Internet continues growth in midst of Asian turmoil

The outlook is bleak for for IT investments in the Asia-Pacific region this year, according to a new study by Access Media International (AMI), a research and consulting firm for computer companies. But the firm expects Internet technologies to buck the trend and continue to carve a niche in the corporate business sector. Australia and Korea are expected to record the largest growth rate in corporate spending on Internet and related technologies

While the region's financial and economic scenario paints a bleak picture for IT investments this year, Internet technologies will continue to carve a niche in corporate business, according to a 1997 Asia-Pacific Internet study by Access Media International Inc. (AMI), a research and consulting firm for computer companies.

“Although revised to reflect the effects of the ongoing financial turmoil, expected spending by corporate organizations in Internet and related technologies appear to be encouraging, compared to overall IT investments,” the study said.

Findings of the 14-country corporate user study indicated that in seven out of eight developing markets in the region, Internet and related spending by organizations with more than 100 employees is expected to be between 21%and 89%of their overall projected IT expenditure.

“Organisations in countries like Indonesia, the Republic of China, and Vietnam are expected to spend 30%or more of their entire IT budget on Internet technologies this year,” said the study which surveyed more than 150 Internet service providers (ISPs) and 1,500 corporate users throughout Asia-Pacific.

Australia and Korea are expected to record the largest growth rate in corporate spending in Internet and related technologies in 1998 over last year. While the growth in average Internet spending in Asia is expected to range between 20%to 35 percent, Korea and Australia are projected to register growths of 53%and 43%respectively.

The AMI study also highlighted growing interest in intranets and virtual private networks (VPNs) in both medium and large enterprises. The study predicts 46%of medium-sized businesses and 23%of large businesses will have invested in both networks by the end of this year.

About 73%of medium-sized and large enterprises in Japan are expected to have intranets installed in 1998, compared to 56%for the rest of Asia. Internet-based virtual private networks penetration is expected to be 33%for Japan and 21%for the rest of Asia.

This continued spending in Internet technologies amidst economic turmoil could be due to intranet projects that were commissioned in late 1996 and early 1997 and are now taking place, the AMI study said.

Furthermore, while the current economic turmoil is likely to affect spending on Internet-related technologies to some extent, it will not be drastically reduced because of the focus now on e-commerce, according to Pete Hitchen, International Data Corp. Asia-Pacific senior Internet analyst.

“Businesses have to get on the e-commerce tidal wave to stay competitive and look into moving towards Internet-based platforms,” Hitchen said.

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