IT Vendors Urged to Stir Up "Hidden Needs" in the Slow-Recovering Japan SMB IT Market, Says IDC
28 Sep 2012
TOKYO, September 28, 2012 — International Data Corporation (IDC) has published new forecasts for the Japan small and medium-sized business (SMB) IT market for 2012–2016 period. The 2012 Japan SMB (classified by 999 or fewer employees) IT market can expect to see reconstruction demand from the Great Eastern Japan Earthquake, but the study also notes the continuing uncertain prospects for the Japan economy and continuing restraints on IT spending at most SMBs. Therefore, forecasts show negative growth of -0.6% year over year and a market size of 3,549 billion yen.
In 2012, the Japan economy is expected to enjoy the full force of reconstruction demand, but there are still many factors for uncertainty, including concerns about electric power shortages across the country, the rising yen, and trends in European and North American economies. The economy will also experience deepening impact from the offshoring of production facilities by large manufacturers. Most SMBs will therefore continue to restrain IT spending and growth is forecast to be negative. Nonetheless, at the sector level, positive growth is forecast for information services at 1.5% year-over-year growth rate. The number of companies resuming IT spending will gradually increase in 2013, but a full-fledged recovery will have to wait until at least 2015.
On a regional* basis, negative growth is forecast for all regions in 2012 except Kinki and Kyushu and Okinawa. There will be a particularly large expansion in reconstruction demand in Hokkaido and Tohoku, the areas hardest hit by the Great Eastern Japan Earthquake. However, with business results slow to recover at most SMBs, the 2012 growth will be negative (at -4.0%). Conversely, Kinki (0.0%) and Kyushu and Okinawa (0.0%) will continue to be hit by electric power shortages and yen appreciation; however, a growing number of companies are establishing locations at these areas as part of business continuity and disaster recovery plans and this will enable IT spending to remain more or less flat. The study forecasts positive growth in 2013 for the Hokkaido and Tohoku and Kanto regions thanks primarily to reconstruction demand, but other regions will continue to experience negative growth through 2014 as a growing number of large manufacturers relocate production facilities overseas.
Japan SMB IT Spending Year-over-Year Growth Rate by Region, 2011–2016
The slump in the Japan SMB IT market is expected to be long term. Most companies have been slow to restore their IT spending, and the movement of more and more SMBs overseas will place a cap on IT spending going forward. "To expand the market, IT vendors need to stir up 'hidden IT needs' at SMBs by proactively proposing IT solutions in areas where most SMBs face business challenges but have yet to make full use of IT," says Hitoshi Ichimura, senior market analyst, IT Spending, IDC Japan.
Details can be found in the IDC study, Japan Small and Medium Business 2012–2016 Forecast Update and 2011 Review (IDC #JP1475303U). This study contains the Japan small and medium-sized business (SMB) IT market in 2011 and market forecasts for 2012–2016 by company size, product, industry segment, region, and prefecture.
*Note: For the regional classification in this study, we split the Japan market into the following seven regions:
- Hokkaido and Tohoku: Hokkaido, Aomori, Iwate, Miyagi, Akita, Yamagata, Fukushima
- Kanto: Ibaraki, Tochigi, Gunma, Saitama, Chiba, Tokyo, Kanagawa
- Hokuriku and Koshinetsu: Niigata, Toyama, Ishikawa, Fukui, Nagano, Yamanashi
- Tokai: Gifu, Shizuoka, Aichi, Mie
- Kinki: Shiga, Kyoto, Osaka, Hyogo, Nara, Wakayama
- Chugoku and Shikoku: Tottori, Shimane, Okayama, Hiroshima, Yamaguchi, Tokushima, Kanagawa, Ehime, Kochi
- Kyushu and Okinawa: Fukuoka, Saga, Nagasaki, Kumamoto, Oita, Miyazaki, Kagoshima, Okinawa
International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications, and consumer technology markets. IDC helps IT professionals, business executives, and the investment community to make fact-based decisions on technology purchases and business strategy. More than 1,000 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries. For more than 48 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. You can learn more about IDC by visiting www.idc.com.
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