The information technology sector appears to be weathering the economic storm better than most
Published: 16/05/2010 at 12:00 AM
Newspaper section: Spectrum
The sun always shines brightly on the IT industry regardless of economic or political conditions, with widespread consumption of IT products ensuring steady growth, says Ekachai Sirijirapatana, president of IT City.
WORLD LEADER: Few technology shopping malls in the world can match Pantip Plaza’s eclecticism. PHOTO: DON SAMBANDARAKSA
With 40 branches in Bangkok and the provinces, the SET-listed chain is well positioned to gauge the direction of the IT retail trade.
First-quarter results underscore the optimism, as the company's net profits grew to 41.4 million baht from 22.2 million in the same period last year. It even posted year-on-year growth in April, when the political temperature reached boiling point, partly because the same month in the previous year also saw mass rallies and political violence.
Growth should also be positive this month and next with the school holidays ending. However, Mr Ekachai expects results to be less rosy than the performance in the first quarter.
With the large number of red-clad neighbours not too far from the doorstep of its main branch at Pantip Plaza, IT City has been facing some tough challenges over the last few weeks.
"In recent weeks, as political problems rocked the city, it led to sales at Pantip Plaza dropping - but we are still able to grow because we have branches elsewhere," said Mr Ekachai.
"Right now, if you go shopping anywhere you'll notice that malls in suburban areas far from the protesters are attracting more people."
However, the main driver of the industry is technological innovation. This year a big boost to sales has come with Intel's introduction of a new family of processors that feature integrated graphics capabilities, complementing the advances made by Microsoft's new Windows 7 operating system for PCs.
"They meet consumers' requirements," he said. "There is no denying that better sound and picture quality help with entertainment and music, and make everything much better.
"This is in addition to the wireless capability that came on to the market two to three years ago. So this new technology from Intel and Microsoft, together with wireless capabilities sits well with users who want to be able to use a computer anywhere and anytime."
Mr Ekachai said the much lower price of computers today compared with 10 years ago has also drawn buyers. The entry-level price point has dropped steadily, with systems priced below 20,000 baht, sometimes even as low as 14,000 baht, considered to be good value.
IT City’s Ekachai Sirijirapatana.
Keeping pace with the surge in computer sales are accessories such as portable hard drives and AirCards. In fact AirCards, which provide wireless internet access by just plugging them in, have been around for a few years, but have become hot sellers this year because people increasingly want to personalise their systems.
However AirCards have not pushed routers off the shelves for good because the latter are still very useful at home as they allow many people to use a single internet connection simultaneously.
Notebook computers remain the favourite among consumers and easily outpace smaller netbooks, which are specifically designed for routine internet and email use, but lack the speed and storage capacity of larger models.
"Netbooks cannot compete against notebooks and this is mainly because we don't have 3G yet," he said, referring to stalled plans to make wireless broadband universally available. "When we do get full 3G it will help, but not having it today is an obstacle not only for netbooks but also PDAs and smartphones."
Aside from computers, digital cameras are performing better this year compared to last year. Mr Ekachai explained that this was because prices are falling while pixel-counts are increasing, and some new models have additional features such being able to be used underwater.
Interestingly, IT City has seen the sale of voltage regulators and uninterruptable power supplies (UPS) jump in recent months. While a regulator prevents voltage surges damaging a computer, a UPS is able maintain power to a computer for a short while during a power cut. One can buy a good UPS for around 2,000 baht, while a regulator costs around 1,000 baht.
"This year, these two items are selling very well. This could be because it is not just computers, but things like refrigerators and other electrical goods that are now increasingly fitted with electronic circuit boards, and an electrical surge could damage them."
The government's policy of distributing computers to schools is also helping the industry, with effects being seen from the fourth quarter of last year. If this project lasts three years the impact will continue until 2012.
"This helped a lot because there are not many computers in the provinces. And when schoolchildren use them, they in turn want to buy their own.
"Computers that 7th graders buy are mostly desktops, and not notebooks because they only cost around 10,000 baht and installments over a two-year period work out at less than 1,000 baht, which isn't a heavy burden on parents, and this certainly spurs demand."
That the provinces lag behind Bangkok in IT usage is underscored by IT City's own performance - although it has 21 branches in the provinces and 19 in Bangkok, revenues are higher in the capital.
However, growth is better in the provinces because it is rising from a lower base.
Looking ahead, Mr Ekachai sees a clear direction for personal use and wireless capabilities, with new products that will be introduced from now to the end of the year meeting these demands. More touchscreen products, both PDAs or smartphones, will also be on offer.
"I am seeing five- and seven-inch screens that will better serve people's needs - every brand is going in this direction, led by Apple."