Diminishing returns in IT

By CHRIS BARTON, IT editor

New Zealand's IT market growth slowed to just over 5 per cent last year with sales totalling $4.83 billion. That was down on 2000's 7 per cent growth and preceding years' growth of 11 and 10 per cent.

But the figures released this week by Statistics New Zealand also painted an even gloomier picture, showing overall growth of just 3.3 per cent in a total IT market worth $6.8 billion.

The discrepancy comes about because of the department's practice of including wholesale figures in its total - essentially, double-counting some sales - essentially double counting some end-user sales. Last year, "other customer sales" amounted to just under $2 billion - about 1 per cent less than 2000's wholesale figures. The value of IT sales to New Zealand end-users was just over $4 billion for the 2001 financial year - an increase of 4 per cent compared with 2000.

Worldwide, the IT industry slowed last year, blamed largely on a declining PC market and to some extent on a more conservative approach to IT purchases following the events of September 11.

But the PC sales downturn does not show in New Zealand's figures. Total single-user computer sales (not including the wholesale market, but including exports) increased 5.7 per cent to $425 million. But multi-user computer hardware shows a 6 per cent decline to $368 million and peripheral computer hardware is down slightly to $326 million.

The shining stars of the year were communications hardware and cables, nte up 23 per cent to $983 million and software, up 11 per cent to $537 million. Computer services growth was flat at almost $2.1 billion.There were encouraging signs, too, in IT exports sales, up 11.7 per cent to $770 million.

The strongest growth - 39 per cent - came in peripheral computer equipment exports of almost $19 million. But although exports of communications hardware ($365 million - up 18.6 per cent) and computer services

($267 million - up 12.9 per cent) were healthy, software exports declined 14 per cent to $97 million.

Jim O'Neill, executive director of the Information Technology Association of New Zealand, (Itanz), was concerned that software exports had slipped in value to below $100 million after four years of steady growth.

"This sector represents the lifeblood of New Zealand IT innovation. The figures indicate that we need to work harder to find ways of boosting its performance."