Vietnam- a major ICT spender in 2014

The report from the International Data Corporation (IDC) Vietnam ICT 2014 said that ICT spending will grow strongly.

This study discusses the factors that will have the biggest impact on the ICT market across the country in 2014. The market has been more challenging than before due to unfavourable economic times in Vietnam, coupled with the changing appetite of consumers and businesses, said Ha Ngoc Khuong, market analyst for IDC Vietnam.

The traditional economy is moving towards one that is technology-laden, where organisations scale up technology's contributions into the bottom line, he added.

The top 10 ICT predictions that reflect a significant movement of the Vietnam ICT market in 2014 include:

* ICT spending in Vietnam will have a growth rate of 15.5% in 2014, following modest growth of 8.4% this year. The total ICT market is expected to reach US$13 billion in 2014 and if it happens, Vietnam will be among the top ICT spenders in Asia/Pacific.

* Homegrown smartphone brands will be more competitive. There is increasing competition in the budget smartphone segment from local players like Viettel, Q-Smart and MobiiStar. Homegrown brands are predicted to be even more competitive in 2014 as they challenge the status quo in market share between foreign brands versus homegrown ones.

* Mobile gaming will explode, but not without challenges. The proliferation of smart-connected devices extends new opportunities for gaming in Vietnam. It estimates that unique mobile online game users in 2013 will reach 2.68 million. This is expected to be more than 39% growth in 2014. However, the limits of technology and recently increased prices of 3G may hamper the strong growth of the gaming mobile online market.

* Vietnam's desktop/PC market continues growth. The need for desktop/PC consumption in 2013, particularly in the consumer segment, gained over one fifth from a year ago. Continued demand for desktop/PCs is expected in 2014, notably from second-tier cities and new established businesses.

* Taking advantage of 2G frequency for 3G networks. The ever-increasing consumer communication traffic demand continues to outstrip the network capacity, putting pressure on the operator's network.

As the ROI (rate of investment) for investment in 3G, estimated over US$2 billion, has not been achieved yet, Vietnam operators like VNPT and Viettel have proposed that the Ministry of Information and Communications take advantage of 2G frequency for 3G networks.

* Telecommunication companies will seek mutual partnership with OTTPs. Telecommunication companies are facing a new challenge to their business model as Vietnam subscribers are now giving up traditional data services like short message service (SMS) or multimedia messaging service (MMS) in favour of making calls and sending messages through over-the-top (OTT) applications. There will be increasing partnership structure between OTTPs and local telcos in 2014, which will bring a win-win solution for both players.

* Local enterpise mobility partner ecosystem starting to form. The enterprise mobility partner ecosystem in Vietnam is starting to form, with the recent partnership deal between Mobifone – Samsung – FPT Software. This trend will shape up more clearly in 2014 as more service offerings will be introduced to the market and define the partnership structure that help vendors, service providers and independent software vendors to position themselves in the third platform era.

* Local IT Service Providers redefine services portfolio. As the market heads towards the third platform, local IT players are somewhat disengaged from the new landscape as their business volumes are still heavily based on the second platform. Away from the traditional IT services business, key local IT services players will aggressively seek growth and business sustainability to redefine their engagement.

* Stronger IT adoption pushes from lower tier cities and provinces. The phenomenon of Danang Smart City may encourage IT adoption in lower-tier cities and provinces which is seeking more ICT transformation to improve their public services. Unlike the past, where lower tier cities and provinces rely heavily on ministerial and central authorities for investment approval and adoption guidance, they will independently seek their own funding to push out ICT initiatives like metronet, data centres and free wifi offerings or public utilities monitoring system.

* Windows XP: To keep or not to keep. According to Microsoft, as of March 2013, the penetration of Windows XP in Vietnam is nearly 46% with approximately 5.5 million PCs installed. Recently, Microsoft announced that it will end support for Windows XP by April 8. Companies in Vietnam will have to decide if they want to invest in the new OS, choose new options like Virtual Desktop Infrastructure or stick with their XP.