IDC has forecast that an expected increase of 22% on smartphone spending and 40% on tablet expenditure, coupled with rosy economy indicators, will drive overall ICT spending in the Philippines in 2014.
"The younger segment of the population make up the new workforce. They have the utmost need to be connected, updated, informed and entertained. In most cases, they also have lower number of dependents. All these characteristics point to stronger demand for anything mobile, whether devices, services or applications,” says Jubert Alberto, Research Manager, IDC Philippines.
Apart from devices, ICT spending starting this year will be impacted by mobility, cloud, big data/analytics and social business, as the Philippines embraces these four key pillars of the 3rd platform, IDC said.
Usage of these technologies is being driven by the need of companies for new and effective ways to market and reach out to targeted customers, said the research firm, as well as increasing ICT demand from small and medium enterprises.
Alberto added, “Based on IDC’s annual Continuum survey, almost 60% of the companies in the Philippines will be more aggressive in their IT expenditure in the coming 12 months compared to a year ago. This would translate to a 20-45% overall increase in total IT spending.”
The following are the top 10 predictions that IDC believes will have the biggest commercial impact on the ICT industry in the Philippines in 2014:
1. Riding on the momentum from 2013, IT spending will grow by 11% in 2014
The combined positive impact of sound economic fundamentals, healthy domestic consumption and relative under-penetration will drive the Philippine IT industry to grow by 11% in 2014. This will translate to a total of US$6.76 billion in total IT spending, with spending on hardware contributing about 76% of the pie, and software and services for 7% and 18% respectively.
Alberto adds, “The expected 6% GDP growth for 2014, rising investments and remittances from overseas Filipino workers (OFWs) and robust domestic consumption will fuel the acceleration of IT spending in the country."
2. Strong telecom spending growth in the Philippines will continue
With a backdrop of expected economic growth and improved government policies, telecom spending in the Philippines is expected to continue its strong growth in 2014. Unlike in other Southeast Asian countries where mobile data will only surpass mobile voice in terms of overall size in 2014, mobile data will continue to drive the Philippines market. Mobile data is expected to grow by 15%, with voice peaking at 7%.
Karen Rondon-Garcia, Research Manager, IDC Philippines, commented: “Popularity of mobile computing devices such as smartphones, mini notebooks and tablets will increasingly translate to actual mobile data usage especially as 3G and 4G coverage improve, and mobile operators become creative in pricing their mobile data services.”
3. The smartphones and tablets craze will continue, opening up bigger opportunities in the 3rd platform space
IDC forecasts 40% growth for tablet shipments to the Philippines in 2014. It is also noteworthy that people in the Philippines patronise local brands more often compared to their Asian neighbours. The country still has a lot of room for growth in the tablet space.
Jerome Dominguez, Analyst, IDC Philippines says, “With the bullish tablet and smartphone growth in the country, novel opportunities within the 3rd platform space of social and mobility will increase - which businesses can utilise to their advantage.”
4. Increasing integration of social media and mobility will give rise to dynamic partnerships and new modes of consumption
With the increase of smartphones and tablets in the Philippines, mobile devices have become the preferred primary devices for consumers. Due to this, social media and mobility have increasingly been integrated. This will put monetisation models for social media, consisting of advertising, usage based platforms and intelligence gathering, at the centre of service providers’ attention this year.
Cecilia Santos, Analyst, IDC Philippines, states, “In 2014, more organisations will see the importance of having visibility in the mobile social network and look for more creative ways of selling themselves to their consumers through app partnerships.”
5. Mobile apps will go more “Pinoy*” than ever
Over the past few years, Pinoy pride has become very apparent. This is driving the need for a plethora of apps developed which have Pinoy flavor and/or which are specific to Pinoy interests and customs. This trend will be likely continue in 2014.
6. Geolocation will unlock opportunities for commerce
Filipinos are increasingly letting their circles know about the places they frequent, from restaurants, to hang out places to vacation spots through social media. This trend has influenced IDC to forecast that geolocation information will be the game changer in 2014.
Such data could allow marketers to study the behaviour of current and potential customers based on the places they frequent, their social activities, and interests.
7. Pervasiveness of mCommerce and mobile banking will rise in 2014
mCommerce and mobile banking are not new to the Philippines. However, the explosion of smartphone sales, coupled with expanding 3G coverage and LTE roll out and improving affordability of mobile data services are leading to demand for applications that allow mobile users to shop for products and tickets, book taxis, and sample content among others.
The growth in smartphone usage is also putting pressure on banks to provide mobile banking services as more customers are demanding it for its convenience.
Rondon-Garcia adds, “Additionally, mobile banking is the easiest way for banks to reach a larger population, and bridges the gap between banks and people who have no access to traditional banking facilities, particularly in agricultural areas.
"Furthermore, as online shopping becomes increasingly popular, whether using a smartphone or a personal computer, mobile wallets offered by mobile operators provide customers a means to pay for online purchases even when they have no credit cards, PayPal or bank accounts.”
8. The “Internet of Things” will revolutionise products and business models
IDC defines Internet of Things (IoT) as a network connecting (either wired or wireless) devices, or "things," that is characterised by autonomous provisioning, management, and monitoring. The concept is that everything in the world can be connected through the internet.
While the Philippines is not expected to be on the forefront of IoT, there lies a big opportunity for service providers through connection services for IoT, especially in partnerships with solution providers or device manufacturers to build up intrinsic values and differentiated services in their offering. This will also be driven by the rising need for vertical-specific applications such as in healthcare, retail, utilities, transportation and public safety.
9. There will be more higher-value, non-voice outsourcing opportunities in 2014
Given favourable economic conditions for investment, IDC predicts further entry of higher-value knowledge process outsourcing services (KPO) to the country in 2014. Over the past couple of years, the business process outsourcing (BPO) industry has exhibited a shift in the type of services being outsourced – initially they were purely contact centre services, but more knowledge-intensive services are now being outsourced to the Philippines. Some of the KPO services which IDC expects to further increase come 2014 include services in the fields of IT, research, accounting and engineering.
10. Rising investment in “next wave cities” will oblige IT vendors to rethink their channel strategies
With increased expansion of technology-dependent commercial activities outside Metro Manila, IDC predicts a rise in IT spending across more cities in the country: Sta. Rosa in
Laguna, Bacolod, Iloilo, Metro Cavite (Bacoor, Imus, and Dasmariñas),
Lipa in Batangas, Cagayan de Oro, Malolos in Bulacan, Baguio, and
Dumaguete.
Dominguez adds, “This scenario will necessitate IT vendors to realign their channel strategies to tailor to the specific requirements of consumers and enterprises in newly emerging ICT hubs.
"Suki* relationships will have to come into play more than ever, as well as channel hybridisation to become both consumer and commercial technology seller and provider.”
*Pinoy is a term often used to describe something that is uniquely Filipino.
*Suki relationships are social understandings between a customer and a supplier which can lead to preferential treatment. Although informal such relationships can be as binding as a formal contract.
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