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Argentina Information and Technology Report Q1 2008Product Type: Market Research ReportPublished by: Business Monitor International Published: February 2008 Product Code: R302-2427 Description Market OverviewThe Argentina IT market is the second largest in the Latin America region and is projected to grow at acompound annual growth rate (CAGR) of 9% over the 2007-2012 period. The total value of IT spendingon IT products and services should pass US$3bn in 2009 and be approaching US$4bn by 2012. Despitedouble-digit growth in the PC sector in 2007, a PC penetration rate of around 22% currently indicatesplenty of room for growth. The overall economic outlook is constructive for growth in IT spending withthe consumption-led economic expansion exceeding expectations in 2007 when GDP growth was around8%. With the continuing recovery from the economic crisis of 1998-2002, company spending on IT productsand services is likely to approach pre-crisis levels during our forecast period. The consumer segmentshould also continue to register strong growth due to rising incomes and the cheaper US dollar, and moreflexible terms from retailers. Government spending will remain a key support to the market. However, anumber of risks pertain to our forecast scenario. The market is characterised by significant income andgeographical disparities, and the financial turmoil surrounding the US credit woes could have a negativeimpact on Argentina’s economic growth outlook. Industry Developments 2007 saw the continuation of government efforts to expand computer penetration to under-servedsegments of the population. In July the government launched a new government initiative PC Abuela, or‘Grandmother PC’. As the name suggests, the programme is aimed to overcoming a particular digitalaccess gap, that of low PC penetration among pensioners. With 10% of the population over 65, this grouphas been identified by the government as a key demographic for its campaign to reduce the digital divide.Meanwhile, in 2007 Telefónica Negocios, a unit of regional telecoms giant Telefónica that offersservices to SMEs and professionals, launched a programme aimed at encouraging computer use by SMEs.Under a special promotion called ‘Puesto de Trabajo’, customers signing up to an internet and voicepackage with Telefónica will receive a free computer together with maintenance and support, andsoftware licences. Competitive Landscape Argentina’s booming PC market is providing an opportunity for local brands such as Air Computers,Ceven, PC Arts and Sicsa to grow. Leading local vendor Sicsa plans to strengthen its market positionthrough a US$5mn plan to upgrade and expand production facilities. However, foreign companies areArgentina Information Technology Report Q1 2008strong in the laptop segment where Dell, HP, Lenovo, Toshiba, and Apple are among the marketleaders. SAP is the market leader in the growing enterprise applications segment, which is also attracting newinvest from vendors. In 2007 SAP set up a US$2.5mn shared services centre in downtown Buenos Aireswhich will have fifty employees. In the IT services segment there has been a growing number of largedeals with international vendors such as IBM among those benefiting. In 2007 Argentina’s fourth largestfinancial institution signed an agreement with IBM for servers and applications migration. Computer SalesBMI is projecting that Argentina’s computer and accessories market will have a CAGR of at least 8%over the 2007-2012 period. For 2007, market revenues were put at US$1.29bn, and should beapproaching the US$1.8bn mark by 2012. Annual computer sales, currently around 1.5mn units a year,are increasing at a rate of around 20% a year. As elsewhere in Latin America, the main drivers of growthinclude the fall in the value of the US dollar as well economic growth and rising incomes, which arebringing computers within the reach of a greater proportion of the population. Affordability has also beenboosted by a greater availability of financing options from retailers and vendors with governmentencouragement. SoftwareArgentina’s software market is estimated to have been worth US$422mn in 2007, and the figure for 2008is expected to come out at a little more than US$464bn. Software CAGR for 2007-2012 is projected ataround 10%, despite high annual software piracy losses. Enterprise software accounts for around half oftotal software revenues. The main functional category currently remains ERP solutions, estimated toaccount for more than 80% of the enterprise software total. Demand will remain strong in the near-termdue to the large potential market represented by SMEs in many parts of the country. IT Services Argentina’s IT services market is estimated to have grown around 11% in 2007 to a value of just short ofUS$700mn, with similar growth expected in 2008. For a developing market, the percentage of IT marketrevenues generated by services is fairly typical at around 25%, but lower than some other countries in theregion where the services share is already above 30%. However, services revenues are expected to growfaster than for the market as a whole, with CAGR for the 2007-2012 period in the low double-digit range.Argentina Information Technology Report Q1 2008 E-Readiness Argentina possesses one of the most dynamic telecoms markets in the region, with a dramatic expansionin the number of mobile subscribers over the past years. Fixed line penetration is also among the highestin the region, providing a good platform for strong growth in broadband services adoption. According toBMI estimates, the number of Argentine internet users reached 12.2mn in 2007, representing 31% of thepopulation. The percentage of broadband subscribers in the general population was 5.6%, compared with2.2% in Brazil. Table of Contents
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