CLOUD COMPUTING is expected to account for 13% of the Philippine information technology services market by 2020, a report by BMI Research showed.
“Driven by the digitization of government agencies and SMEs, datacenter demand in the Philippines has been growing strongly over the past few years. We forecast cloud computing spending to grow at an average annual rate of 31.7% over the five-year period to 2020, reaching P14.9 billion,” BMI Research said in an industry trend analysis report released on Monday.
“By then, we believe cloud computing will account for 13.3% of the Philippines’ IT services market, more than double its 6.1% contribution in 2015.”
However, BMI Research, the research arm of the Fitch Group, said the local data center industry, which would meet the boost in IT service demand, is still “relatively small” and its infrastructure availability “pales in comparison to other Asian markets.”
“Datacenter operators have to rely on a close partnership with either PLDT or Globe Telecom for connectivity; the two dominant telcos have the upper hand to limit competitors’ scale and capitalize on rising demand for IT services themselves.
The research firm specifically cited PLDT for its P10-billion investment in its datacenter business over the next two years, placing it “in a prime position to fulfill enterprises’ rising IT service demands.”
Despite the industry’s improvements, the Philippines still lags behind other countries in the Asia Pacific in terms of cloud adoption.
Citing data from Asia Cloud Computing Association’s Cloud Readiness Index (CRI) 2016, it said that the Philippines ranked ninth out of 14 Asia Pacific countries surveyed, while scoring the poorest in the same index in terms of broadband quality.
However, BMI noted a “possible liberalization” of the telco industry, citing the promise of the government to establish a national broadband network, “which could open the market to smaller players.”
“We see one key upside to the development of the Philippines’ broadband market over the longer-term in possible reform of the telecoms sector headed by the new Duterte administration,” it added.
In his first State of the Nation Address, President Rodrigo R. Duterte said that he would task the newly established Department of Information and Communications Technology with the development of a National Broadband Plan for the Philippines.
“Mr. Duterte’s leadership could see the revival of the construction of a national broadband network, a plan that had been abandoned in 2008 due to a corruption scandal,” BMI said, referring to the National Broadband Network deal with China’s Zhong Xing Telecommunications (ZTE) Corp.
“A second attempt at constructing a national broadband network, if successful, will only yield results after our five-year forecast period. Until then, we believe operators will be the primary beneficiaries of growing cloud service demand through their advantageous ability of bundling services with connectivity.”
Hastings Holdings, Inc., a unit of PLDT Beneficial Trust Fund subsidiary MediaQuest Holdings, Inc., has a stake in BusinessWorld through the Philippine Star Group, which it controls. — Roy Stephen C. Canivel