We have just published Forrester's semi-annual global tech market outlook report for 2015 and 2016 (see "The Global Tech Market Outlook For 2015 To 2016 -- Five Themes That Will Define The Tech Market"). In this report, we are projecting growth of 4.1% in 2015 and 6.3% in 2016 business and government purchases of computer and communications equipment, software, and tech consulting and outsourcing services measured in US dollars. These growth rates are distinct improvements over the 2.3% growth in 2014. The strong dollar is a key negative factor in these forecasts; measured in local currency terms, the growth track for the global tech market is higher with a gentler upward slope, from 3.3% in 2014 to 5.3% in 2015 and 5.9% in 2016.
Our global tech market outlook can be defined with five main themes:
Moderate 5% to 6% rates in 2015 and 2016 in local currency terms. While a stronger-than-expected US dollar has resulted in lower dollar-denominated growth rates for 2014 and 2015 than in our August 2014 projections, though a stronger-than-expected US dollar both years caused a downward revision in these growth rates.
The US tech market will set the pace for the rest of the world in 2015 and 2016. Not only does the US have the largest country-level tech market by far, it will have one of the fastest growth rates at 6.3% in 2015 and 6.1% in 2016. US businesses and governments are also leaders in adopting new mobile, cloud, and analytics technologies. Among other large tech markets, China, India, Sweden, and Israel will also have strong tech market growth, while Brazil, Mexico, Japan, and especially Russia will lag.
Vacations are over – or at least mine is – but I’ve brought home some of mine for homework. Yes, I did a little work while on vacation. While in Costa Rica this summer, I had the opportunity to meet with the country’s Director of Digital Government, Alicia Avendaño Rivera.
Governments worldwide recognize the power of “going digital.” The recently announced US Digital Service and the appointment of its dedicated Administrator illustrate a commitment on the part of the US Federal government. Yet the US is merely joining others who have made similar commitments to transforming government with a focus on efficiency, effectiveness, transparency and empowering citizens and businesses through new digital technologies. Alicia Avendaño has served as Costa Rica’s Director of Digital Government since 2009.
Costa Rica Digital Government initiatives address four main goals:
G2C: Government to Citizen – citizen oriented services
G2B Government to Business – rapid and transparent business services
G2G: Government to Government – efficient and interconnected services
Infrastructure – favorable ICT infrastructure and legal framework
Forrester has just published our forecast for the 2014-2015 global tech market (January 2, 2014, “A Better But Still Subpar Global Tech Market In 2014 And 2015”), and we are predicting that business and government purchases of information technologies (IT) will grow by 6.2% in US dollars in 2014, and by 5.5% in exchange-rate-adjusted or local currency terms. (Note that this data includes purchases of computer equipment, communications equipment, software, IT consulting and systems integration services, and IT outsourcing services, but does not include purchases of telecommunications services.) The US dollar growth rate will be distinctly better than the 1.6% growth in US dollars in 2013, though constant currency growth will be only somewhat better than the 4.3% growth in 2013. Still, the global tech market won’t see strong growth until 2015, and even then the 8.1% US dollar and 6.9% local currency growth rates will be well below the double-digit growth rates of the late 1990s and 2000 era.
Three interconnected and reinforcing themes will define the global tech market this year:
To conduct our global eBusiness research at Forrester, we rely heavily on support from our multilingual group of Research Associates and Researchers. Recently, one of our Research Associates, Lily Varon — whose family originates from Peru — spent two weeks in the country and emailed us with her take on the state of eCommerce. Given that an increasing number of our clients are eyeing the online retail markets of Latin America, I thought it would be interesting to hear Lily’s observations of what’s happening in the region’s sixth-largest economy.
“Here are a few high-level findings from my travels:
Consumer adoption of online shopping in Peru remains low. The lack of online shopping is largely due to the fact that it’s just not customary, but also due slightly to the fear of putting personal financial information on the web. Retailers are encouraging consumers to overcome these barriers by prominently displaying payment and security information on the website, as well as educational information such as FAQs, step-by-step shopping, and payment instructions or YouTube videos explaining the shopping and checkout processes.
I was thrilled to be back in São Paulo last week visiting with different companies in the eCommerce space. I met with over a half dozen online retailers, as well as other players in the industry including payment providers and market entry specialists. It was also great to have the opportunity to speak at Rakuten’s event on April 24th announcing their official launch in the country.
Below are a handful of takeaways from the trip:
Online momentum is building in categories such as apparel and beauty. In markets like the US and the UK, apparel represents a significant percentage of total online sales. In Brazil, by contrast, this category is just starting to take off, with online sales currently representing a very small percentage of the total market. As issues such as inconsistent sizing are increasingly addressed, however, and new entrants boost the market, the online apparel sector is set to grow substantially. Likewise, there’s much talk of growing beauty sales in Brazil (the country is set to surpass Japan to become the world’s second largest beauty market) – as with apparel, online beauty sales are a tiny fraction of the total today, suggesting substantial growth opportunities going forward.
Over the past year, we’ve worked together with the forecast team at Forrester to help eBusiness professionals understand the size of different online retail markets around the globe. Last year we published our first look at the online retail markets in some of the major markets in Asia-Pacific — this year, we’ve just published our first forecast for two of the largest online retail markets in Latin America, Brazil and Mexico. Some findings from the report include:
Brazil is — and will remain — the powerhouse in the region. With more than 40% of the online users in the region and a steadily growing economy, it’s not surprising that Brazil’s eCommerce market will outpace all others by a wide margin. Brazil’s projected 2011 sales of almost $10B put it behind other major online retail markets like France and South Korea but ahead of smaller ones such as the Netherlands and Italy.
Mexico’s online retail market is small today —but growing by a CAGR of almost 20%. With less than half of the online users of Brazil and limited online spending, Mexico’s online retail market remains a small fraction of the size of Brazil’s. Average online spending per buyer will not increase significantly over the next five years, but the sheer number of online buyers will.
The word for “crisis” in Chinese apparently comes from two roots meaning “risk” and “opportunity” – there is both a downside, and the potential for an upside. That’s how César Alierta, Telefónica Chairman and CEO, began the opening keynote of their 2010 Leadership Conference in Miami (where I spent several days last week). For Telefónica, that definition has played out with the global economic crisis. While results in Spain have been their downside, Latin America has been the opportunity. Telefónica has a presence in 15 countries in Latin America (and 42 countries worldwide), with offerings in mobile and fixed telephony and in IT services. Not all offerings are available in all markets but in many countries Telefónica has leveraged a strong position in one offering to expand into the others becoming the first integrated operator in the region.
According to José Maria Pallete, CEO of Telefónica Latinoamérica, Latin America represents 65-70% of their total customer base, 40% of revenues and about 40% of the operating income. In the enterprise space (as opposed to consumer services), 37% of Telefónica revenue comes from Latin America. That corporate segment (including public sector) marked double digit growth in Latin America in 2009, with its biggest markets in Brazil and Mexico.
Earlier we shared with you our excitement around our newest addition to the countries we now cover with Forrester Technographics: Latin America. For the ones less familiar with our Technographics offering, please see the text below the graphic.
Recently the data for LATAM came out of the field. Questions we cover include: How large is the PC market in Mexico and Brazil? What brand of PC have consumers purchased most recently? How are PC owners using their PCs?
Please find below some data on PC ownership in Brazil:
The PC markets in Mexico and Brazil are fairly well established, with at least half of consumers owning at least one PC in the home. Interestingly, almost half of the consumers in the low socioeconomic level in Brazil (C1C2) own at least one PC, in contrast to only one-quarter in Mexico (D+).