At its annual forecast meeting with reporters, the research firm projected that tech expenditure in the region excluding Japan will swell by 7.6 percent to US$208.7 billion in 2005. Although higher than the 5.4 percent growth predicted for the global market, this figure is a decrease on the 11 percent growth for 2004.
"The trends we are highlighting are all about improved efficiencies, relatively slow growth just like you would have in mature industries," said Bertrand Bidaud, vice president at Gartner. "We're not talking sky-high growth rates anymore."
He added that the highest increase is expected in the software segment, where spending will improve by 12.4 percent to US$5.6 billion. Driving this change will be a trend towards more "componentized" applications that allow companies to adapt faster to changing business models, said Gartner vice president Ian Bertram.
"Web services is one of the key drivers for the software area," said Bertram. "People start to re-architect their infrastructure and what's driving it is changing business models. It's moving to a more agile system which is component-based, so I can plug things into my core application and take advantage of some of the Web services."
Gartner also predicted that open-source software will continue to make inroads in the region, with 60 percent of large and mid-size government agencies using it in their core business processes by 2010, compared to less than 15 percent today.
Several governments in the region have already thrown their weight behind open source, particularly in North Asia. In April, China, Japan and Korea commenced work on a collaboration to develop and nurture open-source software. Recently, the Beijing government rescinded a multimillion dollar contract with Microsoft, following complaints that it was overlooking homegrown enterprises.
"We've just seen an announcement of the government in China coincidentally canceling their US$3.6 million licensing agreement with Microsoft, and coincidentally may now go open source, and coincidentally now may go something like Asian Linux, of which the government has a lion's share of, and has been promoting," said Bertram.
He added that cost savings remain the primary driver for open-source software, but enterprises are also seeing it as a growth strategy.
"How you architect your environment--does it allow you to (move into) new business models, new growth models? Some of the proprietary systems don't," said Bertram
Other projections for the region included:
--Spending on offshore IT services is expected to reach US$50 billion by 2007.
--Micro-commerce, comprising payments with values of less than US$5, will generate US$30 billion in revenue per year by 2010.
--140 million telecommunications subscribers will be added in 2005, representing a 14 percent increase year-on-year.
The research firm also reiterated its forecast that the PC market is in for at least three lean years, with three of the current top 10 vendors departing the sector by 2007.
According to Gartner principal analyst Martin Gilliland, several companies appear to be candidates for consolidation, including HP and Gateway. Fujitsu and Fujitsu Siemens also appear to be "logical" partners, he said.
"Dell is the only one that is almost impervious to consolidation at the moment. They have been profitable from day one, they continue to be profitable, and they are significantly more profitable than anyone else except Apple. Everybody else has got to be looking for other ways to make profit," Gilliland added.
Meanwhile, Chinese PC maker Lenovo Group confirmed today its joint venture with IBM.
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