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Romania Information Technology Report Q2 2010
Business Monitor International, April 2010, Pages: 52
Romania Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Romania's information technology industry.
Market Overview
The Romanian IT market is expected to record low single-digit growth in 2010, following a sharp contraction in 2009, which saw double-digit declines in PC shipments. Consumer and business IT spending will, however, remain constrained in 2010 by continued deleveraging and rising unemployment, keeping spending growth below pre-2008 levels.
The Romanian economic recovery is expected to be anaemic this year, despite tentative signs in H209 of improved economic conditions in the eurozone. In the medium term, the market’s strong fundamentals of low computer penetration, rising incomes and the effects of EU membership should support resumed expansion. BMI expects modest positive IT spending growth in 2010 and a market compound annual growth rate (CAGR) of 9% for 2010-2014.
Industry Developments
In 2009, the Romanian government looked to EU structural funds to prevent stagnation in the domestic IT market and stimulate investment. In 2009, information and communication technology (ICT) projects worth EUR125mn had been approved for financing as of October. A total of EUR383mn has been earmarked for Romania’s ICT sector for the 2007-2013 period. Around 70% of the money earmarked for the Ministry of Communications and IT is to expand broadband communications infrastructure, but the government has identified some priority groups. 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. EUR86mn of public funds will also be made available. The government also continued to implement its e-Romania agenda in 2009, despite fiscal pressures. The government’s medium-term goal is the creation of a huge web portal that will provide nearly 600 online services. The government aims to use the portal to decentralise public services and increase efficiency in interactions between citizens and state institutions.
Competitive Landscape
In 2009, the relatively better performance of consumer notebooks, despite an overall shipments decline, saw Taiwanese vendors Acer take top slot in the PC market, ahead of rivals HP, Asus, Dell, Lenovo and Fujitsu-Siemens. Acer was first for both volume sales and value last year, according to research, with close to a 30% share in mobile computers. Acer responded to the slowdown with more aggressive promotions and by strengthening relations with distributors.
In 2010, Microsoft hopes that sales of its Windows 7 operating system, launched in October 2009, will boost its local sales. In summer 2009, Microsoft continued to lay the groundwork for the new operating system launch and released the enterprise version of the software in August. Microsoft said in November 2009 that its goal for Romania in the next nine months was to win a share for Windows 7 in excess of the approximately 19% currently achieved by the Vista operating system.
Siveco Romania targeted 10% growth in revenues in 2009 to as much as US$99mn, up from around US$90mn in 2008. Despite the economic crisis, the company managed to leverage its local market knowledge to secure some key contracts. These included implementation of an enterprise asset management (EAM) solution for Romanian nuclear operator CNE. Siveco implemented a solution from Ventyx, a specialist provider of software to the utility industry.
Computer Sales
BMI forecasts that the Romanian computer hardware market (including desktops, notebooks and accessories) will be worth US$708mn in 2010, with single-digit growth from US$681 in 2008. In 2009, there was a sharp contraction of demand and few vendors expected pre-2008 sales levels to be repeated in the near future.
The low level of computer penetration, at less than 25%, still represents an opportunity for vendors during our forecast period. While recent statistics suggested that 43.5% of urban inhabitants in Romania owned a computer, the nationwide figure for home computer ownership was just 24.6%.
Software
The market value of legal packaged software in 2010 is projected by BMI at around US$216mn, with mid-single-digit growth from 2009. Despite a decline in 2009, investments by businesses and the public sector should see spending on software increase to US$326mn by 2014 at a CAGR of 11%. The enterprise resource planning (ERP) market is still in its early phase, where larger companies and organisations still provide strong demand. In other Central and Eastern European (CEE) states, the focus of opportunity has now shifted more towards the small and medium-sized enterprise (SME) sector. However, demand has gradually become more sophisticated, with increasing interest in support and technical assistance.
Services The Romanian IT services market is projected to be worth US$329mn in 2010, accounting for around 26% of total IT spending in the country. Spending on IT services was expected by BMI to have contracted in 2009 as enterprises cancelled or postponed IT projects as a result of the economic situation. However, a gradual recovery is forecast for 2010. BMI expects IT services spending to increase at a CAGR of 10% to US$486mn by 2014, driven by an inflow of EU funds and foreign investment. Demand for basic enterprise software and hardware systems is 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 in Q408 as well as a CDMA450 licence should help boost broadband growth in the country, particularly in the rural regions. After receiving no bids in its tender for two further WiMAX licences in Q109, the communications authority, ANC, announced that it was slashing the licence fee and would relaunch the tender. This signalled the regulator’s intent to drive growth in the sector.
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