And to provide some guidelines that will help businesses make well-informed buying decisions, ZDNet Asia is happy to unveil this year's list of top 50 IT vendors. Companies that triumphed their way into the Top Tech 50 Index 2006/2007 have proven their weight in terms of financial performance, track record and commitment to the Asian market.
There are 13 newcomers in this year's Index, compared to last year's list. However, as one industry observer points out, there should be more representation from Asia.
According to Pierre Hennes, a partner at Upstream Ventures, Asian businesses today are still investing much of their IT budget on products and services offered by MNCs (multinational corporations). He pointed to the companies on ZDNet Asia's Top Tech 50 Index as a clear reflection of this trend. There are fewer than 10 Asian companies, excluding vendors from Japan, on the Top Tech 50 Index 2006/2007.
"I would have liked to see more Asian companies on the list," said Hennes, who is a Top Tech 50 advisor. He suggested that the lack of Asian representation could be the result of difficulties vendors in the region face in trying to break out of their local markets.
Asia is a fragmented market and it is difficult for a Korean company to step out of their local market and succeed elsewhere in Asia, he explained, noting that these companies would have to deal with issues such as software localization and language support. "MNCs have the advantage because they can partner with local market leaders," he said.
In addition, any IT decision maker's objective would be to best mitigate and manage risk.
"Their neck is on the line for whatever IT purchase decisions they make… And no one gets fired from buying from major companies like IBM," Hennes quipped.
He added that while Asian vendors have done well in certain industries, such as India's strong brand name in outsourcing, these suppliers may not have the pre- or post-sales support and distribution network that larger MNCs have.
However, Hennes stressed that some enterprises--specifically small and midsize businesses--would still look for local IT products and services. "If you're big company, you'll probably want to stick to the usual suspects."
More is better
And it seems to be the usual suspects that continue to hog much of the IT spotlight.
Graeme Philipson, an independent high-tech analyst and writer, noted that the Index is crowded with larger companies that are major players in their respective markets.
Systems providers such as IBM, Hewlett-Packard, Dell Computer and Sun Microsystems, as well as Japanese giants Fujitsu, NEC and Toshiba, made the list because their "sheer size and the number of product areas they play in", said Philipson who was on last year and this year's Top Tech 50 advisory panel.
"With the exception of Apple Computer, there are not too many smaller systems vendors," he said.
Like last year's Top Tech Index, this year's list is also dominated by vendors from two market segments--services and telecommunications--including Indian services giants Tata Consultancy Services, Infosys, Wipro and Satyam Computer Services.
He noted that while the industry is not volatile, technological fads do come and go. "The most successful companies are those which large user base and wide product set shield them from fluctuating [technology trends]," he said.
Philipson also added that the changing of guards in the top 10 fastest-growing revenue and net income lists is indicative of a maturing market. "[It] also shows that it is much easier to achieve growth off a small base than a large one," he said. "Note, for example, Microsoft's declining growth rate."
Philipson said that the products and business models of pure-Internet companies in the Top Tech 50 Index, namely Google, Baidu.com and Yahoo, more than any other vendor, are indicative of the way the industry is headed.
"Search players will maintain momentum because they are at the vanguard of the new information paradigm. Most other vendors, for all their success, just don't get it," he said.
Hennes also expects Indian and Chinese companies, such as Baidu.com, to continue their outstanding growth momentum into the next year.
"China and India have large markets, which is really what gave the United States its success in the 1950s and 1960s," he said.
India however, he noted, will first have to overcome its infrastructure problem and establish links between their towns, villages and cities. "Once they do that, they can move into sectors such as manufacturing… A lot of manufacturing, and even semiconductor, companies today don't invest and build their assembly sites in India because the country's infrastructure is still not properly established," he said.
China has realized the importance role a good infrastructure plays in its economy, Hennes said, adding that India is starting to follow suit.
"I fully expect more Indian and Chinese companies to make the Top Tech 50 list in coming years."
However, Asian companies will first have to address the challenge of working seamlessly across the region's multiple diverse markets. "It's not an easy market, even for the foreign markets, to penetrate," Hennes said. However, he added that there is an opportunity for Asian software companies to rise to the occasion.
Hennes explained: "Today, there's still no pan-Asia supplier, particularly in software field. that supplies across all of Asia. And I'd like to see a software company that can pose a challenge to some of the bigger guys."
He noted that Asian businesses, particularly those in the midsize market, do not need the bells and whistles that large software suppliers such as Microsoft, currently offer.
"These businesses have very specific cost limitations, and have specific requirements that can be easily met with mid-market technologies and services," he said.
- Latest global revenues (15%)
- Latest global net income (15%)
- Average year-on-year revenue growth over 4 years (25%)
- Average year-on-year net income growth over 4 years (10%)
- Global headcount (10%)
- Asian presence in 10 countries: China, Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, Taiwan, Thailand and Vietnam (25%)
Top Tech 50 winners are also tagged, according to the products and services they provide, into eight key industry categories:
|1. Systems||5. Networking and Communications|
|2. Storage management||6. Security|
|3. Software infrastructure||7. Services|
|4. Business applications||8. Internet services (including Web 2.0)|
Note: Data correct as at September 2006. Information was compiled by ZDNet Asia from sources such as official reports, corporate Web sites, and Hoover's. ZDNet Asia strived to get the latest information but does not guarantee the correctness or completeness of the data. The information provided on this site is for general informational purposes only and is not an offer to buy or sell any securities.