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France Information Technology Report Q4 2011
Business Monitor International, Oct 2011, Pages: 59
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 projected to grow at a CAGR of 2.3% over 2011-2015. The addressable French market for IT products and services is projected by BMI to reach US$45.9bn in 2011 and US$49.3bn by 2015. BMIs downgraded forecasts reflect their lower expectations for GDP growth in 2011 following no growth at all in Q211.
A slowdown in consumer spending does not bode well for IT service vendors. While a return to growth had been reported in the first half of the year, the ongoing crisis in the Eurozone has done little to boost consumer confidence.
In BMIs core IT forecast scenario, IT market growth will be around 4% in 2011. Vendors will look to key segments such as telecoms, banking and energy where most opportunities are likely to be generated. Virtualisation and cloud computing offering opportunities, but much will depend on the pace of economic recovery and reform in key sectors.
Competitive Landscape:
IT services vendors forecast a return to growth in the French market in 2011, which is expected to gather pace in the second half of the year. In France, Capgemini's revenues increased by 7.5%, with over 900 new employees taken on during the quarter. However, Atos' French revenues actually declined by 2.6% in Q111, with Atos warning about price pressures.
In Q111, HP took first place in overall French PC shipments, ahead of Acer, which had seen a sharp loss of share compared with the same period of the previous year. Other leading vendors include Asus, Dell and Samsung, with the top five vendors accounting for more than 50% of total shipments. Cloud computing is one of the key growth drivers identified by Orange Business Services in its five-year plan. The company has set a target of generating EUR500mn from cloud computing by 2015. In December 2010, Orange Business Services implemented a cloud-based messaging and collaboration solution for French entertainment provider Cirque du Soleil.
Computer Sales
According to BMI figures, France's addressable computer hardware market will be worth around US$10.2bn in 2011, up by an estimated 6% from US$9.7bn in 2010. Total PC revenues including notebooks and desktops are estimated at US$7.9bn and are expected to rise to US$9.2bn by 2015 at a CAGR of 4%.
In 2011 the French computer hardware market is expected to record single-digit growth, consolidating a recovery in shipments in 2010. Overall shipments were estimated to have grown by nearly 10% in 2010. One additional driver both of increased notebook sales and lower prices is the move of telecoms operators into the PC retail space.
Software
In 2011, French software sales are projected by BMI at US$13.8bn and, despite the uncertain economic conditions, revenues are forecast to rise to US$16.0bn in 2015. Software CAGR for 2011-2015 should be about 4%. Migrations to Microsoft's Windows 7 operating system, and growing interest in cloud computing services, should be among areas of opportunity in 2011.
The French market remains 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$22.2bn in 2011, up from US$21.1bn in 2010. Demand for IT services stabilised in 2010 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, as the market approaches US$25.7bn by 2015.
BMI estimates the addressable IT services market will grow by around 5% in 2011. IT services account for around 48% of total French IT spending. In 2010 the booked projects of major market players such as Atos Origin and Capgemini were healthy, indicating the market had started to recover.
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 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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