"Czech Republic Information Technology Report Q4 2010" now available at Fast Market Research

Oct. 2, 2010 - PRLog -- The Czech Republic's IT market is forecast to achieve a compound annual growth rate (CAGR) of 6% from US$4.5bn in 2010 to around US$6.0bn in 2014. In 2009, the local currency's depreciation against the US dollar added to pressure on retailer and vendor margins, as average prices of notebook computers declined. Many firms put investment in new technology on hold because of a deterioration in external demand.

BMI expects to see a gradual improvement in 2010 in enterprise and consumer IT spending, but an uncertain economic and political climate will weigh on investments. Enterprise spending should pick up in the second half of the year, with an improvement in the external trading environment triggering upgrade cycles postponed from 2009. EU funding for information society initiatives will provide support to Czech IT investment.

Industry Developments

The Czech Ministry for Local Development, which supervises the allocation of EU subsidies for investment in IT and other areas, has launched a campaign to make access to the funds easier for smaller organisations. According to the ministry's plans, subsidies should go into areas with strong potential to drive growth. Since the beginning of the 2007-2013 budget period, the total amount approved by the EU for Czech projects has reached CZK150.6bn.

In H109, the government faced pressure to cut state spending in all key areas due to falling tax revenues. However, IT spending retained some momentum from the second half of 2008, when the government rolled out a number of IT initiatives, including a central accounting system to interconnect and provide visibility about the finances of a number of state organisations. The project was due to be completed in late 2009 or early 2010.

Meanwhile, the health sector is another area of growing public sector spending. The Czech National Health Insurance Agency has implemented a new anti-fraud software plan to be implemented in the next couple of years. As part of the modernisation of the sector, 14 medical institutes run by the Ministry of Health are also rolling out unified software, supplied by Aquasoft.

Competitive Landscape

Despite the impact of the global financial crisis, the banking and financial services sector remains a key target for IT vendors. In April 2010, business analytics software vendor SAS won a contract from the Czech Republic's largest bank, Ceska sporitelna. The bank purchased SAS's Marketing Optimisation software with the aim of optimising existing marketing campaigns and increasing income. Ceska sporitelna, which already uses SAS software, selected long-term partner Capgemini for the implementation.

Meanwhile, also in April 2010, Israeli IT services global player Ness announced that it had won a US$2mn contract from Teva Czech Industries, a provider of pharmaceuticals products. The important project win confirmed Ness's position as a leading provider of Oracle implementation services in the Czech Republic after the vendor had delivered solutions for other Czech companies such as Vitkovice and Dalkia Czech Republic.

The growing popularity of mobile and fixed broadband services acted as a driver of the PC market in 2009, with network operators an increasingly significant channel for PC sales. A number of network operators launched notebook and netbook bundling deals in cooperation with vendors. Vodafone Czech Republic offered a Dell mini-notebook through all its sales channels, while Telefonica O2 was offering a Samsung model to its 3G subscribers.

Computer Sales

The Czech computer hardware market is forecast to grow in 2010, following a contraction in spending last year. Sales of desktops, notebooks and accessories are projected at US$2.0bn in 2010, with notebooks accounting for around two-thirds of PC sales. The country still lags behind the EU average for computer ownership, which BMI sees as rising from around 48% in 2008 to 71% by 2013.

Software

BMI projects a software market value of US$935mn in 2010, up 5% on the previous year. Growth is expected to remain below the trend of previous years as political and economic uncertainty weighs on investments. BMI projects a market value of US$1.3bn by 2014, growing at a CAGR of 8%. The launch of Microsoft's Windows 7 operating system has the potential to impact positively in 2010, although much will depend on success in bringing down the piracy rate, which still remains above the EU average.

Services

The Czech market was ahead of many other Central and Eastern European (CEE) countries in moving to a relatively high level of spending on IT services and the market is expected to grow at a CAGR of 6% to around US$2.0bn by 2014. BMI estimates that sales revenue of IT services dipped slightly in 2009 as a result of the eurozone slowdown.

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 48% currently and is expected to rise to around 67% by 2013. A recent 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.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.