Japan’s Major IT Markets: Scale and Trends through 2014 (2)
Driven by “Mobile EC,” B2C EC Market to Expand 1.8 Times to 12 Trillion yen in 5 Years
December 21, 2009
Nomura Research Institute, Ltd.
Nomura Research Institute, Ltd. (NRI: Tokyo; Akihisa Fujinuma, Chairman and President, CEO & COO) has completed market analyses and market scale forecasts for the period through fiscal 2014 for five major markets of information technology, principally in Japan. In this second phase following the forecasts for broadband service and broadcasting media markets released on December 16, 2009, NRI announces forecast results for the seven fields of the Internet-based business market, four fields of the mobile market and five fields of the hardware market.
Market Scale Forecasts
(See the definitions for each market provided at the end of this news release.)
(Unit: Billion yen)
*1: The forecasts for Internet advertising, mobile content and flat-screen TVs are based on calendar years rather than on fiscal years.
*2: The figures in the upper row represent the assumption that the average revenue per user (ARPU) of each carrier will continue to decline at an annual rate of 8 percent through fiscal 2010 and at an annual rate of 6 percent thereafter. The figures in the lower row represent the assumption that the ARPU of each carrier will continue to decline at an annual rate of 10 percent in and after fiscal 2009.
*3: CAGR (Compounded Annual Growth Rate) refers to the average annual growth rate of each market during the five-year period between fiscal 2009 and fiscal 2014.
Internet-based business to expand to 14 trillion yen in fiscal 2014
Because Internet-based business targeting mobile phones as well as PCs is growing, the overall Internet-based business market will steadily expand. The entire market is projected to increase nearly 1.8 times from about 8 trillion yen in fiscal 2009 to about 14 trillion yen in fiscal 2014*4. The B2C EC (business-to-consumer electronic commerce) field is expected to account for the largest portion of total sales in this market, and will reach about 12 trillion yen in fiscal 2014. In the next five years, “mobile EC” (EC targeting mobile phones) will drive the market, and the ratio of mobile EC in the entire B2C EC will increase from 17 percent in fiscal 2009 to over 20 percent in fiscal 2014, amounting to more than 2.5 trillion yen.
*4: The online settlement and contactless IC settlement fields are excluded because these fields are partly included in the B2C EC field, and the amount settled by contactless IC also includes that settled by other than through the Internet.
While the pace at which the Internet advertising field grows might slow down, it will nevertheless expand from more than 600 billion yen in 2009 to about 900 billion yen in 2014, accounting for slightly more than 12 percent of the total advertising expenditure in Japan. Spurred on by the expansion of the EC market, the size of advertising targeting mobile phones will rapidly expand, reaching about 220 billion yen in 2014 and accounting for 25 percent of the entire Internet advertising field.
The online game field has grown with the diffusion of broadband lines and the spread of home-use game machines enabling online usage. However, because such growth is not expected to continue, and the number of online PC game users will not increase further, this field will see only limited growth in the future, reaching around 158 billion yen in fiscal 2014 compared to 110 billion yen in fiscal 2009.
Because a safe and secure environment is being developed that will encourage the participation of women and seniors who have so far shown little interest in using online auctions, and mobile phones are increasingly used for participation, the online auction field is projected to reach about 1,260 billion yen in fiscal 2014 (about 1.3 times that in fiscal 2009).
With the expansion of the EC market, the field of online settlement is projected to expand from 240 billion yen in fiscal 2009 to about 470 billion yen in fiscal 2014. Of this amount, the settlement market for EC using mobile phones and other types of mobile terminals is expected to rapidly increase from about 44 billion yen in fiscal 2009 to about 100 billion yen in fiscal 2014.
Contactless IC (electronic money, etc.) settlement:
With the participation of major retailers and railway companies, this market has expanded rapidly. Because major participants have already entered the market, the market will enter a stable growth stage in the future. The transaction amount in this market is expected to reach about 3,160 billion yen in fiscal 2014.
Corporate information systems incorporating mobile phones and the market of content targeting mobile phones are to expand
With the number of subscribers to mobile phones exceeding 100 million, the market is approaching maturity in terms of revenue from the communications business. Accordingly, a major change is required in the business structure of the mobile phone market. More precisely, a shift from “quantitative” growth such as an increase in the number of subscribers to “qualitative” growth such as the expanded use of content services and the provision of solutions is necessary. As seen in the growth of overseas smartphone markets and the increased use of open source technology for the OS in mobile handsets, the mobile market is moving toward a major turning point.
The number of contracted lines of mobile phones is projected to increase slightly, from 110 million in fiscal 2009 to 115 million in fiscal 2014. This increase is expected to be caused by an increase in the number of new subscribers in the lower-aged (youth and young-adult) segment, an increase in the percentage of people in the senior segment who have mobile phones, an increase in the number of individuals such as students and business persons who have more than one mobile phone, an increase in the number of contracts with companies and the number of data communications contracts. Even if the number of contracted lines increases, the revenue of the mobile phone carriers will shrink if the declining ARPU (average revenue per user) trend continues. Under a scenario in which ARPU is assumed to decline at an annual rate of 8 percent through fiscal 2010 and at an annual rate of 6 percent thereafter, the revenue in fiscal 2014 is projected to decrease to around 70 percent of that in fiscal 2008.
The estimated size of the wireless broadband field in fiscal 2009 is about 3.73 million lines and around 175 billion yen. This market is expected to grow to around 340 billion yen in fiscal 2014 because of the diffusion of higher speed services such as WiMAX (worldwide interoperability for microwave access) and next-generation PHS and the introduction of new mobile communications systems such as 3.9G LTE (long term evolution).
The mobile content field is projected to expand slightly from 430 billion yen in 2009 to around 460 billion yen in 2014. While electronic books and games will drive the expansion of the “entertainment” segment, the growth of this field is expected to slow down from a long-term perspective because of shrinkage in the “information service” segment such as news.
The size of the mobile solutions field is projected to amount to more than 720 billion yen in fiscal 2014, which is about 2.3 times that in fiscal 2009 (more than 310 billion yen). Because companies have reduced their investments in the development of information systems due to the global financial crisis that hit the world in late 2008, the market size is projected to remain almost unchanged in fiscal 2009 on a year-on-year basis. However, supported by such factors as a wider selection of mobile terminals and the development of the overall mobile network environment, companies are expected to increasingly use mobile terminals in their information systems such as data processing and enterprise systems.
The hardware market will generally expand in countries other than Japan, the US and Western Europe, such as in China
With respect to various IT devices, the areas where differentiation in terms of functions and performance is possible are becoming limited. Because of the intensified competition seen all over the world, the unit prices of products have further dropped considerably. While the markets of advanced countries have been approaching maturity, emerging markets have reached a size that cannot be ignored with strong demand in terms of quantity, showing high growth potential.
Given this situation, most manufacturers have clearly shifted their strategies to the following two directions: strategies aiming to expand sales volume and attaining a high global share by regarding emerging markets as priority markets and strategies aiming to differentiate products and to generate high added value as represented by smartphones.
Flat-screen TVs in the world market:
The sales of flat-screen TVs in the world market will increase from about 141 million units (estimate) in 2009 to about 252 million units in 2014. While the number of units sold dropped temporarily because of the economic recession, the economic policies implemented to cope with a global financial crisis in large-scale markets (US, China, etc.) as well as a shift to digital terrestrial broadcasting have been functioning as an engine to increase the number of units sold. Because the penetration rate of flat-screen TVs is already high in Japan, the Japanese market in the future will see only limited growth in demand until the period when demand for replacement arises. The US and Western European markets will continue to grow as these countries have lagged behind Japan in introducing flat-screen TVs. The most promising markets are considered to be emerging markets such as China.
Since the latter half of last year, the demand for mobile handsets has cooled down, principally in Europe. In the world market as well, shipments in fiscal 2009 are projected to decrease from those in fiscal 2008. While the market will resume growth in fiscal 2010, the growth rate is projected to decline thereafter because emerging markets will also approach saturation. Shipments in the world market are projected to increase from about 1.06 billion units (estimate) in fiscal 2009 to more than 1.35 billion units in fiscal 2014.
Because of the global financial crisis, the demand for digital cameras decreased substantially during the period between the latter half of 2008 and the first half of 2009. While the demand is rapidly recovering thereafter, it will no longer be possible to expect such explosive growth as that experienced in the past. Growth potential in advanced countries is limited; promising markets where shipments can grow will shift from advanced countries to emerging economies such as BRICs and post BRICs. The world’s annual shipments are projected to increase from around 123 million units in 2009 to 192 million units in fiscal 2014.
Car-mounted information terminals:
Compared to the automobile market overall, this market has been experiencing a quick recovery. Such a quick recovery was enabled because each manufacturer sold car navigation systems at a discount to encourage the sales of automobiles, which became quite sluggish, and because the types of cars that are equipped with car navigation terminals as standard equipment are selling well. Domestic shipments are projected to grow slightly from about 4.6 million units in 2009 to 5.1 million units 2014.
Robots in the Japanese market (robots used in manufacturing plants and for entertainment are excluded):
The sales of robots in Japan are expected to rapidly expand from about 4.4 billion yen in fiscal 2009 to about 11.2 billion yen in fiscal 2014. The sales of simple-function home service robots specializing in support for specific chores, such as Roomba by iRobot Corporation, and welfare and nursing care service robots for which there is a possibility that a user can receive public subsidies at the time of purchase are expected to grow significantly.
NRI plans to publish the details of market analyses and forecasts as a book entitled Korekara joho tsushin shijo de nani ga okorunoka – IT shijo nabigeta 2010 (What will occur in the information and communications market in the future – IT market navigator 2010) on December 22, 2009, by Toyo Keizai Inc.
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