As a part of the country's economy, the ICT market is influenced by economic development trends and is sensitive to macroeconomic and political changes. Igor Kim, the Business Development Manager at Acer Kazakhstan, discussed the current state of the ICT market in general and the IT equipment market in particular, as well as forecasts for its development.
- Igor, what is the current situation in the ICT market and what are the growth rates for the IT equipment market?
- According to IDC data, the ICT market in Kazakhstan grew at an average annual rate (CAGR) of 9.8% from 2018 to 2022, reaching 2,504.2 billion tenge in 2022. The main market segments that contributed to this overall growth were cloud services (+39%), IT equipment (+18%), and software (+12%).
Regarding the IT equipment market, hardware accounted for 48.9% of the market in 2022 (1,224.4 billion tenge). The market for personal computers (PCs) in 2022 was valued at 320,632.2 million tenge. The largest share was held by the laptop segment at 74.4%, followed by desktops at 14.3%, and tablets at 11.3%.
The average annual growth of the market during the 2018-2022 period was 33.6%. The highest growth rate (98.1%) was recorded in 2020. During this time, the desktop market grew by more than half, the tablet market doubled, and the laptop market tripled.
If we look at the digital technology market, in 2019, according to GFK, 250,000 laptops were sold off the shelves. In the current year, 2024, it has also reached 250,000 devices, meaning we have returned to pre-pandemic levels. This discussion is currently only about retail. The personal computer market in 2019 comprised 305,000 devices imported into Kazakhstan, and then the pandemic hit.
Before the pandemic, the market grew at an average of 10%, while during the pandemic year, the growth exceeded 50%. This was due to the fact that during the lockdown, many had to work from home, and children had to study online. If previously a family had, for example, one PC, which was sufficient, during the pandemic it became necessary to provide laptops for all family members who were working and studying. For these and several other reasons, the PC market showed growth of more than 50%. According to IDC, in 2020, around 620,000 devices were imported into Kazakhstan, and 580,000 in 2021. In 2022, there were 610,000 devices, but in 2023, there was a significant market decline of over 25%, resulting in only 484,000 devices.
Overall, starting from 2020, the market has been growing. The pandemic contributed to this growth, and in 2022, parallel imports played a role. Over these years, the computer equipment fleet has significantly updated, and the current market decline is inevitable.
- What are the most promising areas for market development?
- According to IDC's forecast, the fastest-growing segments in the market over the next five years will be cloud services (CAGR +20.9%), IT services (CAGR +14.8%), and software (CAGR +13%). Traditional market segments, such as equipment and communication services, will grow at a slower pace of 3.6% and 5.8%, respectively. Cloud services represent one of the fastest-growing segments not only in Kazakhstan but globally. The growth of the cloud services market will continue even after 2027.
- What is the forecast for the IT equipment market in Kazakhstan for the coming years?
- Until 2027, the IT equipment market will grow significantly slower than in previous years. Some segments are expected to experience a decline. For example, a decrease in the personal computer market volume is anticipated (CAGR 2023-2027 -1.8%), PC monitors (CAGR 2023-2027 -5.4%), and printing peripherals (CAGR 2023-2027 -5.6%). However, due to the active implementation of 5G and the subsequent increase in ASP, the smartphone market will grow in monetary terms (CAGR 2023-2027 +2.6%).
Overall, the explosive growth of the PC market during the pandemic years will have consequences in the coming years. The device fleet has significantly aged, so stagnation is expected compared to the high base of 2020-2022, especially in the laptop and desktop segments.
The only segment that is not declining but continues to show growth is gaming laptops, which are benefiting from the basic and declining sales of desktops. People have realized that it is better to buy a multifunctional device that can work, stream movies, create content, play games, and connect to a display if needed.
- What major players are present in the Kazakh market? What is their market share?
- The top four players in the Kazakh market are roughly the same as those in the global market: Asus, Acer, Lenovo, and HP. We periodically share the market with Asus: sometimes we have 25.9%, sometimes they do. Lenovo ranks third, and HP is fourth. Thanks to the correct strategy of the Kazakh office, Acer consistently holds a market share of 25% in Kazakhstan, while globally it is no more than 8%. At its peak, in 2018-2019, we reached 30%, maintained that for two years, but then the supply chain was disrupted, leading to a rollback as our needs were not met. In early 2022, we returned to 17%, and now we have recovered to 25%.
- Will you be able to return to 30%, as before?
- It is not the easiest task, but I believe it is possible; I have faced a similar challenge before. In 2015, Acer's market share in Kazakhstan was only 14%, and through joint efforts, we reached 30% in 2018. I think we need to increase our presence in product categories, be more active in the so-called open market, and build an ecosystem that provides our customers with more than just "hardware." Pessimists predict that the market will decline by 10% annually until 2027. I believe it will be +5% or flat.
- What market share does Apple hold?
- When determining market share, we always exclude Apple. The customer segment there is specific. In terms of shares, Apple has about 7% market share in Kazakhstan for MacBooks, according to GFK.
- As the main trend in the transformation of the Kazakh retail market for digital technology, you mentioned the migration to online. Will online shopping be able to completely replace offline stores?
- I think not. Online is convenient for consumers due to the variety of products, price comparison, and reading reviews. Currently, marketplaces are becoming a kind of search engine where we study products and their characteristics. For some, the large volume of product information is an advantage, while for others, it can be challenging to filter through it and separate the truth; this segment will always exist. There are people who want to learn how to use gaming laptops or design software, and retail needs to transform into centers of competence to assist customers. Only by doing so can they attract customers from online. The share of online sales has increased from 10% in 2021 to 25% in mixed retail and up to 50% in specialized retail chains. If retail now reorganizes, leaving one or two stores in major cities, making them centers of competence and emotion, then online will not be