Tame ICT Growth in Q1, Govt Measure to Boost Services Market"

Revenues in Mexico's information and communications technology (ICT) industry experienced moderate growth in the first quarter of 2007 versus 1Q06. While the government austerity decree may threaten expenditure on hardware, the IT services sector is expected to benefit in the long-term, according to a report from local consultancy Select.

TELECOMS

Revenues in Mexico's telecoms industry grew 8.6% in the first quarter of 2007 compared to 1Q06 with internet and mobile telephony driving growth.

Mobile telephony was an increasingly competitive market with falling per minute rates for fixed to mobile and mobile to mobile, as well as the extension of the calling party pays billing system to domestic fixed to mobile phone calls on November 4.

DSL was the most widespread means of internet connection as more users migrated from dial-up to broadband.

IT

The IT industry grew 6.6% in the first quarter compared to the same quarter last year. The large systems manufacturers saw growth of 14.4%, followed by personal systems manufacturers (9.1%) due to increased sales of PCs, especially notebooks to the consumer segment, and a spurt in renewal of hardware by SMEs.

Distribution channels saw growth of 6%. Within that segment wholesalers saw a 1% drop in sales versus 1Q06 partly due to the fact that several large government projects concluded in 2006.

Distributors saw a 7% growth boosted by locally assembled white-box PCs for the SME market.

Retailers' revenues were up 20% as a result of increasing sales of portable electronic goods, digital cameras and the substitution of desktops for laptops.

Services providers experienced 7% revenue growth helped mainly by the software development segment, which increased 11%, followed closely by network integrators (10%), while traditionally the most important service providers, namely systems integrators and consultants, saw growth of only 5%.

OUTLOOK FOR 2007

The outlook for the second quarter of the year for the ICT industry is pessimistic, Select said, due to the government's austerity decree signed by President Felipe Calderón on December 3 that restricts the federal government's spending on ICT equipment and services.

Nonetheless, the consultancy said the industry was expected to see growth overall in 2007, though lower than in 2006.

While the government is planning to spend less overall on ICT, this creates opportunities for companies offering outsourcing or complete services packages that include everything from the installation and support to maintenance and training, Select said.

In the case of computing, the service should include upgrades of software and hardware, which avoids the government having to reinvest in hardware that will eventually become obsolete."

Posted to the site on 14th June 2007