"Venezuela Information Technology Report Q4 2013" Published

We have made a downward revision to our forecast for Venezuela's IT market in the Q4 2013 following a downgrade of the economic growth outlook by our Country Risk team. There are downside risks from the uncertainty of the political and economic situation following the death of Hugo Chavez.

Furthermore, the devaluation of the bolivar in February 2013 has raised the cost of imported products, which we expect to squeeze unit shipments, particularly at the high end of the market. While there are many challenges for IT market growth, BMI continues to point to opportunities in Venezuela. It is one of the smaller markets in its region. However, it has a low PC penetration rate from which we infer there is potential for strong medium-term growth. Further, government PC programmes will boost sales, although most units will be procured locally with little scope for international vendors to compete.

Full Report Details at
- http://www.fastmr.com/prod/673261_venezuela_information_technology_report_q4_2013.aspx?afid=301

Headline Expenditure Projections

Computer Hardware Sales: From VEB5.7bn in 2012 to VEB6.8bn in 2013. The weaker growth environment, as well as the devaluation of the bolivar, resulted in a downgrade to our forecast for 2013 as it increases the price of imported hardware. Meanwhile, cheap computer programmes, and the PCs for schools programmes is a driver of unit shipments.

Software Sales: From VEB1.5bn in 2012 to VEB1.9bn in 2013. High levels of software piracy and the government's commitment to open source software will limit opportunities for proprietary software vendors.

IT Services Sales: From VEB1.3bn in 2012 to VEB1.7bn in 2013. We expect 75% of demand will come from large companies, with the oil sector still significant despite the fall in oil prices. However, there is medium-term potential for IT services sales to SMEs, particularly cost-saving cloud computing services.

Risk/Reward Rating

Venezuela's score remained flat in the Q4 2013 update with the impact of the devaluation of the bolivar in February 2013 already factored into our forecasts.

Key Trends & Developments

The outlook for the PC market has worsened with the devaluation of the bolivar in February 2013, however opportunities still exist in the market. Venezuelan computer shipments are forecast to continue to grow due to the government's affordable computer programmes, computers for education initiatives and more local production of inexpensive computers. The 'Va a mi Casa' programme has been extended to high school students, with the first laptops delivered to high school students in April and May 2013.The latest target is for 2.6mn computers distributed by 2014, with the government reporting that the 2mn mark was passed in 2012. Meanwhile, VIT announced three domestically produced tablets targeted at the local market that could see the trend of tablet sales growth hitting Venezuela in H213 and 2014.

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