within infrastructure.
According to IDC, the decline in the infrastructure market seen in 2019 was expected due to the change in government, which has impacted business in 2019, particularly at the beginning of the year, with expectations around the pension reform.
"However, as the months went by and the implementation of the measures was postponed, private sector and government buyers chose to wait to invest again", says Campos.
According to the analyst, there were some noteworthy investments in infrastructure in the public sector in networking and security solutions in 2019, particularly in the last quarter, but these were not enough to reduce the overall market decline.
However, networking and security were the only segments that saw any growth at all in 2019: the former grew 4.4%, while security applications market saw growth of 3% in relation to 2018, with revenue of $ 659.9 million and $219.7 million, respectively.
The network sector saw an increase due to the greater investment in routers by regional operators. "There are thousands of operators spread across the Brazilian countryside and we have noticed an increase in demand for that type of equipment", says IDC's Campos. During the fourth quarter of 2019, sales of routers were up 4.4%, compared to the same period in 2018, with revenue of $80.8 million.
According to Campos, there was an increase in security investments due to the upcoming general data protection legislations. The GDPR equivalent in Brazil is supposed to be enforced in August 2020 but a bill that has been approved by the Senate earlier this month and will now be voted by the Congress, is likely to push the implementation to January 2021.
Sales of servers and external storage decreased by 10.6% and 5% with respective revenues of $482 million and $ 301.3 million, according to IDC.