Personal computer purchases in the country dropped by a staggering 49 percent in the fourth quarter of 2022 compared to the same period the previous year.
A report from the International Data Corp. (IDC) showed the Philippine PC market was only at 464,000 units during the October-December 2022 period, 48.9 percent lower than in the same quarter of 2021.
PC market purchases also declined by 18.5 percent in the fourth quarter of 2022 compared to the previous quarter of the same year.
In the report, IDC associate market analyst Jeeno Velasco said the market declined for both notebooks and desktops largely due to the fact that household spending was geared toward the holiday season even as macroeconomic pressures further drove inventory rationalization among vendors.
It was observed that even the commercial space has not recovered as PC purchases of both the government and enterprise sectors weakened by 44.7 percent and 25.2 percent quarter on quarter, respectively. The report noted that the national government has not announced any major plans involving information technology spending, while the enterprise segment is more reluctant to procure more units due to its negative financial outlook.
Velasco explained that demand for desktops and the influx of company workers required to report back to work should have increased shipments for the corporate sector but this did not pan out, as economic issues such as rising inflation, higher interest rates, and a looming recession abroad dampened corporate spending, especially for business process outsourcing (BPO) companies.
The Acer group accounted for the biggest share of the Philippine PC market during the fourth quarter of 2022 at around 25 percent, followed by Lenovo, HP, Asus and Dell Technologies.
Last January, Gartner released a report saying that worldwide, shipments of PCs, tablets and mobile phones are projected to decline by 4.4 percent in 2023, still an improvement from the 11.9 percent decline the devices shipment market suffered in 2022.
Gartner senior director analyst Ranjit Atwal said the depressed economic market will continue to dampen for devices throughout the year and just as business confidence was beginning to recover after the worst of the pandemic, it has now fallen significantly in most regions.
He added that they do not expect relief from inflation and the bottom of the recession to occur until the fourth quarter of 2023.
PC shipments are expected to continue recording the worst decline of all the devices in 2023 at 6.8 percent, after a 16 percent decline in 2022.
Gartner also reported that worldwide smartphone shipments is forecast to decline four percent this year, noting that consumers are holding onto their phones longer than expected, from six to nine months, and moving away from fixed to flexible contracts in the absence of meaningful new technology.
End-user spending on mobile phones is expected to decline 3.8 percent in 2023. Gartner noted that vendors are passing on inflationary component costs to users, which is dampening demand further.
In another report, Gartner said it expects worldwide IT spending to increase by 5.5 percent to $4.6 trillion, as all regions are expected to have a positive IT spending growth this year despite continued global economic turbulence.
Gartner explained that macroeconomic headwinds are not slowing digital transformation and IT spending will remain strong even as many countries are projected to have near-flat GDP growth and high inflation this year.
The report projects the software segment to see double-digit growth this year as enterprises prioritize spending to capture competitive advantages through increased productivity, automation and other software-driven transformation initiatives.
However, the devices segment is expected to decline by five percent this year as consumers defer device purchases due to declining purchasing power and a lack of incentive to buy.
The 4.6 percent decline in devices spending in the whole of 2023 is however smaller compared to the 10 percent drop in 2022 compared to the previous year. But an 11 percent increase is projected for 2024.
Statista projects revenues in the IT services market in the Philippines to reach $1.75 billion this year. The market’s largest segment is business process outsourcing with a projected market volume of $570 million.
Revenue is expected to show a compounded annual growth rate from 2023 to 2027 of 9.2 percent, resulting in a market volume of $2.49 billion by 2027.
The average spend per employee in the IT services market is projected by Statista to reach $36.15 this year.
The gloomy economic outlook does not seem to affect streaming entertainment service provider Netflix though.
Statista in a recently released report said that from 182.86 million paid subscribers worldwide in the first quarter of 2020, the number of Netflix subscribers has increased steadily to 232.5 million in the first quarter of 2023.
Netflix, which operates in more than 190 countries worldwide, is facing increased competition from streaming rivals including Disney, HBO and Amazon, and has even cut prices in some countries in an attempt to attract more subscribers.
Disney, however, does not seem to share the same trend.
From 54.4 million subscribers in May 2023, there was a continued increase in the number worldwide, reaching a peak of 164.2 million in the fourth quarter of 2022. However, the number of subscribers dropped to 161.8 million in the first quarter of this year, Statista reported.
It earlier noted that in April 2022, over 98 percent of Filipino internet users aged between 16 and 64 used a video streaming subscription service.
2020 saw a boom in streaming in the country as movie theaters and live cinema were largely shut down due to the pandemic and Filipinos heavily relied on in-home entertainment to cope with cabin fever, especially in the Philippines which has the longest imposed lockdown.
As of the first quarter of 2022, the leading streaming service in the Philippines was Netflix, with a 31 market shares, followed by iflix with 21 percent.
For comments, e-mail at mareyes@philstarmedia.com