Local PC industry faces 15% contraction

Thailand's personal computer industry is likely to see a substantial contraction of up to 15% this year as the political turmoil badly dampens consumer confidence and spending, says global research firm IDC.

The new forecast was the second cut in 2014 expectations by IDC, which started the year predicting that the market would grow by low single digits. Then in February it predicted an 8% contraction, which was then followed by another forecast this month when it said the decline would intensify to 15%.

The local computer market witnessed a painful contraction of 20% in 2013 as tablets and smartphones bit into its market share.

Jarit Sidhu, senior analyst of IDC (Thailand), said it estimated sales of PCs in Thailand would total 2.55 million units this year, a 15% decline from last year's 3 million units — marking a second year of contraction.

He attributed IDC's second revision to the political instability as business investment and consumer spending plunged to record lows.

Small and medium-sized enterprises expect to purchase only 280,000 computers this year, down 6.7% from 300,000 last year. Telecoms firms, banks and export and healthcare companies are the top spenders.

Mr Jarit also said Thailand's ICT spending is expected to grow by only 6.8% this year, down from 7.2% it earlier predicted. Local ICT spending in 2013 rose by 9.1% to US$20 billion.

Narong Intanate, executive chairman of The Value Systems Co, a subsidiary of ECS Holdings, a Singapore-based IT distribution firm, said he believed local ICT spending will see a contraction of 5% this year due to the unresolved political conflict coupled with the lack of parliament and the shrinking purchasing power of people in the provinces, particularly farmers.

"We will see an increasing number of IT retail chain stores closing shop in the near future," he said, adding that other small retailers would merge to survive in a hyper competitive market.

IT retailers that shift to selling smartphones as well as computers will survive, with smartphones priced 5,000-10,000 baht dominating the market.

Mr Narong said ICT spending among enterprises are mainly on virtualised data centres and cloud-based services to reduce operating costs and improve efficiency.

He suggested local IT firms expand to CLMV — Cambodia, Laos, Myanmar and Vietnam — to increase their revenue stream.

The Value Systems recently set up an office in Myanmar and plans to expand to Cambodia soon. Half the company's total revenue will come from CMLV over the next five years, up from 2% in 2013.

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