South Korean IT spending is expected to reach KWD21,930bn in 2013, up 6.6% from 2013. South Koreans already enjoy per capita incomes that are high by regional comparison, and strong economic growth is forecast to return after a slowdown in 2012. This will sustain IT market growth for the duration of our forecast period to 2017. In addition to a strong macroeconomic backdrop, we believe South Koreans will increasingly choose to spend on IT products as multiple PC households become more common. Demand for tablets and notebook hybrids will be popular as price competition deepens the market. There will be a number of key drivers and growth trends in the enterprise market, including cloud computing, IT outsourcing and industry-specific software applications.
Headline Expenditure Predictions
- Computer Hardware Sales: KWD5,144bn in 2012 to KWD5,423bn in 2013, +5.4% in local currency terms. Tablets will see strong growth in 2013, as well as other form factors including hybrids, as the launch of the Windows 8 operating system introduces touch functionality to a wide range of vendors.
- Software Sales: KWD7,121bn in 2012 to KWD7,490bn in 2013, +5.2% in local currency terms. Trend in the South Korean software market is towards specialised vertical-specific application packages.
- IT Services Sales: KWD8,301bn in 2012 to KWD9,016bn in 2013, +8.6% in local currency terms. Cloud computing is expected to gain more traction in 2013, both among large enterprises and SMEs.
Risk/Reward Ratings: South Korea sits in fourth position in our Asia-Pacific ratings table with a score of 65.2. It sits below Singapore, Australia and Hong Kong, but ahead of Malaysia and China.
Key Trends And Developments
The improved performance of the South Korean economy is expected to be the key catalyst for faster growth of the IT market in 2013. However, there is downside risk to this outlook due to the derailing of the global economic recovery. IT spending in export-dependent South Korea remains vulnerable to uncertainty in the global economy and a hard landing in China or a shift in market sentiment around the eurozone crisis, and specifically Spain's refinancing requirements in 2013, could have a knock-on effect.
Sectoral trends include the demand for new form factors such as tablets, slimline notebooks and hybrids in the retail market - and cloud computing by public and private institutions. South Korean government agencies are adopting cloud computing and the Ministry of Public Administration and Security is investing in cloud technologies for national computing resources. The Ministry of Knowledge Economy has launched a study of how to combine green IT with cloud platforms. Demand from the financial segment should also be a growth area, with financial services institutions investing in more customer-orientated strategies and streamlining complex operating environments. Growing demand for cloud computing services will also generate opportunities and investments in datacentres.