Market Overview South Korea's IT market is projected record single-digit growth in 2011, consolidating an upturn in IT demand in 2010. BMI expects South Korean IT spending to increase from US$17.3bn in 2011 to around US$23.6bn in 2015. There will be a number of key drivers and growth trends including notebook PCs, IT outsourcing, hosted applications and industry-specific software applications. In 2011, consumer segment IT growth should be solid as the Korean economy posts continued growth. Growing broadband penetration and demand for tablets and other new form factors will continue to be PC market growth drivers. New cloud computing offerings should fuel further demand from companies to utilise this technology and drive investment in data centres. Korean financial services institutions are investing more in customeroriented strategies and to streamline complex operating environments. Industry Developments South Korea announced that it was to spend US$224.5mn to prepare to launch fully fledged cloud computing services in 2010. Around 73% of the funds were to come from the state, with the money being used to develop technology and build infrastructure required to support the service. The government will also move to reform potential administrative and legal barriers to cloud computing, which it aims to complete by 2013. A particular focus for government is encouraging utilisation of cloud computing by small businesses. In 2011, the Korea Technology and Information Promotion Agency for SMEs (TIPA) will launch programme for SMEs, under which between 50%-70% of the costs of cloud services are eligible for subsidy. A pilot project was run in 2010 and many leading telecoms and IT service providers are expected to participate in the tender. South Korea plans to invest KRW400bn (US$341.1mn) by 2013 to help develop the domestic software industry. In 2010, the government announced that it would spend US$27.4mn in 2010 on support for a software training programme that will aim to produce more software entrepreneurs. Competitive Landscape In July 2010, Microsoft announced that it was partnering LG Uplus to launch cloud computing services in South Korea. The two companies said that they would first form teams to study technical and business feasibilities. The partners hoped to help South Korean businesses improve productivity through delivery of cost-effective, easy-to-use services and applications such as ERP, HR, CRM and other business solutions on demand. Telecoms companies are also moving aggressively into the IT services space. SK Telecom said that its business-to-business services would start to generate revenues in the second half of 2010. A bigger expansion of sales is expected from 2010. In December, KT said that it targeted KRW700bn (US$612mn) in annual sales in cloud computing by 2015. In November 2010, telco KT was launched via Samsung's Android-based Galaxy tab, which offered 3G, Wi-Fi and Bluetooth connectivity options. It was predicted that the device would retail for around KRW800,000 in Korea unsubsidised. The device was Samsung and SK's attempt to pre-empt the iPad in the Korean market.

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