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France Information Technology Report Q1 2011
Business Monitor International, Jan 2011, Pages: 52
Business Monitor International's 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.
Market Overview The French IT market is the third largest in Europe and, despite current economic headwinds, is projectedto grow at a CAGR of 3% over 2011-2015. The addressable French market for IT products and services isprojected by BMI to reach US$50.0bn by 2015.
The IT market showed signs of stabilisation in 2010, with a strong rebound in PC sales in H1, after a sharp contraction in 2009 due to the economic crisis, which hit business spending in particular. The firsthalf of 2010 saw new IT services deals in sectors such as energy, telecoms and banking. Despite thetightening of government purse strings, government agencies such as the Social and Health Ministry alsocommissioned projects.
In our core IT forecast scenario, IT market growth will be around 3% in 2011. Vendors will look to key segments such as telecoms, banking and energy where most opportunities are likely to be generated. Keydrivers will include growing mobile and fixed broadband penetration, product innovation such as featurerichnetbooks, technology innovation such as GSP technology and services, and the broader economicrecovery.
Industry Developments In February 2009, the Riester Report on the development of the digital economy was presented to relevantgovernment ministers. The report was the product of a special working group of eight experts convened toconsider digital economy issues. The report contained 25 proposals for action to improve the relationshipbetween the government and citizens and promote innovative services.
In January 2010, the French government issued computer users an advisory warning to change from Microsoft’s Internet Explorer browser. The government was responding to widespread concerns aboutsecurity issues surrounding the Microsoft browser.
Competitive Landscape In November 2010, French retail leader Carrefour announced plans to launch the iPad in around 70 of itsdomestic stores by the end of 2010. The device was launched in 15 stores in November, making Carrefourthe first French hypermarket to stock the iPad. Meanwhile, mobile operator Orange revealed it wasplanning to sell a 3G Android-based tablet made by an unnamed Asian original equipment manufacturer(OEM) under the Orange brand.
Traditional telecoms service providers are moving into the IT services space, a trend well established in the global IT market in 2010. In August 2010, Orange Business Services announced it had acquiredleading French IT integrator Alsy for an undisclosed amount. Orange hopes the acquisition will help ittake a dominant position on the French market for Microsoft solutions integration as it competes withcompanies such as Atos Origin and Capgemini.
In October 2010, French IT and telecoms service provider announced that, as a development of its partnership with Microsoft, it was launching a cloud computing service called Flecs. Meanwhile, in June2010, HP announced it was helping leading French telecom operator SFR extend a cloud computingoffering to its 150,000 business customers.
Computer Sales According to BMI figures, France’s addressable computer hardware market will be worth aroundUS$9.6bn in 2011, up by an estimated 7% from US$9.3bn in 2010. Total PC revenues includingnotebooks and desktops are estimated at US$7.5bn and are expected to rise to US$8.6bn by 2015 at aCAGR of 3%.
In 2011 the French computer hardware market is expected to record single-digit growth, consolidating a recovery in shipments in 2010. One additional driver both of increased notebook sales and lower prices isthe move of telecoms operators into the PC retail space. With increasing mobile and fixed broadbandpenetration, notebooks and netbooks have become popular wireless connectivity options for Frenchconsumers.
Software In 2011, French software sales are projected by BMI at US$13.1bn and, despite the uncertain economicconditions, revenues are forecast to rise to US$15.0bn in 2015. Software CAGR for 2011-2015 should beabout 3%. Migrations to Microsoft’s Windows 7 operating system, and cloud computing services, shouldbe among areas of opportunity in 2011.The French market remains focused on traditional embedded software rather than software-as-a-service.However, French internet service providers (ISPs) continue to roll out hosted software offerings anddouble-digit growth is expected in this area.
Services French IT services spending is forecast to reach around US$20.9bn in 2011, up from US$20.3bn in 2010.Demand for IT services stabilised in H110 after the economic crisis had an impact in 2009 when projectswere put on hold. Sectoral CAGR is projected at 3% over the forecast period, as the market approachesUS$24.0bn by 2015.
BMI estimates the addressable IT services market will grow by around 3% in 2011. IT services account for around 48% of total French IT spending. The most severely hit area during the economic slowdownwere 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 infrastructureis widely available in France, even in rural areas. This means operators are finding it relatively easy andcost-effective to deliver broadband services to a large number of customers (although rural parts are stillbeing neglected). In addition, France has a high GDP per capita, which bodes well for ensuring robustspending 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) ratesand mobile penetration that is still below 100%, providing better subscriber growth opportunities.
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