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France Information Technology Report Q3 2010
Business Monitor International, July 2010, Pages: 47
France 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 France's information technology industry.
The French IT market is the third largest in Europe and, despite current economic headwinds, is projected to grow at a compound annual growth rate (CAGR) of 3% over the 2010-2014 period. The addressable French market for IT products and services is projected to reach US$41.9bn in 2010 and US$47.5bn by 2014.
The IT market showed some signs of stabilisation in H110, after it contracted by around 1% in 2009 due to the economic crisis, which hit business spending in particular. In our core IT forecast scenario, IT market growth will be around 2% in 2010. Vendors will look to key segments like telecoms, banking and energy where most opportunities are likely to be generated.
Key drivers going forward will include growing mobile and fixed broadband penetration, product innovation such as feature-rich netbooks, technology innovation such as GSP technology and services, as well as economic recovery. Industry
Developments
In February 2009, the Riester Report on the development of the digital economy was presented to relevant government ministers. The report was the product of a special working group of eight experts convened to consider digital economy issues. The report contained 25 proposals for action to improve the relationship between the government and citizens as well as on the promotion of innovative services. In January 2010, the French government issued computer users with an advisory warning that they should change from Microsoft’s Internet Explorer browser. The government was responding to widespread concerns about security issues surrounding the Microsoft browser.
Competitive Landscape
Acer remained the leader in terms of French market PC shipments in 2009, ahead of US rivals HP and Dell. Second-placed HP claimed recently that its performance in the French market had improved significantly in the last three to four years and has outlined a long-term strategy for the market. Meanwhile, in 2009, Dell looked to strengthen its reach in this segment by signing a distribution agreement German electronics chain Media Saturn Holding.
French IT services giant Atos Origin has set up a new subsidiary company called Atos WorldGrid, which will provide IT services to the growing market for smart energy metres. Atos Origin hopes to take advantage of opportunities that could be generated in the energy sector by the planned national deployment of a ‘smart’ electricity grid. The business will have 1,000 engineers and revenues are projected at US$203mn in 2010.
Meanwhile, Capgemini has said that it is well positioned to take advantage of a return to growth in H210, even though it still expects a drop in revenues in the first half. Indeed, for full-year 2010, Capgemini forecast revenues to drop 2-4% on a like-for-like basis. The company has put plans in place to optimise profitability and is also looking at acquisitions in the US and emerging markets to fuel growth.
Computer Sales
According to the authors figures, France’s addressable computer hardware market will be worth around US$9.2bn in 2010, up by an estimated 7% from US$8.6bn in 2009. Total PC revenues including notebooks and desktops are estimated at US$7.3bn and are expected to rise to US$8.2bn by 2014 at a CAGR of 3%.
PC volume sales were estimated at around 11mn units in 2009. One additional driver both of increased notebook sales and lower prices is the move of telecoms operators into the PC retail space. With increasing mobile and fixed broadband penetration, notebooks and netbooks have become popular wireless connectivity options for French consumers.
Software
In 2010, French software sales are projected at US$12.6bn and, despite the uncertain economic conditions, revenues are forecast to rise to US$14.3bn in 2014. Software CAGR during 2010-2014 should be in the region of 3%. The launch of Microsoft’s Windows 7 operating system in October 2009 is expected to provide a boost to the operating system market.
This year should see a boost from systems upgrades deferred from 2009, when the economic crisis had an impact across sectors. The French market remains much focused on traditional embedded software rather than software-as-a-service (SaaS). However, French internet service providers (ISPs) continue to roll out hosted software offerings and double-digit growth is expected in this area.
Services
French IT services spending is forecast to reach around US$20.1bn in 2010, up from US$19.7bn in 2009. H110 saw signs of stabilisation in demand for IT services, after the economic crisis had an impact in 2009 when projects were put on hold. Sectoral CAGR is projected at 3% over the forecast period. The authors estimated that the addressable IT services market contracted by around 2% last year. IT services account for around 48% of total French IT spending. The most severely hit area during the slowdown were softer project-type spending such as consulting and software development.
E-Readiness
Thanks to the extensive reach of traditional copper plant and cable TV networks, fixed-line infrastructure is widely available in France, even in rural areas. This means that operators are finding it relatively easy and cost-effective to deliver broadband services to a large number of customers (although rural parts are still being neglected). In addition, France has a high GDP per capita, which bodes well for ensuring robust spending among subscribers.
France has just three mobile network operators and is one of the least competitive mobile markets in the region. This has resulted in significantly higher and more stable average revenue per user (ARPU) rates and mobile penetration that is still below 100%, providing better subscriber growth opportunities.
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