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Romania Information Technology Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8426 Description Market OverviewThe Romanian IT market is expected to contract in 2009, due to the challenging economic outlook. BMIhas now downwardly revised its five-year IT spending forecast for Romania. In the medium term,however, the market's strong fundamentals of low computer penetration, rising incomes and the effects ofEU membership should drive continued expansion. BMI expects modest positive IT spending growth in 2010 and a market compound annual growth rate(CAGR) of 11% for 2010-2013. In the medium term, Romania is probably better placed than many othermarkets to withstand the global economic headwinds. In the historic fifth wave of enlargement of the EUon January 1 2007, new member state Romania is being transformed by various programmes and aninflow of funds, designed to assimilate the country into the EU's broader 'Information Society'. A total of EUR383mn has been earmarked for Romania's information and technology (ICT) sector for the2007-2013 period. The government has said that it expects several IT projects to be cancelled this year,but has pledged to use the prospect of EU structural funds to try and encourage continued investment.Romania is now one of the fastest growing IT markets in the CEE region and one that attracts increasingattention from vendors. Industry Developments The Ministry of Communications and IT (MCIT) has outlined key areas for ICT-related EU structuralfunds. The funds earmarked for Romania's ICT sector for the 2007-2013 period have been confirmed ataround EUR383mn. Around 70% of the money earmarked for MCIT is to expand broadbandcommunications infrastructure, but the government has identified some priority groups. In 2009, the Romanian government continued to implement some parts of its e-government agenda. Oneproject involved the installation of new computer systems by the Ministry of Public Finance. The financeministry's strategic goals include providing the fiscal administration with a computer network as one of itspriorities. Another key element of the e-government programme is 'e-bid', which allows publicinstitutions to procure assets by electronic means. The government is particularly keen to help small- and medium-sized enterprises (SMEs) have easieraccess to EU ICT programmes. In Q408, the government revealed that state aid worth EUR38mn wouldpotentially be made available to SMEs by 2013 for IT projects. The funds are to be distributed under the'e-Growth!' initiative, which is part of the 'Knowledge-Based Economy' programme part-funded by theWorld Bank. Competitive Landscape Romania PC vendors generally anticipated slower growth in 2009. Notebook segment leader Acerplanned to respond to the slowdown with more aggressive promotions, and by strengthening relationswith distributors. Meanwhile, Fujitsu-Siemens anticipated losing more of the low-tier market to Asianvendors and said that it would target the IT infrastructure service sector, which it hopes will account for30% of sales in 2009. In 2009 Microsoft wants to increase the number of its partners in the Romania market by 20-30%. In thelast fiscal year, market leader Microsoft Romania achieved revenues of some EUR24.5mn, and profits ofEUR5.6mn, according to finance ministry data. The company is targeting the consumer and businesssolutions segments as growth opportunities. Siveco Romania has targeted 10% growth in revenues in 2009 to as much as US$99mn, up from aroundUS$90mn last year. Siveco is looking at projects based on structural funds, and services such as systemsintegration to power growth. The company, which is estimated to have at least 20% of the local enterpriseapplication solutions (EAS) and enterprise resource planning (ERP) market, was part of a consortium thatrecently won a contract for informatisation of Turkey's customs system. Computer Sales BMI forecasts that the Romanian PC market (including notebooks and accessories) will be worthUS$764mn in 2009, down 4% from US$790mn in 2008. By the end of 2008, there were signs of aslowdown, and few vendors expect 2008 growth levels to be repeated in 2009-2010.In the short term, sales are likely to slow most in the household segment, while a deterioration in businesssentiment is also likely to lead to cutbacks or deferments of spending among enterprises. As a result,vendors are likely to focus their attentions more on government ICT infrastructure tenders and bigprojects. Software The market value of legal packaged software in 2009 is projected by BMI at around US$222m. Despite adeceleration in 2009, investments by businesses and the public sector should see this increase toUS$328mn by 2013 at a CAGR of 10%. Romania saw a further decrease, at least in percentage terms, insoftware piracy in 2007, to 66%, building on progress made in 2007. In the short term, the economic slowdown may have a negative impact on the market for enterpriseapplication software. The ERP market is still in its early phase, where larger companies and organisationsstill provide strong demand. In other CEE states, the focus of opportunity has now shifted more towardsthe SME sector. Services The Romanian IT services market is projected to be worth US$343mn in 2009. Spending on IT services isexpected by BMI to contract in 2009 as enterprises cancel or postpone IT projects as a result of theeconomic situation. The slowdown is likely to affect demand across several sectors.BMI expects IT services spending to increase at a CAGR of 10% to US$495mn by 2013, driven by aninflow of EU funds and foreign investment. Demand for basic enterprise software and hardware systemsis far from saturated and will continue to be an underlying driver for the services market. E-Readiness The issuance of a WiMAX licence to National Radiocommunications Company (SNR) in Q408 as wellas a CDMA450 licence should help boost broadband growth in the country, particularly in the ruralregions. After receiving no bids in its tender for two further WiMAX licences in Q109, the ANCannounced that it was slashing the licence fee and would re-launch the tender. This signalled theregulator's intent to drive growth in the sector. Table of Contents
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