North America's share of the IT market is shrinking as China's
share grows, said Philippe de Marcillac, president of the
international business unit at research company IDC.
He forecasts that the IT market will more and more resemble the
telecom services market, where North America's and Europe's market
shares are decreasing while the emerging countries' market share is
growing rapidly.
In 2006, GDP growth in China will reach 9.2 percent and India's
8.1 percent, he said. In contrast, New Zealand's GDP growth is
forecasted to be 2.2 percent, the US will have a GDP growth of 3.2
percent and the EU's GDP will grow only 2.1 percent.
"The growth in the EU is going down, possibly due to lack of
investment," he said. Japan is decreasing slightly by 2.3
percent.
Some of the factors that affect growth in the IT market are
availability of talent and the increasing cost of labor, said de
Marcillac. China currently has five times as many engineering
graduates as the US, he said. The emerging countries also have an
advantage in demographics. Twenty-seven percent of the population
in emerging countries are between 15 and 29 - the "MySpace
generation" as de Marcillac calls it - compared to 18 percent of
the population in mature countries. Thirty percent of the
population in the emerging countries are under 15, while the
equivalent number in mature countries is 15 percent.
"China is the fourth largest economy this year," said de
Marcillac. "It is the number one high tech exporter. China has
overtaken Germany as the third largest telco services market, worth
US$72 billion (NZ $115 billion). China is also the sixth largest IT
market, worth US$35 billion."
China is also a major manufacturing center, but the U.S. is
still the leader.
Among the challenges that China faces are competition from India
and other emerging Asian countries, and demographics, said de
Marcillac. He said that inflation is definitely coming in China due
to the one child per family policy, which will result in a
declining working population, but at the same time there are a lot
of workers tied up in "useless employments" as an alternative to
unemployment.
India is another country with high potential, he said. "India is
a very important part of the offshore market."
The country's IT revenue in 2005 was just over US$30 billion.
The forecast for 2006 is close to US$40 billion, and the forecast
for 2009 is over US$60 billion.
The IT spending in the BRIC-countries - Brazil, Russia, India
and China - is expected to rise from US$50 billion in 2004 to
US$115 billion in 2009, said de Marcillac.
"These markets will have the same share as Japan in 2009," he
said.
The top economies in 2050 are very likely to be China, followed
by the US and India. Far behind come Japan, Brazil, Russia and then
the EU, according to de Marcillac.
"But it is also possible that India will be number one," he
said.
Caveats that could hold the emerging markets back include
inflation, insolvency, inefficiency, insurrection, inept
administration, corruption and lack of infrastructure, he said.
De Marcillac foresees significant changes in IT as we know it
today. For example, datacentres will move towards virtualization
and service-oriented architecture. Trends in the software area are
new business models, software for rent and development of open
source. Phone, IP and mobility networks will converge, as will
clients.
De Marcillac spoke at the recent IDC Directions conference in
Auckland.
IDC is owned by International Data Group Inc., which also owns
IDG News Service.
icon.
