Boston, MA -- (SBWIRE) -- 07/22/2013 -- We revised our forecast for Venezuela's IT market downwards in the Q3 2013 update to take account of devaluation in February 2013 and further downside risks from the uncertainty of the political and economic situation following the death of Hugo Chavez. The initial transition to the government of Nicholas Maduro has been relatively smooth, but we still believe there are uncertainties arising from the loss of Chavez as a figurehead for the movement. Despite this disruption BMI continues to point to opportunities in Venezuela. It is one of the smaller markets in its region. However, it has a low PC penetration rate from which we infer there is potential for strong medium-term growth. Further, government PC programmes will boost sales, although most units will be procured locally with little scope for international vendors to compete.

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Headline Expenditure Projections

Computer Hardware Sales: From VEB5.7bn in 2012 to VEB7.0bn in 2013. The devaluation of the bolivar resulted in a downgrade to our forecast for 2013 as it increases the price of imported hardware. Meanwhile, cheap computer programmes, and the PCs for schools programmes is another market driver of unit shipments.

Software Sales: From VEB1.5bn in 2012 to VEB1.9bn in 2013. Although low penetration should drive sales, the government's commitment to open source software will constrain opportunities for proprietary software vendors, and a lack of action on piracy is a further drag.

IT Services Sales: From VEB1.3bn in 2012 to VEB1.7bn in 2013. We expect 75% of demand will come from large companies, with the oil sector still significant despite the fall in oil prices. However, there is medium-term potential for IT services sales to SMEs, particularly cost-saving cloud computing services.

Risk/Reward Rating

Venezuela's score declined in the Q3 2013 update as a result of the devaluation in February 2013. The score of 36.9 out of 100.0 keeps it in last place in our rankings, reflecting our view that the economic situation and business environment in the country are unfavourable for IT spending growth.

Key Trends & Developments

The devaluation of the bolivar in February 2013 led to a downward revision of our forecast for the IT market. We believe the greatest impact will be in the retail hardware market as the price-sensitive Venezuelan consumer will defer purchases as price of imported goods rises. This adds to challenges already posed by an economic environment where high inflation and a lack of investment into the productive sectors of the economy are resulting in slower growth in 2013.

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