Government will be the most important driver of IT spending across the board in the near future as it influences so many sectors through its ownership of state-owned enterprises, says Gartner analyst Will Hahn.
Earlier this week the international ICT research firm released its first ever report on the overall state of the South African IT market and it plans to update this occasionally when needed.
According to the report's findings, overall IT end-user spending in South Africa is on pace to reach $24.6 billion (almost R190 billion) this year - a slip of two percent from last year's $25 billion, but Gartner forecasts a six percent increase in 2010 as the region returns to growth.
It also states that the computing hardware segment will experience the steepest decline in 2009, with spending projected to fall 23%. The software segment will show the slightest decrease in 2009, with spending forecast to drop four percent.
XHead = 2010 goal
Hahn says apart from government-led spending, the influence of the 2010 Soccer World Cup will be felt long after the event is over as the hardware infrastructure put in place to cater for the event will be left over.
service on existing offers,” Hahn says.
Also influencing the growth in IT spending is the laying of undersea cables such as Seacom, which landed in July this year, and the subsequent opening up of competition in the telecommunications sector.
Open access
“One thing we emphasise both in this and my other pieces is the parallel impact of the open access approach. It's right up there with the physical bandwidth in bringing real opportunity to South Africa, to know that the door is now unlocked to bring offers further down the chain, and not just at lower prices than before. I feel this is driving competitive responses across IT and will ripple through the general economy of the country; it will really be a litmus test of the entrepreneurial spirit of South Africans, and I'll be following the news to see the response,” Hahn says.
He also cites South Africa's “unintentional” opening up of its telecommunications sector that resulted in some 600 value added network services licenses suddenly becoming fully fledged telecommunications operators.
“While few of them will have nationwide ambitions, that's a great many small fish taking a nibble on the bait, and perhaps all at once. This could be particularly important when considering how outside convergent giants will approach the market via partners,” Hahn says.
Size determining
Determining the size of the South African IT market has been a controversial topic for years and Hahn explains that Gartner used various methodologies to get to its numbers.
“We always combine top-down with bottom-up approaches and use them to check each other; but this is within each IT market sector (e.g., hardware, printing, etc.) and we did not attempt to derive a pre-existing South Africa total to which the sectors had to toe the mark,” he says.
Hahn says that each sector analyst used the methodology appropriate to his or her team in divining the size of South Africa. This includes combining the publicly available sources (e.g. Telkom's annual report) with contacts made to local players (or the SA office of global players in some cases) and of course a good dose of intuition, especially about the forecast.
“Sometimes (e.g. Enterprise Infrastructure) a macro-economic factor such as housing stats or employment growth is crucial and strongly linked; in others (say Semiconductors) it hardly matters at all. Each analyst is free to make those determinations within the team framework: the contributions are then combined and vetted for proportions and ratios to make sure we had a picture that 'rang true',” Hahn says.
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