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Czech Republic Information Technology Report Q1 2012
Business Monitor International, Jan 2012, Pages: 61
Czech Republic 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 Czech Republic's information technology industry.
- BMI's Independent 5-year IT Industry Forecasts to test other views - a key input for successful budgetary and strategic business planning in the Czech Republic IT market.
- Target Business Opportunities & Risks in Czech Republic's IT sector through our reviews - and major deals, projects and investments in Czech Republic.
- Exploit Latest Competitive IT Intelligence & Company SWOTS on your competitors and peers through company rankings by sales, market share and ownership structure – includes multi-national and national companies
Market Overview
The Czech Republic's IT market is forecast to increase from US$4.9bn in 2012 to around US$6.2bn in 2016. Consumer and business IT spending are expected to stabilise in 2011 after another difficult year in 2011, which saw double-digit PC sales decline in some quarters.
BMI forecasts that demand will pick up after 2012, but economic uncertainty and rising unemployment will likely mean that, during BMI's five-year forecast period, growth will remain below the immediate pre-2008 trend level.
Industry Developments In 2011, central government agencies continued to issue tenders across a wide range of information technology related areas. One of the more high-profile tenders, valued at CZK72mn, was issued by the Ministry of Finance to secure the administration and maintenance of its information systems infrastructure over a four-year period.
Local governments also continued to modernise, despite fiscal constraints. In 2011, capital city Prague issued a tender to secure analytic, consulting and programming services for the information system of the Prague Municipal Police. A contract value in the range of CZK100mn was estimated for a four-year period.
Competitive Landscape US PC giant HP was on course to take first place in the Czech PC market in 2011, after opening a significant gap on its nearest rival, Taiwanese vendor Acer. Fellow Taiwanese vendor Asus was in third place. In 2011, HP fought back by expanding its portfolio of personal computers with models that were intended primarily for business customers and the public sector.
However, HP's continued dominance of the PC market was thrown into question in August 2011 by reports that the company intended to sell all or part of its relatively low-margin PC business. If the sale happened, it could benefit its Asian rivals such as Lenovo, which reported sales growth in Q311 of an impressive 37.8% year-on-year, despite an overall market decline.
Cloud computing is expected to be a major growth area, with more vendors expected to roll out new service
offerings in 2012. In May 2011, Microsoft launched a new cloud service, the Windows Intune, in the Czech Republic. The service costs EUR11 per month and allows IT managers to administer company computers regardless of location. In October 2011, Microsoft launched a second version of the service.
Computer Sales The Czech computer hardware market is forecast to grow 6% in 2012, stabilising after a difficult 2011. Sales of desktops, notebooks and accessories are projected at US$2.1bn in 2012, with notebooks accounting for around two-thirds of PC sales. The addressable market is expected to reach US$2.6bn by 2016, growing at a CAGR of 5%.
For 2012-2016, the median expectation is probably one of moderate growth, driven mainly by notebooks. Over the past few years, higher real wages and a strong local currency have led to an expansion of electronics and computer equipment sales through retail channels and online stores; however, due in part to the global credit crunch and economic slowdown, expansion seems likely to be slower.
Software BMI projects a software market value of US$1.1bn in 2012, up 4% on the previous year. Growth is expected to remain below the trend of previous years, however, as political and economic uncertainty weighs on investments. BMI projects a market value of US$1.4bn by 2016, growing at a CAGR of 6%. Much will depend, however, on success in bringing down the piracy rate.
BMI expects growth to pick up again as the focus of software market growth shifts from basic enterprise resource planning (ERP) implementations for large accounts and central government to new markets and product areas. Many larger organisations in the manufacturing and utilities sector in particular have already completed ERP implementations. Therefore, vendors are now looking to other areas such as customer relationship management (CRM) and business intelligence, where faster growth is possible.
Services The Czech market was ahead of many other CEE countries in moving to a relatively high level of spending on IT services, and the services market is expected to grow at a CAGR of 7% to around US$2.2bn by 2016. BMI estimates that IT services was the strongest sector of the IT market in 2011 despite the impact of the eurozone currency crisis.
Headline trends obscure some patterns of change in the composition of spending. The relatively sophisticated market means that there is more demand for applications tailored to specific verticals, as well as systems consolidation and platform integration.
E-Readiness The Czech Republic still lags behind Western Europe in high-speed internet connections. In one survey, the Czech Republic ranked third for PCs per household among new EU member states at accession; overall PC penetration is around 50% currently and is expected to rise to above 75% by 2016.
A 2010 EU report revealed uneven advances in information and communication technology (ICT) indicators in the Czech Republic. The EU i2010 report suggested that much current growth in internet connectivity in the Czech Republic now comes from conversion from narrowband to broadband.
Furthermore, rapid growth in overall connectivity is balanced by a slowing of broadband penetration of enterprises.
Alternative broadband technologies such as wireless technologies Wi-Fi and WiMAX are expected to play an increasingly important role in the development of the broadband industry. Ceske Radiokomunikace (CRa) launched a commercial WiMAX service in Prague in January 2009. The availability of internet and broadband services is continually being expanded, driven by Telefónica O2's reduction in wholesale access prices and the regulator's enforcement of local loop unbundling. Availability and competition are helped by other operators with their own networks such as Broadnet and UPC, which are able to offer an alternative to Telefónica O2's network infrastructure and encourage the incumbent to invest in developing its own network.
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