Back To School Increases Demand for IT Products

Europe and the US consistute the majority of students entering the next year in the fall. Students in Asia, for the most part, go up a grade at the beginning of the year. But there is no mention anywhere of a back-to-school effect in January or February. The back-to-school effect is always talked about in Q3 of each year. Why?

Europe has about 330 million in population while the US has close to 300 million. The total comes to 630 million. In contrast, the population of China itself is more than 1.2 billion, Japan has about 130 million, and South Korea has more than 50 million. Asia combined is roughly 1.5 billion in population, about 2 1/2 times larger than Europe and US combined. Assuming a similar percentage of students for these regions, it would be safe to say that there are about 2 1/2 more students going back to school in the beginning of the year compared to the fall.

But the back-to-school impact on IT demand cannot be based on population alone, you have to have money. The per capita income in Europe and the US are much higher than countries in Asia. Luxembourg is #2 with $55,600, but with a population of only a bit more than 450,000. The US is #6 with $41,800. Norway is #5 at $42,300 and a population of 4.5 million. In Asia, even Hong Kong, the highest of all Asian regions, is ranked 15 with $32,900 estimated per capita income in 2005, but has a population of more than 7.5 million. Japan is a distant #20 with $31,500. I won't go through all the numbers but the fact is Asia has lower per capita income. Let's say Asia (excluding India, Australia) has a per capita income that is only 1/5 of Europe and the US, based on China's #117 ranking and $6,800 estimated per capita income in 2005.

The combined effect based on these simple assumptions is that Asia's back-to-school effect in January/February is about 50% that of the effect in the fall. This is nothing to sneeze at. Sure, one could argue that Europe and the US consumes more IT products in general, but I can point out a few things like broadband penetration, mobile phone annual purchases and usages, etc. that will make the argument a wash.

I think it is time that the IT industry look at Asia in January and February and make sure to have some deals for the students returning to school. I'm sure whichever company figures this out will make a good profit.

Sources: CIA Fact Book, Mongabay

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