Mobile and e-commerce IDC's hotspots

Growth in the New Zealand IT market is coming from software and services, not traditional hardware sectors, says market researcher IDC. E-commerce is on the point of taking off and wireless device use will explode.

Growth in the New Zealand IT market is coming from software and services, not traditional hardware sectors, says market researcher IDC. E-commerce is on the point of taking off and wireless device use will explode.

Those were the main themes of IDC's annual New Zealand market overview, delivered by the company's local head, Dinesh Kumar, in Auckland this week.

IDC estimates the New Zealand IT market will grow by $100 million from $4.7 billion in 2001 to $4.8 billion this year.

Annual compound growth of 2% to 3% over the next five years is expected, giving a total IT spend of $5.7 billion in 2006.

IT services currently make up 45% of this and its market will grow by 5.7% this year.

Packaged software, responsible for 17% of IT spending, will grow by 4.5% in 2002.

Datacom equipment sales (5% in 2001) will grow by 8.5% and the server market will grow by over 10% this year, IDC believes.

But the single user systems market (currently 26% of New Zealand’s total IT spend) will slump by 10.5%, IDC estimates.

Kumar told the 100 or so IT business leaders present that this was because New Zealand has a highly mature market.

IDC expects the “Top Five Opportunities” will be in e-business, wireless web, network storage infrastructure, security solutions and digital identity.

“Despite the doom and gloom surrounding internet stocks, e-commerce will continue to grow at a healthy rate,” says Kumar, with sales rising from round $US600 million to over $US2 billion in 2002.

That will drive IT spending, Kumar says, as it creates a market for enterprise application services and enterprise integration software.

Mobility will be the second major trend, believes IDC. Wireless internet use will explode from to 30,000 to 35,000 users in 2002 (less than 5% of total net users) to 450,000 in 2005 (20% of the total). Half of new users will be mobile, says Kumar, presenting “huge opportunities for new mobile devices, applications and particularly services”.

The network storage market will also grow 50% over the next five years from $85 million to $120 million as firms increasingly realise the value of keeping information.

Internet security will also grow in New Zealand and across the Asia-Pacific region. September 11 concerns, says Kumar, saw security shift from the back office into the boardroom and onto the agenda of chief executives.

The market for security products and associated software and services would double, as firms try to ensure business continuity.

“Once again this will provide opportunities for vendors to this very real risk,” Kumar says.

IDC also believes people will tire of having to remember numerous passwords to log into various sites, creating a “ground-swell among consumers and merchants to subscribe to digital identity services”. Consumers will have concerns over security, but will want the convenience of single sign-on.

Kumar says the Asia-Pacific market still has “hot areas” where annual compound growth of 30% to 65% is expected. These include smart handheld devices, application outsourcing, IT consulting, IP VPN, cable access services, voice over IP equipment, security software and network storage.

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