Information Technology in Argentina

 

The Evolution of the Argentine IT Market:

 

 1988

 1989

 1990

 1991

 1992

 1993

 1994

 1995

Total IT Market ($US millions)

 520

573 

610

721

855

990

1242 

1367

 Annual Growth %

--

10.1

6.4

18.1

18.5

15.7

25.4

10.1

Source: World Development Indicators, 1997, World Bank

 

The Argentine Information Technology (IT) market, which includes hardware (HW), software (SW) and Services, measured in dollars, has been growing at a rate of ten percent annually. The hardware market has declined while the software market share has increased. As can be observed in the following charts, the average annual growth of each one of the segments during the period 1991-1995 was: 14.6 percent for hardware, 17.2 percent for software and 38.2 percent for services (this includes maintenance of HW and of SW, outsourcing and traditional services).  [8] 

 1991

1992

1993

1994

1995

Dollars

 Dollars

%

Dollars

%

Dollars

%

Dollars

%

Dollars

%

Hardware

 464

64.4

536

62.7

613

61.9

697

56.2

755

55.1

Software

 123

17.1

148

17.3

160

16.1

197

15.8

217

15.9

Services

 134

18.5

171

20.0

217

22.0

348

28.0

397

29.0

Total

 721

100.0

855

100.0

990

100.0

1242

100.0

1369

100.0

Note: Services include maintenance of hardware and software.

Source: United States Department of Commerce, International Trade Administration, 1996

The 1000 largest Argentine companies is the segment that has the highest consumption of total IT services and products, with 52% in 1994. Currently, the Government of Argentina purchases represent 8%. The government sector may not grow during 1995 or 1996 due to severe budget cuts. However, because its equipment is outdated, this segment has potential for growth in the medium term. Medium-sized to small companies composed 40% of industry consumption during 1994. This segment, during the last two or three years, has maintained its marketshare because of growing purchases of microcomputers and printers. The increase in this market was caused by the appearance of credit, economic stability, and the favorable exchange rate for the Argentine currency (one Peso equals one Dollar), combined with constant price reductions.

Another important feature of the local IT sector behavior is the growing market share (in units and Dollars) of microcomputers, peripherals, and software. Within the hardware category, personal computers (PC's) have more than compensated for the shrinkage in sales of midrange computers and mainframes.

With a market share of less than 17% a few years ago, microcomputer sales represented 30% of the total market ($1.2 billion) in 1994 while mainframes, mid range computers and related hardware (storage, etc) represented only 11%.

Mainframes

There are around 260 mainframes in Argentina, as of 1995. Twenty seven of these sites are at present migrating to IBM AS/400 or similar equipment. Major privatizations of obsolete public services such as telecommunications, petroleum production and water distribution will bring about significant upgrades in all mainframes and their related peripherals and services. The future of the mainframes remains unclear. Most users are naturally reluctant to do away with these expensive pieces of equipment, but are not yet fully convinced of installing UNIX systems. All systems engineers of these companies are aware of the better cost/benefit ratios offered by LANs for a myriad of applications.

Mid-range Computers

There are 2,000 IBM AS/400s in the market, and another 4,000 similar processors, mainly supplied by Hewlett Packard. Sales of these computers grew 25 percent over 1992 and all sources agree that this market will remain growing at a similarly steady rate for the following two years.

Micro Computers

Sales of PCs in Argentina grew 65 percent over 1992 and there are now over 1.5 million PCs throughout the country. Growth over 1994, while not as drastic as that of the previous yearis growing at quick pace. At this point in time, there is 24.6 PCs per inhabitant in Argentina. This ratio will rise in the future as LANs and WANs are expected to account for at least 75 percent of the demand for PCs. [8]



Microcomputer Sales 1989 - 1995
198919901991
199219931994
1995
Sales*3870130210280362380
Annual Growth84.20%85.70%61.50%33.30%29.30%5.10%
Installed Base*130
200330540
82011821562.6

* In thousands of units

Source: United States Department of Commerce, International Trade Administration, 1996

Personal Computers Per 1000 People, 1995


Argentina24.6


Brazil13.0
Chile0.0
Uruguay22.0

United States328.0
Venezuela16.7

Source: ITU World Telecommunications Indicators Database, 1995

Software

PC software and software for mid-range and mainframes differ not only in its charistics but in its channels of distribution as well. The price of software for medium and large machines also includes the high cost for service. This makes it difficult to separate services from software, considering that the same software publishers sell the software, the integration and customization of the product.

Local Competition

Local production of networking software is negligible, accounting for less than 2 percent of the total market. This factor is brought about by high local labor costs. No local firm is in a position to make investments as large as those of Microsoft and Novell to develop new solutions. Local end users are also used to working with U.S.-developed software, and moderately comfortable with working in English. Applications in Spanish could, however, enjoy a slightly higher demand than similar solutions in English.

Foreign Competition

U.S. suppliers such as Microsoft and Novell dominate the local market for networking software. Japanese software is reputed to be user-unfriendly, and local business people are aware that European technological levels are lower than those of U.S. suppliers. The excellent reputation earned locally by Microsoft and Novell still leaves a wide-open space for other U.S. suppliers to tap the expected surge in demand.

Evidence of software market growth in Argentina is the local presence through subsidiaries of the principal world suppliers including: J.D. Edwards, SSA, IBM, Microsoft, Lotus, Novell, Computer Associates, Informix, Oracle, and Autodesk among others.

The growth in PC software sales has been helped by the constant growth of microcomputer sales. Microcomputer sales may also be used to project the market for PC applications software.

Major Players in the Hardware/Software Market

A characteristic of the IT market in Argentina is its concentration in a few companies. In 1994, the $ 1.2 billion in supply sales was divided in the following manner: IBM, 43%; HP and Compaq, 6% each; NCR-AT&T, Unysis and Epson, 4% each. Three companies compose 50% of total industry sales and twelve companies represent 80% (including Xerox, TTI, Microsistemas, Sisteco, Bull and EDS, each one with annual sales of more than $20 million). [9]

Internet Activity

IT Export Areas

Back to the Main Page

Last Updated: 5/5/97