BMI's Executive Summary

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Market Overview

The Peruvian IT market is one of the smaller in the Latin America region but is projected to grow at a compound annual growth rate (CAGR) of 8% over the 2007-2012 period. A major driver will be the recently signed free trade agreement (FTA) between Peru and the US, which will reduce tariffs by up to 80% and drive IT investments by companies. The total value of spending on IT products and services should pass US$880mn in 2008 and US$1bn by 2010. Despite strong enterprise and retail demand for IT hardware in 2007, a PC penetration rate of less than 15% indicates plenty of room for growth.

The overall economic outlook is constructive for growth in IT spending, with the Peruvian government projecting that the economy should expand by approximately 9% in 2008 as a result of the FTA with the US. The retail sector should register solid growth in PC sales due to a greater range of tariff reductions, rising incomes, and more flexible terms from retailers. Corporate IT spending is likely to receive a boost from the FTA as large and medium sized companies invest to compete in the new competitive environment. Government spending is around 10% of total IT spending and the government will remain a support to the market with a number of programmes to drive PC penetration.

Industry Developments

In November 2007 Peru's President García launched a new programme called 'Teachers of the 21st Century'. The programme gives teachers the opportunity to purchase laptops at reduced prices and is part of the government's strategy to improve education in Peru. The government's ultimate aim is for every teacher to have a laptop. Chinese PC manufacturer Quanta Computer has developed the XO laptops which will be used by the programme in Peru

In 2007, national attention also focused on developing the Peruvian software segment through a number of initiatives. The government is targeting US$100mn annual software exports by 2012, from US$25mn last year. In one initiative, industry association Apesoft signed an agreement with the Andean Development Corporation (CA), targeted at improving the improving the competitiveness of Peruvian software firms.

Competitive Landscape

Peru's status as one of the Latin American region's faster growing PC and notebook markets in 2007 is providing opportunities for international vendors. Strong sales in Peru in 2007 helped to drive Dell's recovery in the Latin America region in 2007, with the company taking around a 7% share in the region.

Meanwhile, Lenovo received a boost in 2007 when it was selected as one of the vendors for the Peruvian government's laptops for teachers programme.

Turning to software, SAP is dominant in the enterprise software segment which contains around twelve major providers and is worth around US$50mn a year. SAP is increasingly focusing on the SME sector, however, and has said that it expects some 70 SMEs to develop IT upgrade projects in 2007. SAP claims 80 implementations of its Business One ERP suite for small companies. Computer Sales

BMI is projecting that Peru's computer and accessories market will have a CAGR of at least 7% over the 2007-2012 period. For 2007, computer sales were put at US$381mn, and should pass the US$500mn mark by 2012. Annual computer sales including notebooks are currently more than 500,000 units a year, and increasing at around 20% a year. Indeed, 2007 was a particularly strong year for hardware sales with demand up from both retail and enterprise segments. The main market driver is, however, the retail sector which accounts for around 45% of PC sales and recorded 50% year-on-year (y-o-y) growth in some quarters of 2007.

Software

Peru's software market is estimated to have been worth US$98mn in 2007, and the figure for 2008 is expected to come out at around US$106mn. Software CAGR for 2007-2012 is projected to be in the region of 8%. Software demand is starting to pick up, with the use of pirated software in the public sector dropping significantly in 2006 to around 40% of all software from 73% in 2003. The main driver of this trend is a regulation passed in 2003 obliging all public entities to use legitimate software and setting up a watchdog Indecopu to oblige public entities to audit applications running on their employee PCs.

IT Services

Peru's IT services market is estimated to have grown around 12% in 2007 to a value of around US$269mn. Some 10% growth is projected by BMI for 2008. For a developing market, the percentage of IT market revenues generated by services is high at around 32%, although in line with the region and lower than for Brazil. In Peru, the growing level of investment in recent years in corporate management solutions is translating into demand for support and maintenance as well as more sophisticated IT services.

E-Readiness

The World Economic Forum ranked Peru 78th in the world in its most recent survey of 'degree of preparation to participate in and benefit from information and communications technology', some 25places behind Brazil. However, Peru had risen seven places and the report cited improvements in some institutions including Judicial, Police and Education. According to BMI estimates, the number of Peruvian internet users reached 6.2mn in 2007, representing 22% of the population. The percentage of broadband subscribers in the general population however was only 2.1%.

CONTENTS

Executive Summary

• Market Overview
• Industry Developments
• Competitive Landscap
• Computer Sales
• Software
• IT Services
• E-Readiness

SWOT Analysis

• Peru IT Sector SWOT
• Peru Business Environment SWOT

Market Overview

• Government
Authority
• Background.
• Hardware
• Software
• Services
• Industry Developments

Industry Forecast Scenario

• Table: Peru's IT Industry Indicators

Macroeconomic Forecast

• Table: Peru – Economic Activity

Competitive Landscape

Company Profiles

• Dell (Peru)
• SAP (Peru)

BMI Forecast Modelling

• How We Generate Our Industry Forecasts
• IT Industry
• Sources