ICT Growth in Indonesia Looks Rosy as the Nation Reaches a Transformative Phase of its Economic Development, says IDC

Kuala Lumpur, January 19, 2012 – Global market volatility and economic uncertainly have led investors to seek shelter in emerging nations where opportunities for growth still exists. With Indonesia’s plans to transform itself into an economic powerhouse coupled with its appeal in the international arena for foreign direct investments, International Data Corporation (IDC) believes that information and communication technology (ICT) growth in the nation looks promising. More insights will be revealed in a forthcoming report, "IDC Indonesia ICT 2012 Top 10 Predictions".

Sudev Bangah, Senior Research Manager, IDC Asia/Pacific says, "As 2012 dawns, Indonesia will move into a transformative phase where ICT will play a major role in enabling traditional economies and boosting economic growth in the society. The country has to rapidly adjust its ICT infrastructure to accommodate the increasing influx of foreign investments and this will have a positive impact on the overall ICT market.”

Indonesia's economic growth is expected to top all other ASEAN countries in 2012. IT spending is forecasted to achieve US$12.9 billion by the end of year, showing an 18% year-on-year (YoY) growth. Bangah cautions, “While the forecast looks sunny for the republic's economy in 2012, seat belts should be fastened securely as unexpected dips could occur at any given time."

Drawing from the latest IDC research and internal brainstorming sessions amongst IDC's regional and country analysts, the following are the top 10 key ICT predictions in 2012 for Indonesia. These trends are what IDC believes will have the biggest commercial impact on the Indonesian ICT market.

1. Indonesia Comes up Tops* in 2012 for Stability and Growth
ICT budgets from end user organizations are growing in parallel with the economic growth expected in the nation and this leads IDC to be upbeat about the nation’s ICT spending in 2012. Discussions evolving around datacenters, managed services, social media, cloud computing and mobility has garnered heavy interest from both local and global organizations. Therefore, IDC believes that Indonesia is the key Southeast Asia market that IT vendors will focus their attention on in the year ahead.
* Compared to other in ASEAN nations

2. Cloud Computing – Moving from Awareness to Understanding
In 2011, IDC found that more than 50% of end user organizations in Indonesia were either actively searching and/or planning to adopt public cloud services within the next 12 to 24 months. In 2012, IDC anticipates that cumulative efforts from both local and foreign providers will garner more interest in this emerging technology. IDC expects a shift in the thought process of Indonesia end user organizations in 2012; companies will begin to better understand the value proposition and mechanics of cloud computing.

3. Telecommunications Spending to Continue Surging
While this has been a common theme in IDC's predictions for the past year, its relevancy is now heightened as IDC is witnessing a surging demand for network coverage across all major cities in Indonesia. In light of this, telecommunications operators are beginning to devise means to upstage competition and ultimately win over their target group. As a showcase for how much demand is heightening at this juncture, IDC estimates that the end of 2011 brought forth 43 million mobile shipments into Indonesia and this is aggressively driving and heightening the utilization of both voice and data telecommunications services. Fixed data services and broadband are also continuing to grow, driven primarily by residential and business segments.

4. 2012 – The Year Mobile Broadband Explodes
Affordable smartphones and USB modem dongles are beginning to be ubiquitous in many cities in Indonesia. The current view of the mobile broadband ecosystem is one which is competitive, and where service providers are forced to offer affordable broadband packages in order to compete. With the prices of smartphones coming down to around the US$100 mark, and USB dongles being available for an average price of US$25, IDC is witnessing all the makings of a society with a high propensity to adopt mobile broadband due to the demand in content, social media applications and connectivity.

5. Transition Point – Further Movement Expected from Feature to Smartphones
On par with the global and regional shift towards "smarter" devices, IDC is witnessing a transition occurring in Indonesia where affordable smartphones are making their way prominently into the market. These phones are capturing the attention of a demographic group that is beginning to swap in their archaic feature phones for one which boasts a faster and more sophisticated user experience. The mobile phone market in Indonesia is fairly saturated, ranging from global brands to top local brands that have successfully made an impact on the middle- to lower- class income group that demands smartphones at a more affordable price.

6. The Rise in Prominence of Social Media as a Marketing Tool
Based on government released statistics, there are approximately 35 million internet users in Indonesia, a figure which is expected to reach in excess of 95 million by 2015. What is even more extraordinary is that Facebook claims that there is an estimated 32 million registered Indonesia Facebook users at the start of 2011. Indonesia is also cited as one of the countries with the highest penetration of Twitter users globally. This translates to some golden opportunities for marketers as there appears to be a huge untapped marketplace where potential seems limitless and outreach has no boundaries.

7. IPTV to Gain Further Traction within Business and Residential Segments
PT Telkom launched its IPTV services in Indonesia in mid 2011. Due to the wide range of features available on IPTV including on-demand screening (pause/play) and recording functions, the service provider captivated an audience who were swung by its novelty; IPTV allowed them to "control" the manner in which they watch television. IDC predicts that IPTV subscribers will double in 2012.

8. Marked Changes Within the Peripherals Market
Improving cost efficiencies is high up the agenda of Indonesian SMBs and enterprises and this will be driving the changes within the peripherals market. Vendors offering color copier-based multi-function printers (MFPs) will note an increase in their revenue in 2012 as its acceptance by businesses heighten due to a focus from SMBs in driving up longer-term cost efficiencies against shorter-term cost reductions. In 2011, color copier-based MFP took 17.8% of total market share compared to 13.5% a year ago. IDC predicts that the hard copy peripherals (HCP) market in Indonesia will continue to grow as positive economic news will pave the way for SMBs and Enterprises to spend more on hardware.

9. The Increasing Tablet Scene – Beginnings of a Paradigm Shift
Indonesia has emerged as one the largest markets in Southeast Asia nations in the consumption of media tablets. With the rapid development in Indonesia and the higher drive for inter-connectivity due to a surge in interest on social networking websites, Indonesia looks poised to fully usher in an era of media tablets, replacing mini netbooks which rose to prominence in the same market barely three years ago.

10. The Future is "Now" – Towards an Advanced Information Society
A global shift towards an age of information and communications has caused many governments to re-think their strategies moving forward. Indonesia is no stranger to this shift, and the government has recognized the need to put in place a formidable strategy in order for the country and its economy to grow further in the future. In the past three years, the government has positioned ICT at the top of the agenda within its transformative plans and earmarked ICT as a key enabler in aiding its traditional economies to reach a higher plateau, as well as a means to reduce poverty by opening up a new sector to create jobs and opportunities.

For more information about this report, “IDC Indonesia ICT 2012 Top 10 Predictions" (forthcoming), please contact Juliana Lai at +603-2177-9255 or julianalai@idc.com.