Australia information technology report q1 2015

Q1 2015
www.businessmonitor.com
AUSTRALIA
INFORMATION TECHNOLOGY REPORT
INCLUDES 5-YEAR FORECASTS TO 2018
ISSN 2041-7160
Published by:Business Monitor International
Australia Information Technology
Report Q1 2015
INCLUDES 5-YEAR FORECASTS TO 2018
Part of BMI’s Industry Report & Forecasts Series
Published by: Business Monitor International
Copy deadline: December 2014
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CONTENTS
BMI Industry View 7
SWOT 9
IT SWOT 9
Wireline SWOT 11
Political 13
Economic 14
Industry Forecast 15
Table: IT Industry - Historical Data & Forecasts (Australia 2011-2018) 15
2014 Outlook 15
Macroeconomic Forecasts 21
Economic Analysis 21
Table: Macroeconomic Forecasts (Australia 2010-2016) 23
Industry Risk Reward Ratings 25
Asia Pacific Risk/Reward Index 25
Table: Asia Pacific IT Risk/Reward Index - Q1 2015 28
Market Overview 29
Hardware 29
Software 36

Services 41
Industry Trends And Developments 49
Regulatory Development 54
Table: Government Authority 54
Government Initiatives 54
Regulatory News 56
Competitive Landscape 60
International Companies 60
Table: Dell 60
Table: Datacom 61
Table: SAP 62
Table: Panasonic 63
Local Company 64
Table: The Good Guys 64
Company Profile 65
SAP 65
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Hewlett-Packard 71
Table: Hewlett-Packard Financial Performance By Division: 76
Regional Overview 80
Demographic Forecast 84
Table: Population Headline Indicators (Australia 1990-2025) 85
Table: Key Population Ratios (Australia 1990-2025) 85
Table: Urban/Rural Population & Life Expectancy (Australia 1990-2025) 86
Table: Population By Age Group (Australia 1990-2025) 86
Table: Population By Age Group % (Australia 1990-2025) 87
Methodology 89
Industry Forecast Methodology 89
Sources 90

Risk/Reward Index Methodology 91
Table: It Risk/Reward Index Indicators 92
Table: Weighting Of Components 93
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BMI Industry View
BMI View: Due to high labour costs, BMI believes Australian enterprises could be among the early
adopters for AI applications such as IBM's Ask Watson service, which has already been trialled by ANZ
Bank. Emerging technologies aside, the growth outlook is relatively weak in Australia. This is in part a
consequence of market maturity, meaning growth will underperform the APAC average, which is weighted
to emerging markets but there is also macroeconomic downside as BMI expects economic growth to slow
over the medium term.
Headline Expenditure Projections
■
Computer Hardware Sales: AUD8.2bn in 2014 to AUD8.5bn in 2015, up 3.8% in local currency terms.
Slowdown in tablet demand due to market saturation will be offset by a stabilisation in desktop and
notebook sales in 2015 due to design innovation in the hybrid notebook market.
■
Software Sales: AUD4.7bn in 2014 to AUD4.8bn in 2015, up 0.8% in local currency terms. Security
software will outperform, particularly for small and medium-sized enterprises (SMEs) and consumers -
but the effect of XP enterprise upgrades will be diminished.
■
IT Services Sales: AUD9.7bn in 2014 to AUD10.7bn in 2015, up 9.6% in local currency terms. IT
services will be fastest growth area of the IT market over the medium term, with cloud services the key
growth driver as local companies try to use efficiencies enabled by the National Broadband Network
(NBN).
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Key Trends And Developments

After a sustained boom since 2012 the Australian tablet market appears to have peaked, in line with BMI's
expectations. High-street consumer electronics retailer JB Hi-Fi reported that sales in July 2014 fell by
5.5% year-on-year (y-o-y), mainly due to a significant slump in demand for new and replacement tablet
computers. We believe this data reflects the level of consumer satisfaction with existing products and the
slower rate of innovation by leading vendors such as Apple and Samsung that have produced iterative
improvements rather than significant changes in recent announcements. Although a small uptick is expected
in 2016 as mobile network operators seek to attract customers to their new 4G mobile broadband networks
by including tablets in new service bundles, sales are expected to fall in the following years as the
operational lives of high-spec devices - as well as their high cost - obviates the need to buy a replacement in
the short to medium term.
In contrast to the slowdown in tablet demand the Australian cloud computing growth story has plenty of
momentum remaining. The latest research by the Australian Communications and Media Authority
(ACMA) showed the adoption of cloud computing services continued in 2013. In March 2014 the ACMA
claimed that 36% of SMEs actively using cloud services believed that such services provided easier or more
convenient access to data and key resources (36%), assisted in making key productivity tools accessible
from multiple locations (15%) and that disaster recovery would be facilitated through the use of cloud-based
platforms (11%).
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SWOT
IT SWOT
SWOT Analysis

Strengths
■
High incomes and strong supporting infrastructure drive high levels of IT spending per
capita.
■
Strong government support for ICT programmes.
■

IT-literate population with high levels of PC ownership and a propensity for premium
devices.
■
Strong financial sector, a large source of demand for enterprise software and
services.
■
Tablet boom has offset the decline in desktop and notebook sales.
Weaknesses
■
Australia has a relatively mature domestic market, with correspondingly slow growth
rates.
■
Sensitive to volatility in the global economy.
Opportunities
■
High labour costs and proximity of low-cost competition make Australia a fertile
market for automation technologies such as IBM's Watson and other personal
assistant products.
■
Considerable demand for cloud computing services from both the public and
enterprise sector.
■
Government cloud computing strategy creates opportunities for vendors in the public
and SME sectors.
■
Potential for a rebound in notebook sales as hybrid designs evolve.
■
Other major IT projects in areas such as healthcare, education and smart cards.
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SWOT Analysis - Continued
Threats
■
A cheaper Australian dollar would affect consumer and business demand in the
import-dependent IT market, with downside weighted towards the latter years of our
forecast.
■
Vendors face threat of parliamentary enquiry into product pricing and are coming
under pressure regarding tax arrangements.
■
Data from retailers indicate a sharp slowdown in the tablet market in 2014, in line with
our long-held view that saturation and slower rate of innovation would result in longer
replacement cycles.
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Wireline SWOT
Australia Wireline SWOT

Strengths
■
Australia's overall wireline sector is host to a large number of service providers, many
of which offer a full range of voice, data and internet services.
■
Many service providers offer broadband internet connectivity by means of several
different technologies.
■
The penetration rate, measured as a proportion of buildings reached with broadband
network infrastructure, is extremely high.
■
The residential market supports strong demand for pay-TV services.

■
The business market supports strong demand for converged data services.
■
Australia's leading broadband operators continue to report strong internet and
multimedia service sales.
Weaknesses
■
Despite a significant number of service providers, the broadband market continues to
be dominated by Telstra.
■
Despite fixed-line market liberalisation and steady growth in the number of unbundled
local loops, Telstra remains the dominant player in the sector.
■
After a period of moderate growth, business demand for fixed telephony lines now
appears to be weakening.
■
Overall, demand for traditional fixed-line services is shrinking, resulting in a
diminishing market.
Opportunities
■
The National Broadband Network, announced in April 2013, aims to be completed
sooner and cheaper, with the trade-off being slower connectivity.
■
Demand for wireless broadband services, including WiMAX, 3G datacard and USB
modem-supported services is growing.
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Australia Wireline SWOT - Continued
■
Australia's leading broadband operators are investing in the development of higher

speed broadband services. This has potential to drive demand for new data services.
■
The government revealed that it has set aside AUD60mn for regional, rural and
remote telecoms projects; satellite and wireless broadband networks are seen as a
source of potential investment in remote regions.
Threats
■
Fixed-line sector may decline at a more rapid rate than expected, with potentially
negative consequences for ADSL growth.
■
Proliferation of naked ADSL could hasten the decline of the fixed-line sector.
■
Growing popularity of wireless broadband services could negatively affect the market
for fixed broadband access based on DSL and cable.
■
The high rate of broadband penetration reduces the scope for further growth in the
broadband sector; growth will slow as the market nears saturation point.
■
Following the election of the new Liberal-National Coalition government in September
2013, the NBN is likely to offer slower connectivity than originally envisaged.
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Political
SWOT Analysis

Strengths
■
Australia is a mature democracy with a broadly stable party system.
■
Economic stability over recent years supports the current political system and radical

groups are unlikely to gain substantial support.
Weaknesses
■
As one of the region's largest and most stable states, the country attracts many
refugees and economic migrants. The issue is a key source of domestic tension and
has been hotly debated in parliament in recent times as the capsizing of a boat led to
the death of a number of refugees. The issue continues to be debated in the federal
parliament with no sign that political parties will find a viable alternative that would
ensure the safe passage and fair processing of the refugees, while reducing the
possibility of people smuggling.
■
The fragility of the state governments' finances compared to the large infrastructure
projects that they need to undertake has led to questions with regards to the
compatibility of the federal-state system with the country's current development
needs.
Opportunities
■
Australia has historically enjoyed close military ties with the US. However, with the
rise of regional economic powers such as China, it will need to balance competing
military and economic ties.
Threats
■
Australia's early support for the US 'War on Terror', among other things, has made
Australians abroad a target for Islamic extremists.
■
Australia's close alliance with the US, particularly under John Howard, has left a
lingering feeling among some Asian governments that it is America's 'deputy sheriff'
in the region.
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Economic
SWOT Analysis

Strengths
■
A free-market economy supported by a highly educated workforce.
■
Blessed with rich natural resources, Australia's economic activity has been
augmented by demand for commodity exports and the investments made in the
mining sector.
Weaknesses
■
The persistent current account deficit increases vulnerability to capital flows and, by
extension, currency volatility.
■
The export basket is highly concentrated in commodities, and consequently exposes
the economy and currency to fluctuations in world prices for metals, coal and
agricultural goods.
Opportunities
■
The rapid expansion of Asian economies in recent years offers new opportunities for
diversifying trading ties from core European markets.
■
A low level of government debt has provided a certain amount of flexibility in fiscal
policy to support domestic demand through the downturn.
Threats
■
The high level of private sector debt - especially mortgage loans - fuelled by overseas
funding poses a threat to sustained growth and financial stability.
■

A collapse in exports from a drop in resource demand from China and other resource-
hungry countries would severely impact headline GDP growth.
■
Australia is vulnerable to extreme weather that may lead to droughts and floods,
which have become increasingly severe in past years as a result of global climate
change.
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Industry Forecast
Table: IT Industry - Historical Data & Forecasts (Australia 2011-2018)
2011 2012 2013 2014f 2015f 2016f 2017f 2018f
IT market value, AUDmn 19,715.8 20,585.3 21,414.9 22,654.8 23,941.6 25,169.8 26,413.2 27,667.8
IT market value, % of GDP 1.4 1.4 1.4 1.4 1.4 1.4 1.4 1.4
Computer hardware sales,
AUDmn
7,584.7 7,756.5 7,904.2 8,185.2 8,499.3 8,718.8 9,006.9 9,241.0
Personal computer sales, AUDmn 6,048.0 6,231.6 6,397.7 6,612.8 6,853.8 7,017.8 7,236.1 7,410.4
Software sales, AUDmn 4,087.1 4,162.3 4,345.1 4,728.1 4,764.4 5,099.4 5,272.1 5,483.8
Services sales, AUDmn 8,044.1 8,666.4 9,165.6 9,741.6 10,677.9 11,351.6 12,134.2 12,943.0
f = forecast. Source: BMI
BMI made a minor downward revision to historical data for the Australian IT market in the Q414 update,
but our medium-term outlook is unchanged. We maintain our view for solid growth in local currency terms,
as we forecast a CAGR of 5.3% 2014-2018. Over this period the market will remain stable at around 1.4%
of GDP. The Australian IT market has considerable medium-term potential, particularly in areas such as
tablets, cloud computing, real-time enterprise software and data centre growth.
However, it should be noted that as a result of BMI's in-house Country Risk forecast for significant
weakening of the Australian dollar against the US dollar over the forecast period, the IT market is forecast
to grow at a CAGR of just 0.1% in US dollar terms 2014-2018.
2014 Outlook
BMI forecasts the IT market will expand by 5.7% in local currency terms in 2015, to reach a value of

AUD23.9bn.
Despite the economic environment becoming less supportive of IT market expansion, we continue to
forecast GDP and private final consumption will grow in real terms in 2015. We forecast real GDP growth
of 2.3% in 2015 (the same as for 2014), and an increase from 1.3% real growth in 2014 to 1.6% in 2015.
PC penetration is high in Australia, limiting growth potential, but nonetheless we expect sales growth to
continue as high income consumers purchase personal devices on a short replacement cycle. We expect
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2015 to be a strong year for sales of traditional form factors such as desktops and notebooks after recent
declines. The withdrawal of Microsoft official support for the legacy OS XP in April 2014 should continue
to cause hardware upgrades, particularly in the enterprise and public sector markets. However, it will be
tablet sales that again outperform as the largest device category. Meanwhile, BMI considers there to be
potential for growth of hybrid notebook sales running Windows 8/8.1 as a result of design innovation on the
part of vendors, while at the low-end, Microsoft's decision to cut OS licensing fees on low-cost notebooks
should make them more cost-competitive versus tablets.
The Australian government is an important factor in the IT market through programmes such as the
National Broadband Network (NBN), which is extending connectivity across the country. National and state
governments will continue to roll out new initiatives, and the Victoria government has invested more than
USD150mn in IT in schools. New South Wales and Queensland were also rolling out IT for schools
projects. Meanwhile, an initiative by the not for profit organisation One Laptop Per Child saw 50,000
laptops distributed to the nation's schoolchildren by June 2014.
The enterprise IT outlook is the weakest out of retail, public sector and enterprise, with business confidence
susceptible to global headwinds and the domestic slowdown in economic activity. There are however areas
of rapid growth within the enterprise segment, which are mainly based on the increasing prevalence of
connectivity. Three key areas that stand to benefit are cloud computing, data analytics and machine-to-
machine communications, about which BMI holds a positive medium-term view.
In 2015, uptake of cloud services will continue to increase. Surveys indicate that cloud computing is a
priority for Australian CIOs, while the release of the government's cloud computing strategy in Q213 should
also boost deployments. Cloud initiatives have already been implemented by many of the country's leading
banks, and across sectors cloud adoption is spreading from storage and email to areas such as human

resources management. The government has adopted a six-year cloud computing strategy. Cloud computing
spending could reach around AUD4bn by 2017.
Market Drivers
The medium-term outlook is for stable IT market growth, underpinned by economic stability. BMI forecasts
the Australian economy will remain on a lower growth trajectory over the medium term, with real GDP
growth forecast to average 2.6% 2014-2018 and real private consumption growth to average 1.7% annually
2014-2018. However, we also highlight downside risk to this outlook, which could result in market
disruption. We expect a weakening of the Australian dollar from an average of AUD1 to the US dollar in
2013 to AUD1.3 in 2017 and 2018. Depreciation could undermine domestic confidence levels, and reduce
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consumer purchasing power of imported products, both of which would be detrimental to IT market
spending.
The maturity of the Australian hardware market means growth rates will be significantly slower than the
APAC average 2014-2018. BMI estimates that household PC penetration in Australia at just below 90% in
2014, meaning there is little scope for growth in first-time PC sales. However, there are large opportunities
in the personal/upgrade device market as we expect consumers will continue to be willing to spend on
innovative devices that offer new use cases. Tablets are the most prominent device meeting these
requirements, but we believe hybrids/convertibles and ultrabooks that use Haswell and, soon, Broadwell
chips could gain traction in Australia. There is also a significant medium term opportunity in the wearable
devices market, although it is too early to gauge potential market impact in 2015.
Increased reach of broadband infrastructure over the medium term will boost activities such as online
banking and shopping, while the increased upload speeds delivered by the NBN will be a crucial enabler for
widespread adoption of cloud computing services. The expansion of broadband infrastructure will also act
as a foundation for the ongoing modernisation of retail operations, including improved logistics and
distribution, as well as a shift to online sales.
One important feature of the Australian economy which could position it as a leader in emerging
technologies is the high labour costs in Australia that will generate demand for services that replace labour.
For instance, IBM's Ask Watson was adopted by ANZ Bank in H113 to enhance customer services and cut
costs. Such technology is in the early stages of commercial deployments, but BMI believes that Australia

could be a fertile market for such technology over the medium term due to the scale of potential labour cost
savings.
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IT Market Growth
(2011-2018)
IT market value, mn
2011 2012 2013 2014f 2015f 2016f 2017f 2018f
0
10,000
20,000
30,000
f = forecast. Source: BMI
Segments
Enterprise software demand in key verticals will continue to be centred on enterprise resource planning
(ERP), customer relationship management (CRM) and business intelligence solutions - but we also expect
these applications to gain traction among small- and medium-sized enterprise (SME) market. A catalyst for
wider adoption of enterprise software suites among SMEs is likely to be the provision of basic software
delivered in the cloud. Further, BMI believes security software has potential for strong growth over the
medium term as awareness about threats grows, particularly among SMEs.
In the enterprise segment regulatory compliance will result in continued spending by banks, and intense
competition in the retail sector is spurring spending on CRM and back-office systems. Competition in the
telecoms field is a driver for that key IT spending segment, where deregulation has led to new entrants.
IT services are forecast to be the outperforming segment of the IT market in the medium term, as demand is
driven by cloud computing services, data analytics and machine-to-machine communications. Cloud
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computing should see strong growth with the rollout of the NBN and the release of the government's cloud
computing strategy in 2013. Opportunities will exist in telecoms, healthcare and utilities verticals. Cloud
computing will be key as businesses look for opportunities to reduce cost and increase flexibility, and has

already gained traction in the market and spread beyond initial core application areas, with around one-third
of Australian organisations estimated to be using some cloud services.
Over the medium term the development of supporting infrastructure, new cloud computing offerings and
increased competition in this segment are expected to fuel further demand from end-users for this
technology. The federal government has set out a timetable for migrating government agencies' computing
systems to a public cloud environment. Australia's big four banks will remain in the vanguard of moves
towards cloud computing after revaluating their IT spend during the economic downturn.
Meanwhile, government initiatives such as e-government, healthcare and education will drive significant
opportunities for IT vendors over the medium term. The National E-Health Transition Authority aims to
create a paperless environment in Australia's health sector, including public hospitals. Although the
government is pursuing investments in IT in a number of areas, it is reviewing procurement procedures to
reduce cost, which could squeeze vendor margins. For instance, in early 2013 the Australian Government
Information Management Office (AGIMO) consolidated its contracts with Microsoft through a single
reseller to deliver cost savings of AUD100mn.
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Australia GVA By Vertical (%)
2014e
e = estimate. Source: BMI, national statistics, World Bank, UN
Summary
The hardware market is forecast to grow from AUD8.2bn in 2014 to AUD9.2bn in 2018, with PC sales
(including accessories) forecast to rise from AUD6.6bn to AUD7.4bn, boosted by computer procurement
for education and new form factors. Software spending is forecast to rise from AUD4.7bn to AUD5.5bn and
IT services from AUD9.7bn to AUD12.9bn.
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Macroeconomic Forecasts
Economic Analysis
BMI View: We are revising up our real GDP growth forecast for 2014 to 2.8% from 2.3% previously, given
the stronger-than-expected growth rate seen in H114. However, we remain below consensus, and expect

growth to slow to 2.3% in 2015 as the strong construction picture struggles to counteract the weakness in
external demand.
Australian real GDP came in at 1.9% quarter-on-quarter (q-o-q) annualised in Q214, slightly higher than
consensus expectations but nonetheless marking a slowdown in growth from the strong growth seen in
Q114. Given the stronger-tan-expected growth rate seen in H114, we are revising up our real GDP growth
forecast for 2014 to 2.8% from 2.3% previously. We remain below consensus (3.0%), however, and expect
domestic and external economic weaknesses to continue to result in a slowdown in growth, with our 2015
forecast remaining at 2.3%.
Lower Trend Growth To Be Expected
Australia - Real GDP Growth, % chg q-o-q annualised
Source: BMI, ABS
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Looking at the breakdown of the Q214 data, the most dominant trend was the acceleration in domestic
demand. Both private consumption and investment rebounded strongly, with domestic demand surging by
5.5% q-o-q annualised. However, net exports subtracted 3.7 percentage points from headline q-o-q growth
as exports fell by 3.2% and imports rose by 14.9%, resulting in a sharp rise in the trade and current account
deficit. Corresponding with the relatively strong performance of domestic demand, form an industry
perspective, manufacturing output expanded by 8.4% q-o-q, construction expanded by 5.6% q-o-q, while
mining contracted by 5.6% q-o-q.
Going forward, we continue to expect the mining industry to struggle under the weight of declining external
demand for Australia's raw materials, which should keep overall export growth subdued, if not negative.
Meanwhile, we believe that domestic demand will fail to maintain its current pace of growth. The
Australian Industry Group's performance of manufacturing and services gauges have both fallen back
below 50 in recent months, with profit margins remaining under pressure as input prices rise faster than
selling prices. We expect this to weigh on domestic economic activity over the coming months.
Construction Sector In The Driver's Seat
One area of significant strength over recent months has been the construction sector, with the performance
of construction activity surging above 50 amid a rapid rise in property prices, a renewed pickup in mortgage
lending, and strong commercial property construction. There is potential for rising property prices to

support continued construction growth over the coming quarters, as well as providing a boost to private
consumption. However, this is unlikely to arrest the trend of gradually declining economic activity across
the economy as the country's terms of trade weaken, putting downside pressure on household budgets.
Furthermore, with housing affordability once again coming under pressure thanks to higher property prices,
this will make it difficult for a self-sustaining cycle of rising property prices and rising consumer spending
to take hold. The rise in the unemployment rate, which we believe is partly structural in nature, will act as a
drag to further house price growth.
Speculative Property Demand Not Sustainable
As we recently pointed out, data from the Australian Bureau of Statistics shows that the proportion of
housing-related financial commitments attributable to investors (rather than owner-occupiers) is closing in
on previous peaks last seen in 2004 and 2008, which coincided with house prices easing in the following
months. Investment-related housing credit has increasingly driven both housing-related and overall credit
growth in recent quarters, and price declines could force these investors to sell in a downward trending
market. With an overvalued property market being the main source of economy-wide credit expansion, any
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weakness has the potential to lead to a sharp decline in overall credit and money supply growth, which
would in turn lead to weakness in economic activity and further weakness in the employment picture.
Table: Macroeconomic Forecasts (Australia 2010-2016)
2010 2011e 2012e 2013e 2014f 2015f 2016f
Population, mn 22.4 22.7 23.1 23.3 23.6 23.9 24.2
Nominal GDP,
USDbn
1,247.3 1,499.6 1,555.1 1,501.2 1,474.2 1,454.3 1,452.3
GDP per capita,
USD
57,009 67,165 66,663 61,709 64,105 62,630 61,947
Real GDP growth,
% y-o-y
2.7 2.5 3.8 2.4 2.8 2.3 2.5

Industrial
production, % y-o-
y, ave
4.7 1.2 4.6 3.6 1.6 1.6 2.1
Consumer price
inflation, % y-o-y,
ave
2.8 3.4 1.7 2.4 2.4 2.1 2.3
Consumer price
inflation, % y-o-y,
eop
2.7 3.1 2.2 2.7 2.1 2.1 2.4
Central bank policy
rate, % eop
4.75 4.25 3.00 2.50 2.50 2.50 2.50
Exchange rate
AUD/USD, ave
1.09 0.97 0.97 1.04 1.11 1.18 1.23
Exchange rate
AUD/USD, eop
0.98 0.98 0.96 1.12 1.14 1.22 1.25
Budget balance,
AUDbn
-58.1 -37.2 -32.4 -31.2 -41.3 -43.7 -43.7
Budget balance, %
of GDP
-4.3 -2.6 -2.2 -2.0 -2.5 -2.6 -2.4
Goods and
services exports,
USDbn

289.5 319.6 312.3 284.0 297.7 298.5 309.5
Goods and
services imports,
USDbn
282.5 307.7 336.8 293.1 296.4 290.8 297.7
Current account
balance, USDbn
-48.7 -41.0 -65.4 -44.9 -32.2 -20.3 -12.4
Current account
balance, % of GDP
-3.9 -2.7 -4.2 -3.0 -2.2 -1.4 -0.9
Foreign reserves ex
gold, USDbn
34.1 42.8 44.9 50.1 53.5 57.0 60.4
Import cover,
months
1.4 1.7 1.6 2.1 2.2 2.4 2.4
Total external debt
stock, USDmn
1,168,828.6 1,286,128.8 1,392,940.5 1,353,181.5 1,322,072.1 1,233,162.8 1,205,491.8
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Macroeconomic Forecasts (Australia 2010-2016) - Continued
2010 2011e 2012e 2013e 2014f 2015f 2016f
Total external debt
stock, % of GDP
93.7 85.8 89.6 90.1 89.7 84.8 83.0
Crude, NGPL &
other liquids prod,
000b/d

569.2 495.7 484.2 411.8 409.3 430.0 441.0
Total net oil
exports (crude &
products), 000b/d
-455.6 -574.0 -607.0 -689.4 -702.1 -694.5 -693.9
Dry natural gas
production, bcm
45.9 45.6 48.2 49.8 52.6 85.2 109.3
Dry natural gas
consumption, bcm
33.4 35.1 36.1 37.0 38.0 38.9 39.9
Source: National Sources/BMI
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Industry Risk Reward Ratings
Asia Pacific Risk/Reward Index
BMI View: BMI's Asia Pacific IT Risk/Reward Index (RRI) compares the potential of a selection of the
region's markets over our medium-term forecast period to 2018. The Q115 index reflects our analysis of the
political and economic risks, as well as the risks associated specifically with IT intellectual property (IP)
rights protection and the implementation of government initiatives to develop IT markets and local industry.
There are several changes in the position of markets in our Q115 index, and a net improvement in the
regional average score. This was driven by stronger sales of PCs (including desktops, notebooks and tablets)
in several key markets, as well as large scale investments by international IT enterprise vendors looking to
tap into the region's growth story. The average regional IT score increased 0.7 percentage points
(pps) quarter-on-quarter (q-o-q) to 56.3 out of 100, slightly behind the European average of 57.0, but with
greater upside potential as the region continues to develop.
There was a change at the top of the table, as South Korea reclaimed top spot from Singapore. South Korea
moved up with a 1.2pps q-o-q improvement in its overall score, as BMI's in-house Country Risk team
upgraded the country rewards score, reflecting the medium-term growth prospects for the economy as a
whole. South Korea continues to score highly in the industry rewards category, second only to China, with a

score of 70 out of 100, supported by high per capita spending and high penetration not only of desktops and
notebooks but also of tablets and increasingly hybrid notebooks. There is scope for an uptick in enterprise
IT spending in the medium term as vendors focus on cloud computing and IT services opportunities.
Adoption levels among South Korean firms remain low considering the country's advanced economy status,
but we expect this to change as competition in a range of sectors in the wider region intensifies, driving
investments in cost saving products and solutions.
Singapore dropped to second position in the rankings in Q115, although there was no change to its score of
72.8 out of 100. Singapore has always scored highly in our index, as one of only two countries with the
maximum score of 100 in the country rewards category. However, it scores slightly below average in the
industry rewards categories due to the relatively small size of its population, and therefore its IT market.
This is offset by Singapore's position as a regional hub for cloud computing services and data centres, which
is continuing to attract major inward investment by global and regional vendors.
Hong Kong is in third position in the index, closing the gap with Singapore as a result of a 1.7pps
improvement in the industry rewards category. BMI upgraded the outlook for medium-term IT spending
Australia Information Technology Report Q1 2015
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