Dan Swinhoe (Asia)- Indonesia's IT Market: Social Media, Undersea Cables and Smartphones

When it comes to IT, the Asia-Pacific region is a mixed bag. At one end, countries such Singapore and South Korea are among the world leaders, while at the other extreme the likes of Vietnam and Myanmar are essentially devoid of IT. But there a few in the middle, countries that are up and coming, but still with a way to go.

Indonesia is one such country. BMI is expecting Indonesian IT spending to reach US$6.0bn this year, up 12% on the year before, so things are looking good. "The market has much growth potential," the report says, but warns, "Indonesia's uneven development and digital divide are major barriers to faster growth within this potentially huge IT market."

Currently the country has around 55 million internet users, the eight most in the world. But that's just a tiny fraction (22%) of its 245 million population. That fraction is growing however; the number of internet users saw 29% year-on-year growth, and the signs are good this is going to improve. Predictions point to 76 million users by 2015. Like other countries in the region, Indonesia has been investing in undersea cables. Soon after finishing the Malaysia to Indonesia Batam-Dumai-Melaka (BDM) system, a new 4,600km Australia-Indonesia-Singapore cable was announced. More cables means cheaper access and better quality connections, something that always helps foster growth.

Despite these numbers, it's clearly the majority are accessing the web while on the go, and not from a desk. While mobile penetration is at 54%, PC penetration is a mere 5%, and the majority of those were netbooks. However these figures are also on the increase with PC sales growing by 36% last year, and could rise by around the same amount this year. According to StatCounter, Windows XP is still the most popular OS, with Win7 not too far behind. Firefox is the most popular web browser by far, with Chrome following a distant second.

Unlike everywhere else in the world, BlackBerry still has a strong following in Indonesia, and accounts for 12 million out of around 77 million users worldwide. According to ROA Holdings Analysis, smartphone penetration stands at around 60% and is expected to rise even further. Tablets are also on the rise. While just 700,000 were sold in the last year, the fourth quarter of last year saw sales spike by almost 100%,indications are good that this will continue to grow at a rapid pace.

This strong relationship with mobile internet is helping drive Indonesia's love of social media. While 1 million Indonesians may have left Facebook in the last three months according to Socialbakers, the social network still boasts over 40 million users. That number puts the country fourth in the world, still 2 million ahead of the UK. While the recent loss of such a high number of people may be concerning, it may just be a blip, and with only 16% penetration, there is still huge potential. One of the reasons for this exodus could be the growing number of phishing scams on the site that are masquerading as adult videos and photos of Indonesian celebs. Perhaps better education on security would help.

It's not just Facebook that's popular. Since the launch of a local language site, LinkedIn has grown quickly, with over a million joining in its first two months. Twitter is also a favorite, in January Indonesia was fifth worldwide in terms of users. Though these figures are from the start of the year, a quick view on A World Of Tweets will show the country is among the most active on the micro blogging site. Online games are also popular; TMG's KotaGames saw 85% month-on-month growth earlier in the year.

Though a free country, the government does seem wary of the internet and has made several moves to censor it over the years. The Guardian rates the country has having ‘selective' or ‘substantial' censoring for political, social, and internet tools. The most recent case was the blocking of over a million porn sites ahead of Ramadan. While this is no big loss for the internet, censoring one kind of site could easily lead to more, and be the start of a slippery slope.

Indonesia has some real plus point. Mobility is on the increase and becoming more widespread, and the laying of cables will no doubt help facilitate this. Aside from the occasional effort to censor parts of the internet, the government is helping to push things in the right direction. But with millions still not benefiting, there is still a long way to go.

By Dan Swinhoe, Editorial Assistant, IDG Connect


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Dan Swinhoe

Dan is a journalist at CSO Online. Previously he was Senior Staff Writer at IDG Connect.

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