Market Overview
The Colombian IT market is one of the least developed in the Latin America region but is projected togrow at a compound annual growth rate (CAGR) of 11% over the 2007-2012 period. While four years ofcivil war have impeded information society development, the total value of spending on IT products andservices should pass US$2bn in 2009 and US$2.5bn by 2012.
Despite faster hardware spending growth in 2007, a PC penetration rate of around 10% is one of thelowest in the region and indicates plenty of potential for organic growth. The consumer-driven economicboom of recent years is expect to moderate over the next few years, but is still likely to be healthy in the4%-5% range, providing a framework for growing spending on IT products and services.
Government programmes also provide an important context for market development. The governmentsees increased ICT spending as a key means to advance its central strategic goal of helping the country torecover and reintegrate former armed rebel groups.
The retail PC sector should anyway continue to increase in significance, although growth will likely beslower than in 2007 when there was a boost from the introduction of a tax exemption for PCs. Economicgrowth should also continue to encourage hardware by companies, which are the mainstay of the marketcurrently. While the majority of demand, around 75%, still comes from the large company sector, smallercompanies will become more a more significant focus for vendors.
Industry Developments
In 2007 Colombia’s High Council for Reintegration (ACR) launched an initiative to widen digitalinclusion for Colombians, including those previously involved with armed rebel groups. The programme,called Zona Clic, aims to bring 90,000 computers with printers to public access areas. The target is toinstall 2500 modules a month, and it is planned that the programme will be present in 55 cities and townswith more than 100,000 inhabitants.
Meanwhile, the Colombian government also announced that it will spend COP15bn between 2008 and2011 on an ambitious new programme of building digital cities and towns. The programme, announcedby Communications Minister Rosario Guerra, has set a target of 20 districts and six departments withinternet access within the next four years.
Colombia Information Technology Report Q1 2008
Competitive Landscape
Colombia’s PC market is seeing leading international vendors increasingly targeting the residential sector.In September 2007 HP launched a number of new mobile and PC devices with features targeted at retailcustomers. Meanwhile, Dell has launched a new distribution strategy by signing agreements with localretailers Exito, Carrefour and Falabella. Lenovo has also announced plans to target the residentialsegment.
The fastest growing segment of the IT market is, however, expected to be IT services. In 2007 leadingvendor IBM won a US$12mn outsourcing contract from Colombian airline Avianca to manage itsinformation technology. IBM is also targeting opportunities in the telecoms sector, setting up a new unitin 2007 specifically to develop solutions for telecoms companies.
Computer Sales
BMI is projecting that Colombia’s computer and accessories market will have a CAGR of around 6%over the 2007-2012 period. For 2007, computer sales were put at US$676mn, and should pass theUS$900mn mark by 2012. Sales should rise some 6% in US dollar terms in 2008 to reach US$727mn.The fastest growing segment is notebooks, which enjoyed triple-digit growth in 2007 compared with theprevious year and accounted for around 30% of unit sales in some quarters. The introduction in December2006 of a tax exemption for PCs costing under COP1mn (US$850) led to fast PC sales in the first half of2007.
Software
Colombia’s software market is estimated to have been worth US$283bn in 2007, and the figure for 2008is expected to come out at around US$304bn. Software has opportunities for growth over the next fewyears, despite a relatively high software piracy rate. Software piracy was estimated to account for 69% ofsoftware in 2006, but last year the government mounted a more sustained campaign to reduce this. Thesoftware sector’s growth will be sustained in the short term by continuing demand for basic solutionssuch as ERM and supply chain management systems.
IT Services
Colombia’s IT services market is estimated to have grown around 10% in 2007 to a value just aboveUS$680mn, with growth of around 9% expected in 2008. For a developing market, the percentage of ITmarket revenues generated by services is currently around 39%, high by emerging market standards andabove the regional average. Most demand, around 75%, still comes from the large company sector, butsmaller companies are also now becoming more sophisticated. In the last year or two there has been atrend towards bigger managed service and outsourcing deals.
Colombia Information Technology Report Q1 2008
E-Readiness
According to BMI estimates, the number of Colombian internet users reached 8.5mn in 2007,representing 18% of the population. The percentage of broadband subscribers in the general population,however, was only 2.4 % with just over 1mn subscribers.
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