- The Washington Times - Monday, January 20, 2003

SINGAPORE, Jan. 20 (UPI) — The Asia-Pacific region (excluding Japan) will lead the global information technology recovery this year, with sales growth almost doubling.

Stamford, Conn.-based Gartner said Monday that this year's sales of IT and communications products and services would grow about 10 percent in the region, almost double last year's 5.8 percent expansion.

Japan is seen growing by 4 percent this year.

The Indian domestic market is expected to grow by 25 percent to 30 percent and will be the world's fastest-growing IT market — surpassing even China, which will remain the largest market.

Combined personal computer, desktop and notebook shipments in the Asia-Pacific will grow by 11 percent this year to 23.4 million units, while Intel 32-bit server shipments will grow by 10.8 percent, the Gartner report predicted.

China is also seen overtaking the United States to become the world's largest fixed-line telecom market this year, with the number of fixed-line subscribers seen growing to 255 million in 2003 and 341 million by 2006.

China is already the world's largest cellular market with 203 million connections, seen rising to 258 million this year and 385 million by 2006.

But the specter of war could upset these scenarios, the firm warned. "Users and vendors alike must wait until 2004 for a more pronounced global IT recovery. One mitigating factor is the unstable political environment on many fronts around the world such as between the United States and Iraq.

"If there is a prolonged war, consumer confidence in the United States could plummet and oil prices rise. The tenuous global economic situation will worsen, prolonging any hope of short-term IT investment recovery," said Ian Bertram, vice president of Gartner Asia/Pacific.

Political and economic uncertainties aside, with many companies jostling for meager returns in Asia Pacific and Japan, a shake-out is inevitable. A number of the major players are expected to merge in the IT services, hardware (particularly storage) and telecommunications marketplaces, Gartner said.

Bertram warned that even after the economic situation turns around, demand will be too slow to sustain all players.

"Vendor consolidation will not only continue but accelerate. For most medium to large enterprises, at least one strategic vendor partner will cease to exist in its present form by the end of 2003," he said, adding that these changes will by no means occur among smaller vendors only.

"Many of the largest and best-known names will be among those transforming or disappearing in 2003, and this turbulence is a global phenomenon," Bertram warned.

External outsourcing will become a critical competency, in another year when "cost is king."

The Asia-Pacific region will capture a majority of the offshore services market with growth of 35 percent to 40 percent, most of which will be derived from demand for IT services from the United States, which will grow 3 percent.

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