|
|
Romania Information Technology Report Q3 2007Product Type: Market Research ReportPublished by: Business Monitor International Published: November 2007 Product Code: R302-2419 Description Market OverviewComputer sales are growing strongly in 2007 as Romania feels the price benefits of the current US$/RON exchange rate as well as increasing demand from public and private sectors. EU and government spending remains the main driver of Romania IT market growth with some US$380mn in structural funds assigned for ICT through 2012. The market remains hardware and enterprise dominated but with the historic fifth wave of enlargement of the EU having taken place on January 1 2007, new member state Romania is set to be transformed over the next few years. Increased competition and privatisations in many industry sectors will provide strong support to the domestic IT market which grew close to 15% in 2006 and is projected to increase in value from around US$1.2bn in that year to close to US$2.0bn by 2011. Romania is therefore expected to continue as one of the fastest growing IT markets in Eastern Europe. Immediately following EU entry in January consumer demand was depressed by concern about higher prices, but there are now signs of a new consumer confidence and growing retail market. Since 2004, government has moved to the forefront of IT spending, co-ordinating a number of EU programmes in the areas of e-government and e-services. Meanwhile, the ongoing transformation of political and economic structures will also continue to stimulate the market. Romania is involved in a number of European ITrelated programmes, and opportunities should be generated in nearly all economic sectors, with government bodies and state-owned enterprises among the largest spenders, along with banks and telecoms. As reform continues areas such as healthcare and pensions will provide many opportunities for major projects. Industry Developments Romania’s IT Minister has pledged that all schools in Romania will have internet access within three years. Currently only 57% of schools are connected. Earlier this year the government set up a working group to develop an affordable laptop programme targeted at Romania’s 1.2mn students. The IT Ministry has also recently launched a new initiative called EURO PC aimed at rural PC users. Meanwhile, the government has announced that IT service providers will be in line to receive EU structural funds worth over EUR550mn during the 2007-2013 period under the EU programme to increase economic competitiveness. According to the IT Ministry, IT companies in Romania will be able to receive EU funds for participation in certain projects in public and private sectors. The Operational Plan for Competitiveness was due to be launched in mid-July. According to estimates, the total value of public sector IT spending increased by 10.2% in 2006 to around EUR86.2mn. This yearly amount is expected to grow significantly over the forecast period, with at least a 30% increase in 2007 on the way to a level of some EUR300mn by the end of the decade. Recent EU figures have revealed that Romania is set to benefit from structural funds over the next few years, with structural fund amounting to EUR380mn earmarked for Romania’s ICT sector by 2012. Company News With the Romanian IT market growing at a high rate even by regional standards, leading vendors are investing in and promoting the key applications that are most in demand. Oracle is the clear market leader and has been growing faster than the market. In the past two years the company has been pushing its HR solutions. Oracle has more than two thirds of the database market and a strong position in applications. In the enterprise sector, the ERP market is still essentially in its early phase where larger companies and organisations still provide strong demand. Meanwhile, in the PC segment, Fujitsu Siemens claimed the leading position for the third year running in 2006 with turnover of EUR49.57mn, being 46% up on the previous year. Fujitsu Siemens achieved a 12.1% share of desktop sales last year but in 2007 is looking to double that share. The company also aims to double its share in the server market to surpass EUR60mn turnover overall. Dell is also targeting above market level growth rates in 2007, following a doubling of turnover in 2006. Corporate sales dominate in Dell’s case, accounting for 85% of annual sales. Computer Sales In 2007 desktop sales are performing strongly following a relatively flat year in 2006. Desktops still account for more than 70% of the market in Romania and were reported to have risen around 30% in Q107 year on year. With 33% computer penetration according to latest government figures, the Romania market is more developed than some regional peers such as Bulgaria. Going forward, expansion of thirdgeneration/ high-speed downlink packet access (3G/HSDPA) broadband internet service on Vodafone’s platform with computer connectivity is likely to be a new driver of computer sales in the consumer and small business segments. According to BMI estimates, the Romanian PC market (including notebooks and accessories) was worth US$607mn in 2005, up 14% from US$533mn in 2005. The low level of computer penetration still represents an opportunity for vendors during our forecast period, with the market set to reach US$1.03bn by 2011. While recent statistics reveal that 43.5% of urban inhabitants in Romanian own a computer, the nationwide figure for home computer ownership is just 24.6%. In other key sectors, penetration is far lower. Just 9.8% of Romanians use a computer at work, and 2% at school. Moreover, 70% of Romanians lack basic computing skills. Software An anticipated drop in software licence fees should help support growth in spending. Demand is becoming more sophisticated, with more demand for support and technical assistance. According to a survey by the Institute for Computer Technology, IT Consulting and training account for around 1.8% and 6.6% respectively of software spending. The packaged software (mainly import) market is expected to grow steadily over the forecast period, despite high annual software piracy losses. The wave of EU funds entering the market to support projects to improve efficiency and facilitate harmonisation with the EU will promote increasing demand for vertical applications tailored to the needs of particular sectors. These include: administration, healthcare, pension and finance. In the enterprise sector, the enterprise resource planning (ERP) market is still essentially in its early phase, where larger companies and organisations still provide strong demand. In other CEE countries, the focus of opportunity has now shifted towards the small to medium-sized enterprise (SME) sector. The market value of legally-packaged software in 2006 was estimated by BMI at around US$162mn, and investments by businesses and the public sector should see this increase to US$275mn by 2011. Services A recent survey by the Software and Service Providers Association (ANIS) found that local giant Siveco Romania is the leader in the IT Services segment. The company has done particularly well in winning elearning and e-health projects. According to BMI estimates, the Romanian IT services market was worth US$255mn in 2006, accounting for around close to 20% of all IT spending in Romania last year. Spending on services is predicted by BMI to increase at a compound annual growth rate (CAGR) of 11% to around US$433mn by 2011, driven by the large number of complex ICT projects being implemented in public and enterprise sectors with the support of EU funds. General economic reform, including a continuing wave of consolidation and privatisations, together with economic growth, will ensure growing demand for IT expertise. Particular areas of opportunity during the forecast period should include telecoms, financial services and banking, and the public sector. Special Focus: Banking The market has seen a growing number of vendors positioning themselves for a stake of the e-banking solution opportunity, with 22 internet banking solutions now offered by six banks. Data from the Ministry of IT & Communications (MCIT) claimed that, by the end of March 2006, some 118,000 clients were using the internet for payments. The challenge for IT vendors has been to work with banks to design the new channels in such a way that customers will readily learn to trust and use them. Aside from the leu revaluation, various factors look set to drive IT spending in the banking sector over the next couple of years. The number of banking services users is increasingly rapidly. E-banking is also on the increase, with the MCIT issuing permission in 2006 to nine banks to provide customers with remote access payment instruments. In total, 33 banks have the right to use instruments such as internet banking, mobile banking and home banking. Leu Revaluation In July 2005, Romania slashed four zeroes off its leu currency as it implemented its long-awaited redenomination, designed to simplify transactions and acknowledge a new lower-inflation era. The move is also designed to help prepare Romania to join the eurozone in 2012 or 2014. So far, there are no official estimates as to the total IT costs companies will incur as a result of the new heavy leu - four zeros shorter than the present one - being introduced; both currencies will be available until 2007. The government agency for small- and medium-sized enterprises (SMEs) said that it is not offering any financial assistance on this matter, due to its low budget, although it may consider offering training. E-Readiness The ICT sector and computer sales are likely to receive a boost from growing broadband penetration over the next few years. Broadband internet access penetration was reported by the National Regulatory Authority for Communications and IT to have increased 136% in 2006. Romanian internet development is held back by relatively low PC penetration, the limited use of credit cards, and an inadequate banking and online payment infrastructure. However, the government reported that in 2006 Romania reached 33% computer penetration. IT Minister Nagy predicted last year that Romania might have around 4mn broadband connections at broadly affordable prices by 2009, and said the Ministry would work together with the national communications regulatory authority to implement the national broadband strategy. Although on the rise, Romania’s broadband connections are currently a modest share of total internet connections. The World Economic Forum recently ranked Romania a lowly 28th in Europe for competitiveness, behind non-EU members such as Turkey and Croatia. In the ‘IT Society’ and ‘Innovation and R&D’ categories, Romania was awarded scores of 3.21 and 3.17, as against EU averages of 4.58 and 4.24 respectively. The full digitalisation of leading telecom Romtelecom’s network, planned for 2007, should provide a boost to e-access. Internet subscribers reached around 7.5mn by the end of 2006, around one-third of the population, and penetration is expected to reach around 43% by 2011. Table of Contents
|
|
||||||||
MindBranch has been the leading provider of industry and investment research from more than 550 independent research firms since 1992. With over 90,000 market research reports, MindBranch is your trusted source of competitive business intelligence. |