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Gartner issues growth downgrade

Worldwide IT spending is on track to reach $3.7 trillion this year, up from 2013, but down from earlier forecasts, the research group says.

Paul Booth
By Paul Booth
Johannesburg, 07 Jul 2014

Gartner's growth downgrade of the international ICT market, and numerous small acquisitions, including some from the 'big boys', were the highlights of a shortened US working week.

At home, the changes at the top of Microsoft South Africa and the announcement that Vox Telecom is looking for a potential buyer stole much of the local ICT media space.

Key local news

* Mixed year-end figures from Amecor, with revenue up 22.2% but profit down 3.6%.
* Mixed year-end figures from Prescient, with revenue up 39.2% but profit down 38%.
* Negative trading updates from Ellies and Poynting Holdings.
* Morvest Business Group disposed of its shareholding in R & S Consulting to a newly established company, Zukubu, for a maximum of R142 million.
* A new JSE cautionary by Huge Group.
* Renewed JSE cautionaries by Morvest Business Group and TCS.
* The appointments of Ivor Daniels as acting MD of SecureData; Zoaib Hoosen as MD of Microsoft South Africa; and Mark Taylor as CEO of Nashua, replacing Dave Hallas who had been acting in this position for some time and is now leaving the company.

Key African news

* Trend Micro will open an office in Nigeria and a presence in Kenya in 2015.
* The Togo government will appoint a third mobile operator.
* The appointments of Mteto Nyati as regional VP for emerging markets in MEA; and Matthew Willsher as CEO of Etisalat Nigeria.

Key international news

* Renaissance Capital said there were 83 IPOs in the US in Q2 2014, the most since Q1 2000, the peak of the dot-com bubble. The technology sector had the most listings, with 23.
* Facebook acquired LiveRail, an online video technology firm.
* The Fiji National Provident Fund bought Vodafone's 49% stake in Vodafone Fiji for $87 million.
* Google purchased Songza, a music streaming service.
* Ingram Micro acquired Rollouts, an IT services company specialising in providing on-demand field technicians and rapidly-deployable workforces to businesses and IT solution providers throughout the US and Canada.
* Microsoft bought SyntaxTree, the France-based company behind UnityVS, a popular visual studio plug-in for developers that use the cross-platform Unity framework to write their games.
* Nokia purchased SAC Wireless, a company that installs wireless network equipment.
* Numericable acquired Virgin Mobile France, a mobile virtual network operator.
* Gartner bought Senexx, a cloud-based questions and answers platform that identifies and manages expertise within organisations.
* Nokia purchased SAC Wireless, an installer of wireless network equipment.
* Qualcomm acquired WiGig industry leader Wilocity.
* Taiwan Display bought small to medium-size panel module maker Star World Technology that will give the former an 80% stake in the latter.
* Twitter purchased TapCommerce, which specialises in targeting consumers after they have downloaded an app and coaxing them to keep coming back.
* Hon Hai Precision made a $376.6 million investment (4.9%) in SK C&C, a South Korean IT services firm.
* Macronix filed a new patent infringement complaint against Spansion and its affiliated companies, as well as some of its customers, with the US International Trade Commission, for infringement of four Macronix patents covering separate aspects of non-volatile memory devices, including flash memory.
* Qualcomm has won an appeal over a $173 million patent claim that had previously been filed by ParkerVision.
* Google will shut down its early social networking service, Orkut, which was launched 10 years ago but has failed to put Google ahead in what has become one of the Web's most popular businesses.
* Vodacom has sold its Fiji stake.
* Good quarterly numbers from Synnex.
* Mixed quarterly figures from HTC, with revenue down but back in the black.
* The appointments of Rene Schuster as COO of VimpelCom (was CEO of Telefonica Deutschland); and R Srikrishna as CEO of Hexaware Technologies.
* The resignation of PR Chandrasekar, CEO of Hexaware Technologies.
* An IPO filing from Zayo Group Holdings, a fibre network company.

Research results and predictions

EMEA/Africa:
* It is estimated that 81% of software installed on Nigerian PCs is pirated, according to a study by Business Software Alliance.

Worldwide:
* Worldwide IT spending is on track to reach $3.7 trillion this year, up 2.1% from 2013, but down from earlier forecasts, according to Gartner.
* Physical location of data will become increasingly irrelevant in the post-Snowden era, according to Gartner.

Stock market changes

Look out for the possible sale or IPO of Vox Telecom.

* JSE All share index: Up 2.8% (highest-ever weekend close at over 52 000)
* Nasdaq: Up 2% (highest weekend close since the dot-com blip of the year 2000)
* NYSE (Dow): Up 1.3% (highest-ever weekend close at over 17 000)
* S&P 500: Up 1.2% (highest-ever weekend close at almost 2 000)
* FTSE100: Up 1.6% (highest weekend close since 1999)
* Top SA share movements: Datacentrix (+8.4%), Ellies (-13.8%), Jasco (+31.8%), MICROmega (+13.9%), Morvest (-13.8%), Naspers (+7.8%) and Poynting (-19.7%)

Look out for

International:
* The possible privatisation of Rackspace Hosting.
* The emergence of Xiaomi Technology as a major smartphone supplier following the news that it shipped 26.11 million smartphones in the first half of this year, well ahead of the numbers from Acer, Asustek and HTC.

Africa:
* Egypt Telecom sorting out its 'mobile' licence.

South Africa:
* The possible sale or IPO of Vox Telecom.

Final word

IDATE, a French NGO that tracks the global telecommunications, Internet and media markets, has published its 2014 DigiWorld Yearbook. Unlike the other industry research organisations, IDATE includes TV services, consumer electronics and new Internet services separately in its figures. The last segment, new Internet services, is expected to be the fastest growing area over the next few years.

It should be noted the 'new Internet services' line does include some double counting.

DigiWorld doesn't separate out Africa, but includes it in its 'rest of the world' (ROW) figures, ie, Latin America and MEA regions. Its analysis by market sectors is as follows:

EURbn

2011

2012

2013

2014

2017

Software and computer services

806

839

877

928

1 091

Computer hardware

370

384

401

422

461

Telecoms equipment

308

329

349

380

452

Telecoms services

1 127

1 158

1 187

1 216

1 312

TV services

382

399

417

435

493

Consumer electronics

283

260

247

245

252

New Internet services

150

181

221

265

402

Total

3 277

3 370

3 478

3 625

4 061

Other observations from its latest yearbook are as follows:
* The ROW market represents 14% of the worldwide total in 2013 and this will rise to 15% in 2017;
* The overall ROW ICT market will grow at an average of over 6% for the next three years, well above the global average;
* The ROW IT services and software market will grow at an average of over 12% for the next three years;
* Market growth still tops 7% on average in emerging countries, while falling to 1% in 2012 and 2103 in advanced economies;
* All of the top 10 media companies are US-based; and
* OTT services are forecast to exceed 16% growth on average over the next five years, five times more than telecoms services.

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