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Home > Computers and Information Technology > IT Administration & Services > General Services
Romania Information Technology Report Q3 2008
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Market Overview
Romania’s IT market is in a state of rapid development as a result of the stimulus of EU membership anda large influx of EU funds. Indeed the market is currently one of the fastest growing in Europe. Computersales rose particularly fast in the second half of 2007, and notebook unit sales in the fourth quarter werenearly equivalent to the combined figure for the first three quarters. Total spending on IT products andservices was estimated at around US$1.35bn in 2007.
IT spending is projected by BMI to increase at a CAGR of 13% through 2012, in which year the ITmarket will be worth around US$2.4bn. The economic environment remains positive for growth althougha downturn in foreign investment could threaten economic stability. Increased competition andprivatisations will also provide opportunities in many economic sectors, particularly Banking.
Some US$380mn in EU structural funds are assigned for ICT through 2012. The new EU state is set to betransformed by a number of initiatives designed to assimilate it into the EU’s broader ‘InformationSociety’. Funds are earmarked for a number of priority areas including rural communities, SMEs,government and business.
Industry Developments
The Ministry of Communications and IT has outlined key areas for ICT-related EU structural funds. Thefunds earmarked for Romania’s ICT sector for the 2007-2013 period have been confirmed at aroundEUR383mn. Around 70% of the money earmarked for MCIT is to expand broadband communicationsinfrastructure, but the government has identified some priority groups.
Among other programmes, the government wants to help SMEs access EU funds to purchase computersfor each workplace, up to a maximum of 10 computers. EU funds are also potentially available for thepurchase of software licences. Beyond that, discretionary funds can also cover other projects such as thepurchase of servers and printers, as well as projects like electronic signature and website execution.Besides rural communities and SMEs, MCIT will also focus on other areas including e-government andbusiness. The finance ministry, when laying out its strategy for 2008, included providing the fiscaladministration with a computer network as one of its priorities for the year.
Company News
Flamingo Computers, Dell and HP were the leaders in the computer market last year and accounted formore than one-third of the market between them. The leading local company, Flamingo, reported aturnover of EUR171mn in 2007, and has set a target of EUR210mn for 2008. The company hopes toboost net profits by a factor of five, to EUR2.6mn. Meanwhile, Dell’s Romanian subsidy achieved abouta 60% increase in sales in 2007.
Turning to software, and Microsoft has recently signed a new agreement with the Romanian governmentfor an additional 39,385 licences with a reported value of US$27.17mn. The agreement is an extension ofthe framework agreement signed in 2005 by which the government bought the right to 50,155 licencesworth US$54.6mn.
In the applications segment, Oracle has the biggest share and has been growing faster than the market.Oracle recently signed a licence and support agreement with the Bucharest metro operator, Metronex.
Computer Sales
The Romanian PC market (including notebooks and accessories) was worth US$722mn in 2007, up fromUS$607mn in 2006. Recent statistics reveal that 43.5% of urban inhabitants in Romanian own acomputer. The nationwide figure for home computer ownership is just 24.6%. Just 9.8% of Romaniansuse a computer at work, and 2% at school. Moreover, 70% of Romanians lack basic computing skills.
BMI projects that this low level of computer penetration represents an opportunity for vendors during ourforecast period, with the market set to reach US$1.3bn by 2012. In the second half of 2007, computersales increased very rapidly, driven primarily by notebooks, which enjoyed a record quarter. However,desktop sales also performed relatively strongly last year as the average prices of desktops and notebooksdropped 8%-10%. Desktops still account for more than 70% of the market in Romania, but this isexpected to fall.
Software
The market value of legally-packaged software in 2007 was estimated by BMI at around US$176mn, andinvestments by businesses and the public sector should see this increase to US$343mn by 2012. Ananticipated drop in software licence fees should help support growth in spending. Demand is becomingmore sophisticated, with more demand for support and technical assistance. Despite the piracy issue, thereshould be increasing demand for vertical applications tailored to the needs of particular sectors. Theseinclude: administration, healthcare, pension and finance. In the enterprise sector, the enterprise resourceplanning (ERP) market is still essentially in its early phase, where larger companies and organisations stillprovide strong demand. In other CEE countries, the focus of opportunity has now shifted towards thesmall to medium-sized enterprise (SME) sector.
Services
According to BMI estimates, the Romanian IT services market was worth US$311mn in 2007,representing 22% year-on-year (y-o-y) growth. IT services accounted for around 23% of all IT spendingin Romania last year. Spending on services is predicted by BMI to increase at a compound annual growthrate (CAGR) of 12% to around US$539mn by 2012, driven by the large number of complex ICT projectsbeing implemented in public and enterprise sectors with the support of EU funds. The government hasannounced that IT service providers will be in line to receive EU structural funds worth over EUR550mnduring the 2007-2013 period under the EU programme to increase economic competitiveness. Generaleconomic reform, including a continuing wave of consolidation and privatisations, together witheconomic growth, will ensure growing demand for IT expertise. Particular areas of opportunity during theforecast period should include telecoms, financial services and banking, and the public sector.
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