Argentina has the third largest population of Internet users in Latin America, with over 17 million users, and Internet use is growing at a 40% annual rate. Broadband access doubled in 2006, and grew 87% in 2007 in terms of subscribers. Since 2004, investment in technology has been soaring after years of low investment.

Trends
Consulting estimated an average increase of 21% for 2007 for the IT market. In 2007, China led the imports of IT products (35%), followed by the U.S. (14%) and Brazil (12%). Imports from Mexico, Manaus (Brazil Free trade zone) and Japan each account for 5% of the import market. Argentina’s IT market – including hardware, software and services - reached US$ 3.2 billion in revenues, a 25% increase from 2006. In 2008, the market is expected to increase 21%. The software and services sectors accounted for the majority of the growth with a 49.3% increase. Hardware sales increased 34% in 2006 and 42.5% in 2007. Prince & Cooke projects that hardware will grow around 40% in 2008, led by PCs and Notebooks. The sale of desktop computers in increased 28% in 2007, bringing the market to 8.5 million units installed. The number of PC units sold in 2007 reached 1.6 million and is expected to increase by 30% in 2008. Printer sales also increased 20% in 2007 while other peripherals increased 35% and consumables 8.3%. Likewise, the sale of notebooks grew 50% in 2007 and is expected to increase 50% in 2008, outdoing sales of desktop PCs. State-of-the-art small computers and communication devices, such as smart phones and PDAs, followed the same two-digit growth trend. Moreover, a direct relationship exists between the purchases of such items and the exponential increases in demand for broadband/Internet access.
In 2007, the total revenue for the software market increased by 20%, reaching approximately US $480 million. Prince & Cooke projects an increase of 21% in 2008. In addition, IT service revenues reached US$1.1 billion in 2007. The packaged software market grew approximately 40% in 2007 with the U.S. being the largest exporter of packaged software into Argentina.
In reference to IT Services, outsourcing of IT-related solutions continues to be the main practice and a popular option for companies. Current market realities require companies to reduce costs, concentrate on core business, improve quality and productivity, and increase flexibility. This subsector increased 20% in 2007.

Best Prospects/Services
Branded PCs, notebooks, super-notebooks (with 20 hour batteries, folding mice, etc), wireless PCs (with 26 “ monitors), printers, servers and multi-user systems are the major source of foreign hardware imports, and are consequently best prospects. In addition, consumer electronics, such as digital cameras, MP3, MP4, PDAs, CD/CD W, DVD players/creators, digital storage devices and Pen Drives are expected to see increased demand for the next two years.
In reference to IT Services, sub-sectors with major prospects for U.S. companies include network implementation, management and maintenance, legacy applications, wireless LANs, RTE (real time infrastructure) implementations, remote operation processing, back-up, critical mission services, disaster recovery systems, internet and network security systems, document digitalization, digital asset management, storage, utility computing, and information systems for rural areas (traceability, RFID, etc).
Regarding software, large projects in the areas of security solutions or business intelligence will have opportunities in 2008/9.

Opportunities
Five main factors will keep demand for IT hardware, software and services high in 2008/2009:
- new investments in the country in a number of industries (e.g. tourism)
- the majority of the systems installed need upgrading
- the growth of Internet access
- the increasing complexity and convergence of technologies
- highly educated and tech-savvy population

In hardware, servers and multi-systems present good opportunities. The Compaq-HP merger opened some additional market share, which was partly taken over by Intel servers. The sale of servers grew 60 % in 2006 and in 2007 and the trend is expected to continue throughout 2008. In 2007, the United States was the major exporter of servers with 40 percent of total imports, followed by Brazil (25%) and Mexico (12%).
PC components will also be in high demand since locally assembled PCs (clones) account for over 60% of the PC market. Local assembly targets the residential/SOHO clone PC segment, where the cost of lower cost labor (resulting from devaluation) has a major impact on the final price. In the corporate segment, the cost benefit from local assembly does not outweigh the guarantee offered from an original vendor.
The increased demand for broadband access has also driven the demand for notebooks and mobile devices. According to IDC Argentina, the sale of notebooks for homes in the first semester of 2005 was the highest number registered in the history of Argentina.
Other market conditions will foster growth in IT services throughout 2007/2008, including the constant price reduction of IT hardware, local salary increases, and the availability of financing options from retail chains. The increased use of e-banking, electronic commerce and E-Government has increased awareness of Information Technology security needs. Recent investments in software development centers by companies such as Motorola, Intel, EDS and IBM will continue to create good opportunities for U.S. companies. The best clients for U.S. companies will be medium-to-large corporations, manufacturing/industrial companies, as well as exporters.