Where are the new markets?

In growth terms, Asia/Pacific is the powerhouse. The Software Publishers' Association, which tracks growth in these markets, indicated that sales in Asia/Pacific grew by over 60% last year, as shown in Figure 1 (Source: SPA).

Figure 1. Software sales growth rates

The strongest growth was in Japan, where sales revenue shot up by 90%. These high rates of primarily dollar-based sales are even more notable when you consider two negative conditioners - the continued decline in unit value of packaged products, and the weakness of the US$, particularly against the yen. The market in Latin America is neither as large, nor growing as fast, as that in Asia/Pacific, but it is a significant growth area and becoming a huge new market for localisation vendors. Spurred both by NAFTA (which brings Mexico within a free-trade area with the US and Canada) and Mercosur (which is promoting tighter economic links within South America), the growth in the need for Latin American Spanish and Brazilian Portuguese is giving a real boost to opportunities in those market areas.

Other factors are also driving the relative importance of these markets - which are, if not entirely new, much newer than the long- established market in Western Europe. Among these are:

• explosive growth of Windows and Mac products in Japan, and elsewhere in Asia, as the installed base finally begins to move away from DOS
• strong growth in Asia/Pacific of traditional business applications software, as this region takes a larger share of the manufacturing base of the global market
• a changing regulatory regime in Latin America (particularly Brazil) which permits more imported product
• more stringent (or entirely new) application of piracy legislation.

By comparison, growth in Western Europe is a dull spectacle at best. Dogged by continual price competition and declining software prices in general, most publishers are working harder than ever to maintain what are, in this industry, modest growth rates of 10%.

Relative importance of top languages

Obviously this shift in growth is important, but it is not the whole picture. In terms of volume, Western Europe will remain the most important non-English market for the foreseeable future. This means the traditionally important languages in localisation - FIGS- will as a group continue to attract the most business for localisation suppliers. By contrast, in the emerging markets one might argue that there is somewhat more language coherence.

Asia/Pacific will be dominated by Japanese for the foreseeable future, and the only other language which promises huge volumes is Chinese. In the longer term, the relative linguistic coherence of written Chinese as a language for the vast market in that country will, no doubt, mean that it is one of the top languages in the translation and localisation business. But that is not likely to happen in the near or even the medium term. Even the overheated activity currently revolutionising the Chinese economy will not transform it as a software market within the remainder of this decade. This is a long-term trend, a feature of the new, rather than the old millennium! Latin America is also relatively coherent, in language terms, as compared to Europe, since the entire continent can be served by two languages.

The impact on the overall market, in terms of language requirement, is quite interesting, and strategically significant for localisation vendors. Today Japanese represents around 20% of the total localisation market. FIGS is more than twice that, at 46%. By the year 2000 the gap will more or less disappear. In the Ovum forecast, we predict that Japanese will represent 31% of the total "globalisation services" market (and this includes all sectors, not just software) by the turn of the century, while FIGS will have declined to 34%. These shifts are reflected in Figures 2 and 3 (Source: Ovum, Globalisation report, 1995).

Figure 2. Top languages for globalisation, 1994

Figure 3. Top language for globalisation, 2000

How is the industry responding?

As most LISA members are aware, the vendor community has already begun to respond to these shifts in the relative importance of various geographic markets. Larger suppliers are all setting up, or enhancing, their operations in Asia/Pacific. The Singapore Forum is evidence that this trend is maturing.

Vendors have taken various view about where to locate in Asia. Most are replicating the well- established organisations in Europe, hub-and- satellite organisations which concentrate technical skills in one location, and operate language resources on the ground, in the target markets. Most larger vendors have, of course, been in Japan for some time, but most are locating their Asian hub operations elsewhere - Singapore and China itself are popular locations. We should not forget that the reverse can also happen - Asian localisation companies expanding their operations to be nearer customers in the US or Europe. Note that MicroAlliance, a well known Singapore-based vendor, has established a European bulkhead in Limerick, Ireland.

Expansion of localisation services in Latin America, by contrast, continues to be managed largely from either European or US-based operations. Some vendors manage Latin American localisation out of Europe because the core language skills are essentially European. The debate over "universal Spanish" and/or "universal Portuguese" - whether it will ever be possible to publish software in some globalized versions of these important languages - will, no doubt, continue to rage.

The LISA Forum - Asia, therefore, represents a true watershed in LISA's evolution. It both highlights the realities of trends in the market, and offers a chance for LISA members to begin to deepen and broaden their knowledge and experience of Asian markets. Can we expect a Latin America Forum in 1996? I hope so.