Surge in the Asia/Pacific (including Japan) Thin Client Market in 2005 is Only the Tip of the Iceberg

IDC: Total sales of thin client in the Asia/Pacific (including Japan) (APJ) market reached 279,513 units in 2005, representing an increase of 64% over the previous year. Revenue likewise increased 65% over the same period. Although PC replacement cycles across APJ are already largely completed, the stage is being set by several thin client vendors, which recognize that the current PC life cycle ends in about two years and are expanding their presence in the region. These PCs will be due for replacement in 2009/2009, and this is when IT managers across APJ will consider a whole range of options, including thin clients, with which to swap the existing desktop.

• Across the various verticals, the predominant role of thin clients around the region as server-based solutions for individuals leads to the fair share of deployments being used in the government/education, financial services, and healthcare industries in both 2004 and 2005.

• From an operating system (OS) perspective, proprietary OS rollouts see high traction in countries where local thin client vendors employing their own applications have a strong , such as Korea and the PRC. The others OS category (including Sun’s embedded firmware) was the largest, at 34% share of the overall APJ market in 2005. Windows CE was installed in 24% of all APJ thin client deployments, Windows XP Embedded captured 22%, and Linux followed closely with a 21% share.

• There is little correlation between existing thin client penetration and growth rates across countries. Certain countries with lower penetration are not necessarily ready for mass thin client adoption. Australia leads the APJ region’s shipments in 2005, garnering 23% of all sales. This was followed by India, with 19%, and PRC, with 15%.

• Market share-wise, Wyse leads APJ sales with 35% share in 2005, followed by HP with 16%, VXL with 10%, and Changchun Xinyu and HCL both with 8% share - the latter two vendors garner most sales from the PRC and India in 2005 respectively.

Asia/Pacific (Including Japan) Thin Client Unit Shipments by Vendor, 2004 and 2005 Source: IDC, 2006

Future Outlook

The APJ thin client market is expected to perform strongly over the next five years at a CAGR of 34%. This growth in absolute terms will be driven primarily by India and the PRC, with Australia and Korea also showing decent growth despite higher installed bases than other APJ countries.

The government/education, healthcare, and financial services segments, which traditionally have been strong proponents of thin clients, will continue to see expansion over the forecast period.

Competition among thin client vendors will also lead to a variety of technological improvements, not just in the industrial design of the hardware, but also in the software layer, which holds the key to efficient management of a thin client deployment to attain maximum productivity. Once Citrix jumps on the bandwagon and starts to focus its efforts on the APJ region, growth will snowball, and vendors that have their strategies for the region sorted ahead of time will be able to ride on this growth wave.

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