The rise of global players among software developers in the region and the growing adoption of service-oriented architecture among users are among IDC's key predictions expected to shape the IT industry in Asia Pacific in 2007.
The following are IDC's top 10 predictions:
1. China and India continues to lead the pack as the next opportunity - emerging Asia - approaches BRIC (Brazil, Russia, India and China)-like growth rates
GDP growth in China and India are predicted to hit 8.3 percent and 7.7 percent, respectively. As economic growth rates cool slightly, these countries will be pushed to look at domestic markets as recent years of prosperity drive IT infrastructure build-out and the closing of domestic urban/rural gaps. These developments will require vendors to have very deep sub-regional local knowledge to extract big wins in these markets. Further, Emerging Asian Countries (EACs) - Bangladesh, Pakistan, Sri Lanka, and Vietnam will see spending power and IT infrastructure budgets accelerate to approach similar growth rates of BRIC.
2. Eastern heroes emerge to capture regional and global software markets
The rise of "Eastern Heroes" includes the likes of UFIDA Software Co. Ltd.'s UFSoft, Kingdee International Software Group Co. Ltd., Mincom Ltd., Ahnlab Inc., and Rising Software Australia Pty Ltd. to take the lead will give more established global vendors a run for their money. These firms have regional and even global ambitions, particularly in the underserved SMB markets. They are bolstered by their belief that they have far more practical experience to integrate into their solutions and hence able to build applications that are simple to roll out and easy to manage.
3. SOA momentum gathers with new entry points
Nearly two-thirds of midsize and large corporate firms in Asia Pacific Excluding Japan (APEJ) will commit to early stage service oriented architecture (SOA) adoption in 2007, with initial projects concluding in 2008. The appeal of SOA has to be tempered with caution regarding internal process assessments and re-engineering. As many corporations in the region are still struggling with managing business processes, a near-term opportunity may lie with vendors and systems integrators to aid with both re-engineering and roll-out.
4. Consulting and systems integration vendors refine delivery models to improve profitability
As vendors have been forced to over-commit with extra services to meet tight delivery timelines, profitability has often taken a beating. Consulting and systems integration (C&SI) firms will, in 2007, take a more discreet service approach to counter the erosion of their profitability through "standardization" of these services. These services will have standard prices, fixed service level agreements and pre-defined deliverables.
5. BPO customers test drive before making long-term commitments.
New BPO projects will be won from Asian customers through the provision of short term pilot projects first, then followed by long-term contracts after the BPO vendor proves capable of meeting the Asian customer's needs. This is a different model from the typical one to serve Western clients, who are more willing to transit to BPO based on compelling economics. The vendor-customer relationship is key to Asian clients, and BPOs will deliver this through service innovation in 2007.
6. Vendors chase the long tail in the SMB market
2007 will be marked by an aggressive focus from all major vendors to broaden and deepen their coverage of the SMB sector in the APEJ region. The region's SMB market has seen growth rates in recent years approaching 10%, with the SMB market breaking US$52 billion in 2007.
7. Services get caught in the wireless mesh
After much hype, 2007 will finally be the year where wireless mesh services will emerge in Asia. Existing deployments in Taipei will push Malaysia, Singapore, and others to champion their own metropolitan and regional networks, offering wide-area coverage and limited mobile voice over IP (VoIP) capability. IDC expects the wide-area metropolitan Wi-Fi market to double in 2007 to US$250 million.
8. Fixed-Mobile-Convergence enables mass-market consumer mobility
IDC predicts that telecom network operators will begin initial deployments of fixed-mobile convergence (FMC) services in 2007. Technologies such as WiMAX, mesh networking, peer-to-peer computing, software-defined radio equipment, USB-based HSDPA modems, and IPv6 upgrades to Internet equipment have helped push the capability and desirability of FMC services and networks.
9. The evolution of laptops take over both mature and emerging markets in Asia by storm
Notebooks will be the fastest-growing PC form factor in the APEJ region with over 25 percent unit growth in 2007, driven by low prices and growing awareness that help to create more multiple PC households and increased migration away from desktops. While notebook growth is aggressive, IDC predicts the 3G-enabled notebook segment will disappoint in 2007, with bottlenecks at the network operators causing delayed demand.
10. Content is king as HDTV and IPTV emerge in Asia/Pacific
Both high-definition television (HDTV) and IPTV have seen significant growth in recent years. For HDTV, the adoption of high-dollar HD-capable TV sets is expected to pick up as viewers adopt equipment in preparation for HD broadcasts of the 2008 Beijing games. IPTV has seen astonishing growth rates, which will continue in 2007 and 2008 at 76 percent and 168 percent respectively. In both cases, however, the lack of content, due largely to regulatory lags with HDTV and geographic exclusivity with IPTV, currently inhibits large scale levels of uptake.