the South Korean IT market is one of the most developed in the region both in terms of adoption by the population and enterprises, and the local base of firms operating in the hardware, software and services markets. There is widespread use of IT products and solutions by consumers, public authorities and enterprises, but even so we expect robust medium term growth. In the retail market short replacement cycles and demand for tablets and hybrids/convertibles will drive sales, while in the enterprise market emerging technologies such as cloud computing, machine-to-machine (or smart) infrastructure, and Big Data will play a key role. An additional driver of growth is the supportive policy environment as the government promotes the development of the local software and services industry.
Headline Expenditure Predictions
- Computer Hardware Sales: KRW5,404bn in 2013 to KRW6.623bn in 2017, compound annual growth rate (CAGR) of +5.1% in local currency terms. South Korea was one of the first markets where demand for hybrid form factors gained momentum, but growth will continue to be driven by tablets in the shortto- medium term.
- Software Sales: KRW7,463bn in 2013 to KRW9,675bn in 2017, CAGR of 6.3% in local currency terms. The security software market is poised for strong growth due to tensions with North Korea, with local firms expected to benefit.
- IT Services Sales: KRW8,984bn in 2013 to KRW12,865bn in 2017, CAGR of 9.2% in local currency terms. Cloud computing service adoption is becoming more widespread among enterprises, and there is scope for growth through more complex deployments.
Key Trends And Developments
The South Korean government continues to play an important role in the development of the IT sector. It formerly promoted the hardware industry, but in 2013, it turned attention to the software and services market. One measure it has take is to promote smaller local IT service providers by awarding government systems integration contracts to them, rather than the large conglomerates such as Samsung SDS, which has subsequently turned to international opportunities. The government's decision around systems integration procurement will benefit smaller firms and so help them to achieve the scale required to become more competitive.
Another area the government is active in is the cyber security ecosystem, which is a pertinent issue in South Korean due to tensions with its northern neighbour. Following another large-scale attack in June 2013, the government created a cyber security policy group, which is pursuing sector-specific initiatives (ie requirements on the financial sector to build portioned networks), and is embarking on an effort to train large numbers of security experts. BMI believes the government may have to ramp up its efforts due to its high exposure to cyber attack from the activities in North Korea, and its plans to promote the use of emerging technologies such as smart utilities and Big Data in critical industries.