Asian Internet, PC Markets Prepare for Takeoff

Led by China, the number of active Internet users and PC owners in the Asia-Pacific region will increase dramatically in the coming years, according to eMarketer and Dataquest.

The number of active internet users in the Asia-Pacific Region will account for more than 27 percent of the world’s total online population by 2004, according to a eMarketer’s eAsia Report.

The report found that the active Internet population in the region will rise from 49 million users in 2000 to 173 million Net users in 2004, a 38 percent compound annual growth rate (CAGR).

“Currently, the Internet penetration in Asia is still relatively low compared with the rest of the world, accounting for only 21 percent of the world’s online population,” said Eddie Cheung, analyst at eMarketer. “By the end of 2004, however, Asia will see its Internet population rise to slightly more than a quarter of the world’s total.”

eMarketer’s report also found that Japanese Internet users currently account for more than 36 percent of the total Asian Internet population. This high percentage will quickly dissipate as Internet development in China continues to gain strength. By the end of 2004, eMarketer estimates that China’s Internet users will account for 17.4 percent of Asia’s total Internet population. Japan’s user base will shrink to 18.5 percent.

Asia Pacific’s e-commerce revenues have grown dramatically over the past year with revenues reaching $39.4 billion at year-end 2000, and eMarketer estimates revenues will continue to climb to more than $338 billion by the end of 2004.

“Even though total Asian e-commerce revenues will increase substantially over the next few years, the region as a whole still accounts for only a fraction of the total revenues on a worldwide basis,” Cheung said. eMarketer expects total Asian e-commerce, as a world percentage, to peak at 14 percent by 2001, but to shrink to 10.6 percent by the end of 2004.

Other findings from the eMarketer’s report include:

• Asia has a much lower level of B2C activity than B2B activity. B2C revenues grew to $3.2 billion at the end of 2000 and will grow more than tenfold to $38 billion year-end 2004.
• Total Asian B2B revenues grew to more than $36 billion in 2000. B2B e-commerce revenues will climb to more than $300 billion by 2004.
• Poor fixed-line telephone penetration in certain Asian countries, have resulted in wireless phones becoming more of a substitute not a complement to traditional wireline phones.
• Currently there are more than 18 million i-mode subscribers in Japan, making NTT DoCoMo the biggest ISP in Japan.
• Even though wireless Internet access presents a convenient option for people to surf the Internet, the experience is currently somewhat limited.

The Asia-Pacific personal computer market experienced robust growth in 2000 with unit shipments reaching 17.3 million units, a 30 percent increase over 1999 shipments, according to Dataquest Inc. In the fourth quarter of 2000, the market grew 15 percent over the fourth quarter of 1999. Gartner Dataquest analysts said the market could have grown even more, but it was impacted by economic factors outside the region.

“The overall market failed to achieve higher growth rates in the fourth quarter because of the negative impact of the U.S. currency exchange rate, which affected the cost of systems,” said Lillian Tay, senior analyst for Gartner Dataquest’s Computing Platform group. “The negative reports of the U.S. market caused a dampening effect of a normal buying frenzy period, and new technologies introduced in the quarter did not entice buyers as much as was hoped for.”

IBM, which had been the No. 1 vendor in 1999, grew 28 percent in 2000, but it slipped to the No. 3 position. Legend became the No. 1 vendor as its shipments in 2000 surpassed 1.8 million units, an increase of 89 percent over 1999. Samsung and TriGem were the other top-tier vendors that grew well above the industry average with increases of 87 and 100 percent, respectively.

China, Korea, India, Indonesia and Thailand posted strong growth rates and increases in market shares from 1999. China, the No. 1 country in the region, grew 33 percent with shipments of 6.6 million units. Korea followed China with 76 percent growth in 2000 and shipments of 3.6 million units. India increased shipments by 50 percent, as shipments totaled one million units. Indonesia increased 39 percent with shipments eclipsing 383,400 units. Thailand experienced a 45 percent jump in shipments in 2000, as units reached 358,000 units.

“China is such a huge market in Asia/Pacific and success in China can propel the market share of a vendor. China’s entry into the World Trade Organization may introduce more PC vendors into the market and increase competition. It is therefore imperative that existing vendors have a concrete business strategy and invest to grow countrywide,” Tay said.

For more stories on the Asian Internet markets, visit the CyberAtlas Asia Edition.