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Turkey Information Technology Report Q4 2009Product Type: Market Research ReportPublished by: Business Monitor International Published: October 2009 Product Code: R302-8442 Description Market OverviewBMI has downwardly revised its five-year forecast for the Turkish IT market, due to the economicsituation, which is now projected to see Turkey experience a full year economic contraction in 2009.Recovery is forecast to be protracted compared with the pattern of previous recessions. IT spending is expected to dip into negative territory this year. Deferrals of IT purchases and projects areexpected in the short term from consumer and business segments, and there were reports from vendors ofsome IT projects being cancelled. The size of the strategically located Turkish IT market is still expected to increase from around US$6.4bnin 2009 to US$9.5bn by 2013. This still makes it one of the fastest growing in the region. Thefundamentals of low computer penetration and rising incomes should keep the market on an upwardspath. Industry Developments In 2009 the government continued to promote its e-government programmes, despite the economicsituation. A key initiative is the E-Gateway project in Ankara, launched last December. The government'slong-awaited portal is central to the government's target of using IT to create a citizen-centricgovernment, but it is anticipated that the system will take about two years to be fully implemented. Healthcare should be a significant area of opportunity for IT vendors over the next few years as healthcare organisations seek efficiency improvements and improved services. The Health TransformationProject, launched earlier this decade byTurkey's Ministry of Health has driven an increase in outsourcingof hospital functions. Meanwhile, other departments have continued to launch tenders, including one for the supply of ITequipment for upgrading of the statistical system of the Ministry of Labour and Social Security. As withmany other government IT projects, this one was being driven by a drive for compliance with EUstandards, and the EU is providing 75% of the funding from its general budget. Competitive Landscape The PC market slowdown has led many vendors and retailers to respond with special campaigns, andsome have cut prices. Leading computer dealer Crea said that the company would start selling desktopsfor as low as US$199, without reducing quality. Despite the slowdown, vendors still saw Turkey as asignificant growth opportunity, increased investment in channels and local production, and set ambitioussales targets. IT services vendors have continued to strengthen infrastucture and service offerings in Turkey. In August2009, Accenture announced that, in partnership with enterprise software giant Oracle, it was opening anAccenture Innovation Centre in Istanbul. The centre will provide Oracle-based applications for Accentureclients across Europe. Meanwhile, IBM added a new Disaster Recovery Centre in Turkey, part of aworldwide roll-out of similar facilities. The tougher economic climate may give additional momentum to the software-as-a-service (SaaS)business model. TurkCell recently launched a new internet-based platform for small and medium-sizedenterprises (SMEs), which provides customer relationship management (CRM) and enterprise resourceplanning (ERP) applications, as well as basics such as email and website services. The pay-as-you-goplatform does not require subscribers to add any new software to their computers, and the service can beaccessed anywhere. Hardware Turkey's computer hardware sales are projected at US$4.4bn in 2009 and are forecast to reach aroundUS$6.8bn in 2013. BMI now expects the PC market to experience negative revenues growth this year, asthe increased popularity of low-priced netbooks will depress average prices. The market is expected toreturn to positive growth in 2010 with revenues forecast to grow at an 11% 2009-2013 compound annualgrowth rate (CAGR). The market fundamentals remain promising, with computer penetration low at around 10%. Until a fewyears ago, demand for computers was mainly confined to big cities like Istanbul, Izmir and Ankara. Now,however, the fastest growth in sales is coming from Anatolia. Demand for laptops is expected to be thestrongest growth area over our forecast period, but desktops remain popular with businesses. With fasterinternet speeds, growing broadband penetration should be a key driver of PC sales across consumer andbusiness segments. Software The software market in Turkey is projected at US$832mn in 2009 and is now forecast to reach US$1.1bnin 2013, representing a CAGR of 8%. However, much will depend on the success in bringing down therate of illegal software usage, which, at 65%, is nearly twice the global average. The current economic crisis has reportedly led some companies to review IT budgets or look to defersystems updates, but other companies will see IT as a means of achieving greater efficiencies in difficulttimes. Business sentiment showed signs of a continued decline in H109. In the current economic climate,business software vendors will pitch efficiency gains, as declining margins encourage companies to focuson reducing costs. In 2008, there were further moves to encourage the development of Turkey'sdomestically developed Pardus operating system. IT Services BMI estimates that Turkey market revenues from IT services will dip slightly in 2009 as a result of thecurrent recession. Spending on all categories of IT services is projected at US$1.2bn in 2009, with amarked deceleration compared with 2008. However, the Turkish IT services market is expected to growat a 9% CAGR over BMI's 2009-2013 forecast period. The economic situation, and credit tightening, is likely to have an impact this year on spending in somekey IT spending verticals. However, in other cases spending will be viewed as strategic rather thanoperational and will be relatively immune to cutback. Much will depend on the economic situation andthe speed of global economic recovery. E-Readiness Recent data indicated that Turkey's e-commerce transactions level doubled in 2007 to 54.1mntransactions, up from 21.7mn the previous year. Although other operators in Turkey are providing ADSL services, they are currently reliant on theincumbent Türk Telecom's wholesale ADSL product; wholesale connections are included in theincumbent's reported total. Turkey's Telecommunications Authority is keen to foster the growth of alternative broadband operatorsby allowing them to co-locate on Türk Telekom's network, in addition to reselling Türk Telekom'swholesale ADSL product. Competing against Türk Telekom remains difficult, given that the incumbentowns the bulk of Turkey's fixed-line network infrastructure and is determined to compete aggressively onprice. The Organisation for Economic Co-operation and Development (OECD) called in 2007 for moreinitiatives to increase public use of information and communication technology (ICT), with research fromthe EU Statistics Office showing that Turkey is among the countries in which internet access is very low.The research found that only 39% of Turks had computers at home and that Turkey was below the EUaverage in terms of both computers per household and internet access. Turkey lags its EU neighbours on many indicators, excepting e-government, where much progress hasbeen made. In 2005, a new unit responsible for the overall co-ordination of ICT projects - the InformationSociety Department - was established within the State Planning Organization (DPT). To increase theparticipation and level of success, an advisory board with 41 members has also been established. Thisconsulting body gathers representatives from public institutions, non-governmental organisations (NGOs)and universities. Table of Contents
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