The analysts portray their findings as good news for POS makers, especially given the stagnant POS market most everywhere else (including Japan).
Although IHL's projection of "strong growth" for POS units in China and India should not have an immediate impact on POS pricetags, a secondary effect just might: A good deal of those new POS units are likely to be made by startup companies in China, companies that are likely to then do what Chinese startup companies do best: Export them at bargain basement prices.
"There will be no impact on prices" of POS units due to the China/India demand, said IHL President Greg Buzek. He contended POS prices in the U.S. "are more affected by the economy and normal supply and demand effects" than by demand growth elsewhere. However, Buzek also said existing POS makers, such as NCR, might soon have their hands full with Chinese competitors. "A bigger risk/opportunity, depending on whether you are a vendor or retailer, is the rise of domestic Chinese manufacturers that may begin selling directly here," Buzek said, and there's no denying that competition is good for price-conscious buyers.
IHL said the Asia/Pacific POS market expanded at a rate of about 5 percent in 2008, a slower pace of growth than it experienced in prior years but much preferable than the declines seen elsewhere. IHL expects the Asia/Pacific POS market for 2009 will be "as good or better" than it was in 2008. "With the North American and EMEA regions struggling for POS shipment growth in this economy, the strong growth in the Asia/Pacific region continues to be a highlight of the worldwide POS market," Buzek said in announcing the new research. "China and India continue to expand faster than other countries and their swelling retail ranks will continue to drive growth in 2009 and beyond."
IHL defines the Asia/Pacific market as Japan, China, India, Australia/New Zealand, South Korea, Vietnam, Taiwan, Hong Kong, and Other Asia/Pacific countries. "This is still an emerging market," Buzek said. "Other than Japan, Australia and New Zealand, most of these countries are still-growing retail markets for this technology."
He said the POS market enjoyed a "bounce" leading up to the Olympics. That surge faded soon after the games concluded. "Once we got to October and the financial crisis began to hit and it looked like Christmas was going to be bad for the U.S., a lot of things in China crawled to a halt," Buzek said. This prompted the Chinese government to introduce a massive economic stimulus package that IHL expects will create another wave of POS orders.
"What is interesting is China basically they added a stimulus package of 15 percent of their GDP (gross domestic product) but it's all getting focused heavily into domestic consumption," Buzek said. "So essentially they took 15 percent of their GDP and asked people to spend." He believes the government wants to recapture the tax revenues from retail sales so it can be channeled into modernizing the commerce infrastructure, including new POS installations. "So an increase of 15 percent GDP in consumption can be a huge boost for the point of sale market," Buzek said.
Although the POS market in the Asia/Pacific region continues to expand, the growth is slowing. IHL found the market growth rate dropped from 11 percent in 2007 to 5 percent in 2008. "The market slowed in terms of how fast it was growing, but it still grew and we suspect it is going to stay up at least 5 percent for this year, mainly because of that stimulus package," Buzek said. He added that superstore-type "hypermarket" installations drove the growth, particularly in China.