Small and medium businesses (SMBs, or companies with up to 999 employees) in the Philippines are on track to spend US$1.3 billion on boosting their IT infrastructure this year, up some 19% over 2006. Much of this spending will be driven by computing"” which includes PCs, printers, peripherals and servers"”as well as Internet-related investments. These together will account for more than 70% of all IT spending. This comes from the latest study by New York-based Access Markets International (AMI) Partners, Inc.
"Most SMBs in the Philippines are boosting investments on computer hardware and Internet-related technologies as they build the basic blocks of IT infrastructure," says Ruth Garin, AMI's Singapore-based Research Analyst. "SBs (small businesses, or companies with up to 99 staff) will use up more than 80% of their IT budgets on computing and Internet connectivity, while MBs (medium businesses, or companies with up to 999 employees) will spend more than 50% of IT budgets on these two areas."
The two key reasons for the increase in IT spending is awareness and realization that IT will help boost business, and that IT will improve delivery of products and services. "In addition, strong competition among IT market players offers wider technology opportunities for SMBs," Ms. Garin says. "At the moment, the Philippines is one of the top five countries in the Asia-Pacific region outside of Japan, with the fastest IT growth rates."
In the Philippines, end-user price is one of the major hurdles to IT adoption. Thus, bringing IT prices down to the level where budget-conscious SMBs can afford to buy, will ensure a healthy market uptake. "Besides computing and Internet spending, SMBs are also spending on boosting data security," Ms. Garin says. "The market for data security solutions among SMBs is set to grow by almost 30% this year. Securing the data and network is similar to prolonging the life of an IT investment. More SMBs are becoming more aware of cyber-threats and want to take measures to protect their data."
The majority of IT spending is coming from SMBs around the capital, also known as the National Capital Region (NCR) - composed of 17 major cities and municipalities. The NCR makes up more than 50% of the total IT spend this year. Being the center of major business activities in the country, NCR brings in the majority of IT investment. SMBs in this region are more likely to adapt faster to market needs.
Outside NCR, faster market developments are also happening in key cities in the CALABARZON and Central Visayas regions. Major cities in these two regions will account for up to 10% of the total IT spend with an annual growth rate of 13%. The development of the manufacturing industry and its expansion into these regions are boosting IT investment. Aside from this, growth in the retail industry is also encouraging.
"In a market as geographically dispersed as the Philippines, finding key markets and having a targeted approach will be key in identifying market opportunities. This will definitely provide a greater competitive advantage among market players and an effective way of channeling their resources," Ms. Garin says.
About the Study
AMI's Asia/Pacific SMB Global Model Market Forecast combines primary and secondary research to develop overall SMB market sizing and forecasts. The SMB Global Model tracks a broad spectrum of products and services, including computing, internet and connectivity, networking, storage, security, software, telephony, and services and support. Additionally, it also provides firm counts as well as shipments and installed base data for an extensive list of categories.
For more information about this study, AMI-Partners, or our global SMB research, please call 212-944-5100, e-mail ask_ami@ami-partners.com, or visit the AMI Web site at www.ami-partners.com.
About Access Markets International (AMI) Partners, Inc.
AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital, and actionable market intelligence "” with a strong focus on global small and medium businesses (SMBs), and extending into large enterprises and home-based businesses. The AMI-Partners mission is to empower clients for success with the highest quality data, business strategy perspectives and "go-to-market" solutions. Led by Andy Bose, the firm has built a world-class management team with deep experience cutting across IT, telecommunications and business services sectors in established and emerging markets.
AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last ten years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys in more than 25 countries; and its proprietary database of SMBs and SMB channel partners in the Americas, Europe and Asia-Pacific. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.
