AMI-Partners Study Shows Low PC Penetration Among Indonesia SBs, Translating to a Huge Opportunity for Vendors; White Box PCs Dominate among Desktop Users, but Toshiba is a Leading Notebook Brand.

SINGAPORE -- Indonesia, the world's fourth most populous country with 216 million inhabitants, has in recent years been shaken to its roots by economic, political and natural turmoil. The 1997-98 economic crisis, one of the most severe in world economic history, saw poverty rates double, gross national income fall by over one half, exchange rates plummet, inflation rates soar and levels of debt climb close to 100% of GDP.

Understandably, IT adoption among businesses in Indonesia has -- until now -- taken a back seat. AMI-Partners' new study shows that among the 3.73 million small businesses (SBs) in Indonesia, only 18% use PCs in their daily operations. Comparing this to PC penetration figures in several other Asia-Pacific countries where AMI-Partners has conducted studies (Hong Kong, Korea, Malaysia, Singapore, Taiwan and Thailand), Indonesia is the country with the lowest number of PC-owning SBs.

The above findings were released today by New York-based Access Markets International (AMI) Partners, Inc., a leading consulting firm that specializes in IT, Internet, telecommunications and business services market intelligence -- with a strong focus on global small and medium business (SMB) enterprises. AMI-Partners conducts the industry's most comprehensive annual tracking surveys of SMBs in more than 20 countries, including North America (the U.S. and Canada); Europe (the U.K., France, Germany, Czech Republic, Poland and Russia); Asia-Pacific (Australia, China, Hong Kong, India, Indonesia, Japan, Korea, Malaysia, New Zealand, Singapore, Taiwan and Thailand); and Latin America (Mexico and Brazil).

IT Spending in Indonesia

For 2004, total IT spending among Indonesia SBs stood at US$1.623 billion. Despite being hard hit by the late '90s economic crisis, there have been recent improvements in terms of economic growth, a declining deficit, and single-digit inflation levels. Some 69% of Indonesia SBs are experiencing an increase in revenue, with an average annual growth rate of 4%. PC-owning SBs are planning to purchase an additional 4.2 million computers over the next 12 months.

In terms of current PC brand usage, 59% of Indonesia PC SBs are currently using assembled/white box/reseller brand/clone desktop PCs. "Given the volatile economy Indonesia had a couple of years ago, these white box PCs are a cheap alternative to branded ones," observed Ms. Diana Ng, Research Analyst from AMI-Partners' Singapore office.

Things are different in the notebook PC space, where Indonesia PC SBs tend to favor Japanese brands such as Toshiba. "Japanese brands have become well known for their first-class product quality in terms of performance, reliability and stability. As compared to desktop PC users, those using notebooks tend to be more technologically advanced and demand more in terms of performance, features and aesthetics. Therefore, notebook PC users appear to be willing to dig deeper into their pockets for quality and well-known Japanese brands," said Ms. Ng.

Opportunity in Indonesia

Given its huge population both in terms of labor and SBs, potential IT adoption among non-PC SBs is tremendous; the 3.04 million non-PC SBs represent a huge market opportunity. Unfortunately, given that the political scene in Indonesia has changed hands many times in recent years, the government's focus on IT development in Indonesia among SMBs has been compromised.

"It will take a little longer," noted Ms. Ng, "for non-PC SBs to work towards PC adoption. The huge and cheap labor market has encouraged SBs to hire more workers as opposed to investing in relatively costly IT. Further, the IT literacy rate among Indonesians is generally lower than their Asian neighbors. SBs are comfortable with the status quo; there is a lack of pressure and motivation from the external environment -- including customers, suppliers, competitors and government -- for them to adopt IT."

"To drive PC penetration among Indonesia SBs, it will take a concerted effort from the government, IT vendors and stakeholders such as customers -- both consumers and business -- suppliers, and competitors," continued Ms. Ng. "Governmental support might come in the form of financing, improvement of overall IT literacy rates and the supply of IT professionals. IT vendors, together with The Ministry of Cooperatives and Small and Medium Enterprises, Indonesia, should embark on an educational program that will demonstrate the advantages of IT adoption. They should devise bundled packages with the necessary hardware, software and service/support to attract non-PC small businesses."

About AMI-Partners

AMI-Partners specializes in IT, Internet, telecommunications and business services strategy, venture capital and actionable market intelligence -- focusing on global small and medium business (SMB) enterprises. The AMI-Partners mission is to empower its clients for success with the highest quality data, business planning and "go-to-market" solutions. AMI was founded in 1996 under the name of Access Media International (USA), Inc. by Andy Bose, a former group vice president at IDC. Since its inception, the firm has built a world-class management team, each with ten to fifteen years' experience in IT, telecom, online communications and multimedia.

AMI-Partners has helped shape the go-to-market SMB strategies of more than 150 leading IT, Internet, telecommunications and business services companies over the last nine years. The firm is well known for its IT and Internet adoption-based segmentation of the SMB markets; its annual retainership services based on global SMB tracking surveys; and its proprietary database of several thousand SMBs in the U.S., Europe, Asia-Pacific and Latin America. The firm invests significantly in collecting survey-based information from several thousand SMBs annually, and is considered the premier source for global SMB trends and analysis.

For more information on AMI-Partners or our global SMB studies such as the 2004-05 Indonesia Small Business Market Opportunity and Topline Assessment, please email [e-mail], visit www.ami-partners.com or call 212-944-5100.