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Hong Kong Information Technology Report Q4 2010

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Market OverviewBMI forecasts the Hong Kong IT market will grow from around US$4.7bn in 2010 to US$5.8bn in 2014.Computer sales were on an upwards trend in H110, with retail demand leading the way as the economyrecorded positive growth following a contraction in 2009. The government sector is expected to be a keydriver, along with stronger demand from the corporate and small and medium-sized enterprise (SME)segments.IT market growth is forecast at 7% in 2010, but much will depend on continued business and consumerconfidence in the economic recovery. In 2010, consumer spending is expected to remain strong, asevidenced by strong demand for Apple's iPad. Loan advances continued to grow strongly into May, whileimports also increased.The IT market will be supported by initiatives encouraging the integration of Hong Kong's economy withmainland China and the abolition of taxes on cross-border trade. Recent integration of PCs with wirelessnetworking technologies, as well as the roll-out of 3G mobile networks and popular converged servicessuch as internet protocol television (IPTV), are also drivers.Industry DevelopmentsIn February 2010, Hong Kong Financial Secretary John Tsang's maiden budget was broadly positive forlocal IT market growth, as the government looked to strengthen the economic recovery. TheHKD317.2bn (US$40.82bn) budget was composed of higher expenditure and one-off relief measures tosupport domestic demand and lower-income households. Government fiscal stimulus, including tax relief,was aimed at boosting consumer confidence. In 2009, projects being implemented by Hong Kong publicsector organisations included development of a city-wide system for sharing electronic health records andan e-procurement system for the office of the Chief Information Officer.Beijing made it easier for mainland Chinese residents to apply for visas, increasing the number of visitorsand boosting the Hong Kong computer market during the economic slowdown. Many mainlandersvisit Hong Kong to purchase notebook computers, digital cameras and other devices. The visa reform waswidely perceived as a gesture to help Hong Kong fight the economic crisis.Competitive Landscape2010 is projected to be the year of tablet notebooks, spearheaded by Apple's iPad. In July 2010, officialversions of the iPad became available from mobile telecom service provider 3, as well as authorised HongKong resellers and the online Apple store. The iPad is relatively high priced, but seems likely to appeal tofashion-conscious early adopter Hong Kong consumers. Meanwhile the device has also won somecorporate customers, including the InterContinental chain of hotels.Also in July 2010, HP Enterprise Services announced it had signed a 10-year contract with the HKSARgovernment to help Hong Kong public libraries implement and provide ongoing support for a newintegrated library system (ILS). The Virtual ILS system is scheduled to be implemented at Hong KongPublic Library in 2011, and will include a radio frequency identification (RFID) technology to enableautomated management of book borrowing rights.One feature of the IT services competitive landscape is the increasingly aggressive move of telecomsservice providers into the IT services space. In May 2010, PCCW Solutions launched its own cloudcomputing service. Local telecoms company PCCW has forecast the service will break even within oneyear, and the banking and retailing fields are seen as key areas of potential. Meanwhile in January, HongKong Broadband Network, the broadband subsidiary of local telecoms company City Telecom,announced it had formed a partnership with I-Consulting Group to introduce managed services.Computer SalesBMI forecasts the Hong Kong computer hardware market will be worth US$2.2bn in2010, 9% growth from 2009. In H110 the market rebounded as consumer spending remainedstrong, building on an impressive recovery in H209. However, the most popular area of the computermarket was netbooks, which were estimated to have

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Hong Kong Information Technology Report Q4 2010

  1. 1. Find Industry reports, Company profilesReportLinker and Market Statistics >> Get this Report Now by email!Hong Kong Information Technology Report Q4 2010Published on October 2010 Report SummaryMarket OverviewBMI forecasts the Hong Kong IT market will grow from around US$4.7bn in 2010 to US$5.8bn in 2014.Computer sales were on an upwards trend in H110, with retail demand leading the way as the economyrecorded positive growth following a contraction in 2009. The government sector is expected to be a keydriver, along with stronger demand from the corporate and small and medium-sized enterprise (SME)segments.IT market growth is forecast at 7% in 2010, but much will depend on continued business and consumerconfidence in the economic recovery. In 2010, consumer spending is expected to remain strong, asevidenced by strong demand for Apples iPad. Loan advances continued to grow strongly into May, whileimports also increased.The IT market will be supported by initiatives encouraging the integration of Hong Kongs economy withmainland China and the abolition of taxes on cross-border trade. Recent integration of PCs with wirelessnetworking technologies, as well as the roll-out of 3G mobile networks and popular converged servicessuch as internet protocol television (IPTV), are also drivers.Industry DevelopmentsIn February 2010, Hong Kong Financial Secretary John Tsangs maiden budget was broadly positive forlocal IT market growth, as the government looked to strengthen the economic recovery. TheHKD317.2bn (US$40.82bn) budget was composed of higher expenditure and one-off relief measures tosupport domestic demand and lower-income households. Government fiscal stimulus, including tax relief,was aimed at boosting consumer confidence. In 2009, projects being implemented by Hong Kong publicsector organisations included development of a city-wide system for sharing electronic health records andan e-procurement system for the office of the Chief Information Officer.Beijing made it easier for mainland Chinese residents to apply for visas, increasing the number of visitorsand boosting the Hong Kong computer market during the economic slowdown. Many mainlandersvisit Hong Kong to purchase notebook computers, digital cameras and other devices. The visa reform waswidely perceived as a gesture to help Hong Kong fight the economic crisis.Competitive Landscape2010 is projected to be the year of tablet notebooks, spearheaded by Apples iPad. In July 2010, officialversions of the iPad became available from mobile telecom service provider 3, as well as authorised HongKong resellers and the online Apple store. The iPad is relatively high priced, but seems likely to appeal tofashion-conscious early adopter Hong Kong consumers. Meanwhile the device has also won somecorporate customers, including the InterContinental chain of hotels.Also in July 2010, HP Enterprise Services announced it had signed a 10-year contract with the HKSARgovernment to help Hong Kong public libraries implement and provide ongoing support for a newintegrated library system (ILS). The Virtual ILS system is scheduled to be implemented at Hong KongPublic Library in 2011, and will include a radio frequency identification (RFID) technology to enableautomated management of book borrowing rights.One feature of the IT services competitive landscape is the increasingly aggressive move of telecomsservice providers into the IT services space. In May 2010, PCCW Solutions launched its own cloudcomputing service. Local telecoms company PCCW has forecast the service will break even within oneHong Kong Information Technology Report Q4 2010 Page 1/5
  2. 2. Find Industry reports, Company profilesReportLinker and Market Statisticsyear, and the banking and retailing fields are seen as key areas of potential. Meanwhile in January, HongKong Broadband Network, the broadband subsidiary of local telecoms company City Telecom,announced it had formed a partnership with I-Consulting Group to introduce managed services.Computer SalesBMI forecasts the Hong Kong computer hardware market will be worth US$2.2bn in2010, 9% growth from 2009. In H110 the market rebounded as consumer spending remainedstrong, building on an impressive recovery in H209. However, the most popular area of the computermarket was netbooks, which were estimated to have accounted for 20-25% of Hong Kong notebook salesin 2009.Computer sales are expected to maintain an upward trajectory in 2010, with robust consumer demandsupport by a revival in corporate and SME investment. The Closer Economic Partnership Agreement withmainland China is continuing to expand horizons for smaller enterprises and encourage IT investments.SoftwareSoftware sales are forecast at US$1.1bn in 2010 and are expected to reach around US$1.4bn by 2014.Hong Kong boasts one of the most advanced software markets in the region and software accounts foraround 25% of IT revenues. Indeed, the territory has long been an important market for new launches ofpackaged software products.The release of Microsofts Windows 7 operating system has the potential to stimulate the market. Beyondbasic enterprise resource planning (ERP) applications, business segment growth opportunities includecustomer relationship management (CRM) and business intelligence. As vendors attention turns tosmaller companies, the software-as-a-service (SaaS) model is enjoying increasing popularity in HongKong.IT ServicesIn 2010, the IT services sector is forecast at around US$1.4bn, up from US$1.3bn the previous year. ITservices revenues are then projected to grow at a 2010-2014 CAGR of 5%. The market is expectedto build on a trend towards larger outsourcing projects evident in both the public and private sectors overthe past couple of years: IBM and HP are among those to have won large deals.The governments Digital 21 initiative will continue to generate a number of projects, while one of thehighest IT spending verticals should be the financial sector, where IT systems and processes stillgenerally lag some way behind Hong Kongs status as a leading global financial centre. The IT servicesindustry benefits from Hong Kongs excellent telecoms infrastructure, with Hong Kong being the first cityto fully digitise its fixed-line telecoms networks.CyberportThe Cyberport was designed to provide the city with a major regional hub that would attract leading ITcompanies and professionals. The first phase of the HKD13bn project, developed by PCCW, wasinaugurated in November 2001. After the science park opened in June 2003, it came under criticism forfailing to attract enough tenants to fill the 38,000m2 of office space. This was mitigated slightly when theDutch electronics firm Philips agreed to rent a floor and Microsoft announced it was moving its 250Hong Kong-based employees there. However, high-tech blue chip companies seem to have lost interest,with commentators pointing to the lack of a mature venture capitalist community, favourable egovernmentpolicy or even entrepreneurial spirit. As the Cyberport does enjoy some advantages,including a favourable location and proximity to the vast mainland market, there is increasing demand forthe government to revive the project. Table of ContentExecutive Summary . 5Hong Kong Information Technology Report Q4 2010 Page 2/5
  3. 3. Find Industry reports, Company profilesReportLinker and Market StatisticsSWOT Analysis .... 8Hong Kong IT Industry SWOT .... 8Hong Kong Telecoms Industry SWOT... 9Hong Kong Political SWOT ... 9Hong Kong Economic SWOT .... 10Hong Kong Business Environment SWOT .... 11IT Business Environment Ratings .. 12Asia IT Business Environment Ratings .... 12Table: Asia Pacific IT Business Environment Ratings . 12Asia Regional IT Markets Overview 15Hong Kong Market Overview 22Government Authority 22Mainland China .... 22Background . 22Hardware .... 23Software . 26Services .. 27Industry Developments ... 30Industry Forecast Scenario ... 34Table: Hong Kongs IT Industry - Historical Data & Forecasts (US$mn Unless Otherwise Stated) .. 36Country Context .... 37Table: Rural/Urban Breakdown, 2005-2030 37Table: Consumer Expenditure, 2000-2012 (US$) ... 37Internet .. 38Table: Telecoms Sector Internet Historical Data & Forecasts, 2007-2014 .... 38Macroeconomic Forecast .... 39Hong Kong Economic Activity .... 41Competitive Landscape ... 42Hardware .... 42Software . 43IT Services .. 45Internet Competitive Landscape .... 46Company Profiles ... 48IBM Hong Kong .... 48HP Hong Kong 50Microsoft Hong Kong 51Kingdee .. 53BMI Methodology ... 55How We Generate Our Industry Forecasts ... 55IT Industry .. 55IT Ratings Methodology .... 56Table: IT Business Environment Indicators .. 57Weighting .... 58Table: Weighting Of Components .. 58Sources .. 58Hong Kong Information Technology Report Q4 2010 Page 3/5
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  5. 5. Find Industry reports, Company profilesReportLinker and Market Statistics Payment Information Please indicate the payment method, you would like to use by selecting the appropriate box. Payment by credit card Card Number: ______________________________________________ Expiry Date __________ / _________ CVV Number _____________________ Card Type (ex: Visa, Amex…) _________________________________ Payment by wire transfer Crédit Mutuel RIB : 10278 07314 00020257701 89 BIC : CMCIFR2A IBAN : FR76 1027 8073 1400 0202 5770 189 Payment by check UBIQUICK SAS 16 rue Grenette – 69002 LYON, FRANCE Customer signature:   Please note that by ordering from Reportlinker you are agreeing to our Terms and Conditions at http://www.reportlinker.com/index/terms Please fax this form to: Europe, Middle East and Africa : + 33 4 37 37 15 56 Asia, Oceania and America : + 1 (805) 617 17 93Hong Kong Information Technology Report Q4 2010 Page 5/5

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