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IDC’s Minton untangles developing markets

 

More than half of IT spending growth this year will come from emerging markets, IDC predicted last month. Asia Pacific (except Japan), Central and Eastern Europe, Latin America, the Middle East, and Africa, which compose the research firm’s emerging market category, will grow in IT spending 2.6 times faster than the developed world. Brazil, Russia, India and China will account for half of emerging-market IT spending, with China creating half of those four countries’ combined demand.

To learn why emerging markets are driving such impressive growth and what form their spending might take, IBM Systems Magazine spoke with Stephen Minton, vice president of IDC’s worldwide IT markets research group.

Q: Can you put emerging-market IT spending into historical perspective?

A: In 1995, emerging markets made up about 9 percent of global IT spending. By the end of 2009, we’re up to 20 percent—a fifth of IT spending. So within that 14 to 15 year time span, it’s more than doubled as a percentage of the world.

In the context of why these markets are growing, a lot of that is to do with how much room there is for growth in these countries, because the penetration of IT is still relatively low, which is why these are still important markets even though they’ve already grown for the last 15 years. Obviously it’s not a new story; IT vendors have been investing in emerging markets since the 1990s, and especially over the last decade, trying to build a presence because everybody’s known that the growth would be coming from these countries. So it is that lower penetration rate and it is an ongoing cycle.

We’ve gone through a stitch where these countries have largely been just about building infrastructure and things like PCs. Now, IT is becoming a little bit more entwined with the overall economy and you have much faster consumer adoption and also enterprises starting to do more similar kinds of computing applications that companies are doing in mature economies. And so it’s a continuing evolution in terms of where the growth is coming from. Originally it was all PCs. There was very little install base for telecom equipment, and servers and storage and software spending was very low because you had very high rates of software piracy in countries like China. So it’s really more recently that the growth has started to move beyond the PC market and into other markets, like enterprise computing and software.

 

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