Overview
BMI expects the total size of the Croatia IT market to increase from US$920mn in 2007 to aroundUS$1.5bn in 2012. The strong recent growth in PC and notebook sales has mainly been the result ofrising private consumption, boosted by growing affordability of computer products and runawayconsumer credit growth. Computer sales will continue to benefit from falling prices and more aggressivevendor and distributor promotion, as well as the generally dynamic economy. Real GDP growthweakened somewhat in 2005 to around 4.3%, after a strong economic performance in 2004 whenexpansion reached 4.3%. 2006 will see a strong growth rate of 4.8%.
The IT market is forecast by BMI to grow at a CAGR of 11% over the forecast period with software andservices (40% of total spending) leading the way on the back of a steady rise in private sectorinvestments. The IT market will therefore grow at a rate well above that of the economy as a whole, withpre-accession EU funds continuing to provide a stimulus. Spending on software and services are likely togrow fastest over the forecast period, and will approach a combined 50% share of spending by the end ofthe forecast period.
Competitive Landscape
The leading distributor of computers in the Croatian market is supplier HG Spot, which supplied around15% of the notebook market in 2006. The best selling brand names on the Croatian computer marketinclude Hewlett Packard (HP), followed by IBM and Dell. Microsoft dominates the software segment.However all the major global vendors are present and the market is competitive with more than 20 othervendors competing for share.
Across all software segments, global vendors account for around 40% of revenues, with local vendorstaking the rest. As the Croatian IT market continues to grow, IT services are becoming a more importantopportunity for multinational and local vendors. The largest IT services providers by revenues includeIBM Global Services, Combis, and S&T Hermes Plus. Many IT service vendors reported double digitgrowth in fiscal 2007.
Industry Developments
Building on the e-Croatia 2003-2007 programme, the government plans to complete the computerisationof the education system and networking of government systems, and bring key services like health andjustice online. The Croatian government’s spending on IT is increasing, driven by a variety of projectsCroatia Information Technology Report 2008ranging from basic support to pensions and social security management. Government spending is alsostimulating the whole sector indirectly by generating interest from other sectors in the wider economy.This is still substantially state controlled, and there are still many sectors either owned or more or lessdirectly administered by the state.
Computer Sales
A total market value of around US$400mn was estimated for PC sales in 2007, including notebooks andaccessories. Major projects in government, telecoms and financial services sectors should support anincrease in total hardware spending to more than US$600mn by 2009. Because of falling prices the dollarvalue of the market is increasing at a slower rate than the local currency value, given the kuna’sappreciation against the dollar. The trend towards notebooks is continuing, with notebooks nowaccounting for more than one quarter of new sales.
Software
The total 2007 value of licensed software sales is estimated at around US$156mn. Spending is expectedto increase faster than for the IT market as a whole with the fastest-growing sectors being telecoms,government, and home users. The most important verticals for enterprise applications are manufacturingand wholesale, with basic modules such as supply chain management remaining the most popular.
Services
The Croatian IT services market was worth US$276mn in 2007 according to BMI estimates, and isexpected to be the fastest growing IT market segment over the forecast period. Following some slowdownin government spending during H206, some major projects fuelled sharp growth in 2007. IT servicesaccount for as much as 30% of all IT spending in Croatia presently. Government represents around 20%of the opportunity.
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