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Venezuela Information Technology Report Q1 2009
[April 14, 2009]

Venezuela Information Technology Report Q1 2009

(M2 PressWIRE Via Acquire Media NewsEdge) adds new report: Venezuela Information Technology Report Q1 2009 Market Overview Despite a problematic economic situation, the total value of Venezuelan domestic spending on IT products and services is projected to approach US$2.5bn by 2013. Venezuela is one of the smaller markets in its region, but a PC penetration rate of less than 12% indicates plenty of potential for growth.

Expansionary government fiscal policies continued to support IT spending levels in 2008, but private investors are wary and BMI anticipates an easing of demand in 2009.

The retail sector should continue to perform reasonably well in terms of PC sales growth however, due to more affordable computers. Partly thanks to government initiatives, there will also be more financing options for consumers. Expanding internet penetration will lift PC penetration, with bundling of PCs with internet services. The business sector will offer vendors areas of opportunity in the forecast period, but overall levels of investment are likely to remain relatively low.

Government policies and programmes will shape many areas of the IT market. A focus on science and technology independence should mean further efforts to encourage domestic production of cheaper computers. The newly nationalised telecoms company, CANTV, has become an instrument of government policy in providing affordable PCs.. Meanwhile, the government's strong promotion of open source software will restrict opportunities for vendors of proprietary software in the state sector.

Industry Developments In 2008 COPARI (Invest Venezuela) identified ICT as one of seven key business areas where private investment can play a role compatible with the country's Social and Economic Development. Recent government pronouncements have outlined a major role for information technology in Venezuela's development.

Meanwhile, in encouraging news for foreign vendors, IT imports were reported up in the first three quarters of 2008. Venezuela's foreign currency control commission Cadivi approved US$764mn in IT imports in the year to September, according to government figures. This was a 37% increase on the same period in 2007, when the agency allowed US$555mn in IT imports.

In August 2008 the IT agency CNTI said that nearly 60% of Venezuela's government offices had switched from proprietary software to open source, compared with its target of 100% migration by yearend 2008. Some ministries stood out for their progress. Venezuela's Social Development Ministry had reportedly already migrated 93% of its PCs and all of its servers to open source, having started the migration in 2007.

Competitive Landscape At the end of 2008, CNTI signed a landmark agreement with Sun Microsystems to co-operate on developing open source software. It was the first time that such an IT agreement had been signed with a US company. Under the agreement the two parties will partner to test and develop solutions based on Linux, and to design applications for the public sector.

Venezuela's telecoms companies are moving into the PC retail space. Newly nationalised CANTV in 2008 launched a promotion offering affordable computers (desktops and notebooks) on good credit terms bundled with its internet services. Meanwhile, new wireless broadband service provider Movilmax has launched a similar PC bundling scheme with its WiMAX service, and is targeting 500,000 subscribers within five years.

Lenovo's Venezuelan operation, which has benefited from close ties between China and Venezuela, said that it aimed to grow 1% above the overall PC market growth rate in 2008. Since 2005 Lenovo has nearly doubled market share in Venezuela to over 20%. Meanwhile, Dell announced a partnership with US IT products wholesaler to distribute Dell products and services in Venezuela and other countries in the region.

Computer Sales Hardware dominates Venezuelan IT spending more than in many Latin American markets, accounting for an estimated 66% of the 2008 total. BMI is projecting that Venezuela's computer and accessories market will have a compound annual growth rate (CAGR) of around 9% over the 2008-2013 period. For 2008, computer sales were put at US$818mn, and they should pass the US$1bn mark by 2011. The main drivers of growth in the PC segment are lower prices and greater affordability, partly as a result of cheap computer programmes and initiatives to encourage local production.

Software Venezuela's software market was estimated to have been worth US$50mn in 2008, and market value is expected to approach US$83mn by 2013. Software CAGR for 2008-2013 is projected at around 11%.

Software vendors have growth opportunities over the next few years, despite rapidly declining business confidence in the private sector, and a relatively high and apparently increasing software piracy rate. The market landscape is likely to remain shaped by the government's drive to promote open source software.

However, enterprises in sectors such as retail, distribution, telecoms, financial services and export companies represent potential demand for proprietary software.

IT Services Venezuela's IT services market is estimated to have grown around 14% in 2008 to a value of around US$251mn. Slower growth is expected in 2009. By regional standards, the percentage accounted for by services in this hardware-dominated market is much lower than average, at around 16%. The most demand, around 75%, will come from the large company sector, with the oil sector itself still significant, despite the fall in oil prices. Venezuela's banks also continued to spend in 2008, E-Readiness According to BMI estimates, the number of Venezuelan internet users reached nearly 6.5mn in 2008, representing 23% of the population. The percentage of broadband subscribers in the general population, however, was only 4.2%, with around 1.6mn subscribers.

In 2008, Venezuela's government conducted technical tests on different digital TV standards to decide which ones to adopt. The government expects to implement digital TV by 2012, with both digital and analogue technologies coexisting for a five year period. The tests involved a number of different standards, including integrated services digital broadcasting (ISDB) from Japan, digital video broadcasting (DVB) from Europe, and a Chinese standard.

Because of the low levels of internet access the country, the Venezuelan government has generally been slow to roll out e-services. The recent decision by the government to launch in 2008 a consultation on a new telecoms law to promote competition may be a hopeful augur of progress. The country has fast growing mobile penetration, and has also been rolling out fixed wireless services such as WI-FI and the Korean technology WiBro.

E-Government The government is committed to improving e-use in the public sector, and reducing the digital divide. The development of e-infrastructure is also seen as one method to fight corruption in the public sector.

Telecom Venezuela is working with the government on a project called Telepolitica, which involves using ICT for local development projects. In 2008, state-owned telecoms company Telecom Venezuela signed a co-operation agreement the Comptroller General's Office (CGR) and the National IT Institute (CNTI) to help build ICT infrastructure for the CGR and other public bodies. ((Comments on this story may be sent to [email protected])) (c) 2009 M2 COMMUNICATIONS LTD

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