Mediatek, the biggest supplier of mobile phone chips to China, just became SAP’s newest client, hiring IBM to install the European software company’s Enterprise Resource Planning system globally.
This is welcome news for technology bulls, who will see it as concrete evidence of the return of corporate IT spending. After strong consumer spending on netbooks and smartphones helped lift the industry last year, there is considerable debate on whether this year and the next will see corporates lead a second wave in the global tech recovery.
What’s more, the bulls will argue, this is another sign of Asia and emerging markets coming to the rescue. Mediatek, a Taiwanese company, was a unknown within the IT industry just a few years ago. Now, thanks to the rise of China’s ‘whitebox’ unbranded mobile phone market, it is one of the world’s biggest chip design companies and is this year expected to ship 450m chips, or as many as Nokia will ship phones. Even if US and European corporates may not yet be ready to upgrade their systems, the thinking goes, their competitors in Asia will step up to the plate.
Unfortunately, the picture is not quite so simple. While Mediatek said this project was one of the company’s biggest IT outlays in recent years, the spending is not new. Installing SAP’s ERP system was two years in the making but the move was announced only on Thursday because the system is expected to come online next month.
Bhavtosh Vajpayee, head of technology research at CLSA, also points out that while Asia Pacific accounts for 28 per cent of consumer IT spending, it only makes up 10 per cent of corporate spending, compared to 66 per cent for North America and Western Europe. “For a revival, look Westward,” he said.
Mr Vajpayee instead points to other signs that support a revival, such as a recovery in companies’ profits and cash flows, the fact that by next year, more than four-fifths of corporate desktops will be five years old, and that IT services outsourcing is increasingly saving companies’ money that they can then spend on hardware and other areas.
Mediatek’s announcement may in the end herald little more than yet another “ . . . Runs SAP” ad at international airports, but that’s not necessarily bad news. Mediatek shareholders should even be able to look forward to cost savings improving the bottom line for what is, after all, a project the company spent two years on.
Source:http://blogs.ft.com/techblog/2010/03/mediatek-runs-sap/
