(Nikkei BP Group)
(No.1 High-Tech News Site in Japanese)
| Japan's IT Service Industry to Pick Up Toward March; Nikkei Watcher Survey
January 27, 1999 (TOKYO) -- Japan's information technology service industry
will turn brisk toward March in the face of growing service businesses,
a Nikkei Watcher survey shows.
|However, computer marketers, which depend heavily on hardware sales,
continue to suffer bleak conditions, though there is some sign of improving
A survey on business conditions of the IT service industry conducted
by Nikkei Watcher on IT Business indicates that more and more leading
solution providers have a feeling the economy is picking up.
This survey asked the respondents to judge the business conditions of
their companies intuitively. The business judgment index is the number
representing the results in the range between minus 100 and plus 100.
The questionnaire was sent to a total of 125 companies, either listed
companies, over-the-counter companies or influential channel companies
of similar size on Dec. 1, 1998. It asked them their business conditions
between October and December 1998 as well as their business prospects
between January and March 1999, and got an effective response from 99
companies with a response rate of 79.2 percent.
The business index given by 99 leading service providers for the period
between October and December 1998 was zero, but it jumps to plus six
for the period of January and March 1999.
The Bank of Japan harshly judges leading companies in non-production
categories in its corporate short-term economic prospects. It a gave
minus 34 for December 1998 and minus 27 for March 1999.
These results seem to indicate that the IT service industry will see
business improve before other industries. According to Japan Information
Processing Service Co., Ltd., the IT industry is doing best in Japan,
and will be in a good business condition until 2005.
In particular, the sales index will increase by 14 points from the period
between October and December 1998 toward the period between January
and March 1999. The gross profit index will also make a slight increase
from three to five. This contains the judgment that sales will increase
with modest profits toward the period between January and March 1999.
There are several factors for the improving business indexes of the IT
service industry. The first is the expansion of investment brought about
by a hold back in mid-1998. The second is the expectation to the government's
economic measures, including a tax cut for enterprises in purchasing
PCs. The third is demand for renewal of personal computers. In 1999,
more than five million personal computers will be in demand, according
to Dataquest Japan KK.
There are factors to deter the improvement. They include: (1) discouraging
the business mind for investments in information systems, (2) concern
over the delay in shipments of products, which are expected to be a
driving force for the expansion of investment, such as Windows 2000,
and (3) the delay in investments in strategic systems because of the
late response to the year 2000 issue.
Since the judgment of business is promising, expectations of economic
recovery are slightly stronger than the fear for economic stagnation.
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