Oil-Rich Nations, BRICs Lift IT Industry

SPENDING ON IT is set to rise despite a US-led economic slowdown, as oil-rich regions, such as Russia and the Middle East spend their petrodollars on large-scale IT projects. The rising popularity of low-cost, ultra portable laptops in emerging markets in China, India and Latin America will also boost the global technology industry, which is facing signs of weakening corporate spending as the US subprime crisis hits company earnings.
    Executives from top IT companies were bullish on their prospects at last week's Computex trade fair, saying growth was looking good even at a time of shaky consumer confidence, wobbly company earnings and rising raw materials costs. "Some of the key growth drivers will be big emerging markets. The BRIC countries (Brazil, Russia, India and China) hold a lot of promise," said Robert Chu, VP of Asia Pacific at Hitachi's hard disk drive unit. IT spend by companies, consumers and governments may grow 6% to $1.43 trillion this year, compared with 7% growth a year earlier, with weakness in the US largely offset by growth in BRIC nations and other vibrant economies. Although rocketing oil prices have dented earnings, they are also allowing oil exporters to spend more on technology. "High oil prices are pushing up the economy in Russia and the Middle East, driving the ability of companies and the governments to keep increasing their IT spending," said Stephen Minton, VP of IDC's Worldwide IT Markets.
    Dell underlined the optimistic outlook last week when it posted a higher-than-expected quarterly profit, driven by cost cuts and strong demand from consumers and markets outside the US. Facing soaring fuel and food costs, and finding lenders less willing to hand over cash, consumers are turning to cheaper, smaller laptops, called Netbooks, or mobile internet devices. The rising popularity of Netbooks is another area where technology companies can achieve growth. Asustek Computer expects sales of its handbag-sized Eee PC laptops to double to 10 million units next year, while Acer said smaller, cheaper laptops are seeing significant growth from emerging markets. "The notebook market is growing for the next 2-3 years, and with the entry of new mobile internet devices, the market can double in size, changing the profile of the industry," Acer president Gianfranco Lanci said.
    Intel also sees potential in the market for lowcost computers. But analysts are wary about corporate tech spending. "In the past, what happened to the economy in a year started affecting IT spending in the middle of the following year. There's a possibility that subprime-related impacts will appear a bit later," Gartner research director Hiroyuki Katayama said. reuters