Buildouts not Rollouts
India is expected to add around 85 mn new mobile subscribers in 2007. For the first time, India is expected to beat China in mobile subscriber additions for a full year. This sharp growth in subscriber additions would call for a huge network expansion drive, which is expected to result in investments to the order of $10 bn or more. Around $8.5 bn of this would be investments flowing into mobile service networks alone. Broadband, IP VPN and others would account for another $2 bn of investments.

There will be big marketing buzz around 3G and WiMax, as each lobby works hard to prove its superiority over the other. Initially, 3G operators are expected to position 3G mobile telephony as a premium service to boost their ARPUs (average revenue per subscriber) and focus is on its adoption in urban areas. Also, seamless roaming across circles and geographies will work to their advantage. WiMax operators, on the other hand, could be selling the service as a means to boost broadband usage in smaller towns and even in remote rural areas.

Handset vendors will also bring in 3G-ready handsets to the market, while Intelthe biggest proponent of WiMaxcould be launching WiMax-ready laptops in 2007. Operators will test 3G and WiMax on a much wider scale, but may have to delay their commercial rollouts until early 2008, when the spectrum-availability issues are ironed out. The Department of Telecom (DoT) is engaged in separate dialogues with the Ministry of Defence and the Department of Space for freeing up spectrum for 3G and WiMax, respectively.

Optical fibre cable links may replace some of the existing Defence wireless links with an objective to release additional spectrum in the relevant frequency bands. This means that wireless frequency will not be available in all telecom circles. Instead, IDC expects a phased rollout of 3G in a few states/telecom circles.

Experimentation in IT Retailing
The year will see IT vendors trying out many new approaches in product retailing. The efforts will focus on wooing SOHO and individual customers for converting them into impromptu buyers. Experimentations will be seen in retail formats, in-store and on-site promotions, product bundling, and alternative payment options.

Retailing from exclusive retail outlets in malls or retail stores and from branded IT product stores will be under the IT vendors scanner. The year will see emergence of several single brand or multiple brand IT stores offering a bouquet of IT products. Multi-brand IT product retail stores like HCL Digi-Life stores, Saharas IT Junction initiative, Pantaloon Retails e-zone, etc are already functional.

Vendors will try to offer compatible digital products of their own brands or brands of partner vendors to engage and familiarize home and SOHO users with complementary technology products. Such experiments are likely to result in a huge choice of entertainment, lifestyle and convenience products for personal and home use through the year.

With the evolution of IT retailing, Indian retail chain managers will have many challenges to addressthe right inventory mix, innovative and attractive bundling schemes/offers, financing options, adequately trained manpower to cater to and convert the casual walk-throughs into real buyers.

Organized format retailing, which accounted for around 23% of desktop market shipments in India during the April-June 2006 quarter is, therefore, expected to witness experimentation with the evolution of a whole new set of go-to-market routes in 2007.

BRIC-like Performance
While Asia is home to India and China, two of the dynamic BRIC economies, the region contains a number of other countries with potential to outpace the BRIC economies in the coming years. These Emerging Asian Countries (EACs) include Pakistan, Sri Lanka, Bangladesh, Thailand, Malaysia, Vietnam, Indonesia, and the Philippines.

Within these EACs, overall GDP growth is expected to flatten through 2010 to a rate of around 5.4%. Stellar markets, however, exist among the rapidly growing EACs.

As GDP growth levels taper off through 2010, IT spending will expand dramatically, with a market-wide compound annual growth rate (CAGR) of 12.5% over the same period, or 80% growth over the market size in 2005. In addition, the higher growth in Pakistan, Sri Lanka, Bangladesh, and Vietnam is expected to account for a combined 16.1% of the $15.6 bn IT market in 2007.

Worldwide IT Spending Marginally Higher
In the past two IDC Top 10 Predictions documents, we predicted mid-single-digit growth for the worldwide market as a whole. We will see the same pattern in 2007. Worldwide IT spending will grow 6.6% in 2007, up from 6.3% in 2006.

The Bottomline
Worldwide IT markets continue to be in a long-term period of almost boringly moderate IT market growth. But this does not mean that 2007 will be a boring, "mature" year within the IT market. On the contrary, IDC predicts that this cap on total market growth is, once again, setting the stage for vendors relentless hunt for growth pockets and accelerating their adoption of new disruptive business models.

Kapil Dev Singh and the IDC team
maildqindia@cybermedia.co.in

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