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Czech Republic Information Technology Report Q2 2011

Czech Republic Information Technology Report Q2 2011

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Additional Information

Price	$530.00
Publisher	Business Monitor International
Date of Report	Apr 8, 2011

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Quick Overview

Market Overview
The Czech Republic's IT market is forecast to increase from US$4.8bn in 2011 to around US$6.7bn in 2015. Consumer and business IT spending are expected to expand in 2011 but continued economic uncertainty and rising unemployment will likely mean that, during BMI's five-year forecast period, growth will remain below the pre-2008 trend level.
BMI expects to see a continued improvement during 2011 in enterprise and consumer IT spending, but an uncertain economic and political climate will weigh on investments. However, in the peak year-end 2010 shopping period, PC retail channels reported high interest from customers in their Christmas promotions.
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.
The health sector is one area of growing public sector spending. The Czech National Health Insurance Agency has implemented a new anti-fraud software plan to launch 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
In November 2010, Telefónica O2 became the first Czech telecoms operator to provide mobile data services to iPad owners. Meanwhile, in December O2 also launched Samsung's rival Galaxy Tab device, as part of a trial for CZK14,095. The device was initially available in only five locations. In September 2010, iPad-maker Apple signed up AT Computers as a second distributor for the Czech market.
Despite the impact of the global financial crisis, the banking and financial services sector remains a key target for IT vendors. In 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 Cap Gemini for the implementation.
Also in 2010, Israeli IT services global player Ness won a US$2mn contract from Teva Czech Industries, a provider of pharmaceuticals products. The important project win confirmed Ness' 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.
Computer Sales
The Czech computer hardware market is forecast to grow 4% in 2011, consolidating a strong recovery in 2010. Sales of desktops, notebooks and accessories are projected at US$2.2bn in 2011, with notebooks accounting for around two-thirds of PC sales. The addressable market is expected to pass US$2.9bn by 2015, growing at a CAGR of 8%.
For 2011-2015, 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 going forward.
Software
BMI projects a software market value of US$1.0bn in 2011, up 10% 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 2015, growing at a CAGR of 9%, although much will depend on success in bringing down the piracy rate, which still remains above the EU average.
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 9% to around US$2.3bn by 2015. BMI estimates that sales revenue of IT services dipped slightly in 2009 as a result of the eurozone slowdown.
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 2015.
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.

Table of Contents

Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 8
Czech Republic IT Sector SWOT ........................................................................................................................................................................... 8
Czech Republic Telecoms Sector SWOT ............................................................................................................................................................... 8
Czech Republic Political SWOT............................................................................................................................................................................ 9
Czech Republic Economic SWOT ......................................................................................................................................................................... 9
Czech Republic Business Environment SWOT .................................................................................................................................................... 10
IT Business Environment Ratings ................................................................................................................ 11
Europe ................................................................................................................................................................................................................ 11
Table: Regional IT Business Environment Ratings ............................................................................................................................................. 14
Europe IT Markets Overview ......................................................................................................................... 15
Czech Republic Market Overview ................................................................................................................. 21
Government Authority ......................................................................................................................................................................................... 21
EU Authority ....................................................................................................................................................................................................... 21
Background ......................................................................................................................................................................................................... 22
Key Issues For Investors ..................................................................................................................................................................................... 22
Hardware ............................................................................................................................................................................................................ 23
Software .............................................................................................................................................................................................................. 25
Services ............................................................................................................................................................................................................... 27
End-User Analysis .............................................................................................................................................................................................. 28
Industry Developments ....................................................................................................................................................................................... 28
Table: Czech Electronic Retailers: 2008 Revenues ............................................................................................................................................. 30
Industry Forecast Scenario ........................................................................................................................... 32
2011 Outlook ...................................................................................................................................................................................................... 32
Table: Czech Republic IT Sector - Historical Data And Forecasts (US$mn Unless Otherwise Stated), 2007-2015 ............................................ 34
Country Context .................................................................................................................................................................................................. 35
Table: Consumer Expenditure Per Capita (US$), 2000-2012 .............................................................................................................................. 35
Table: Rural/Urban Breakdown, 2005-2030 ...................................................................................................................................................... 35
Internet ............................................................................................................................................................................................................... 36
Table: Telecoms Sector -- Internet -- Historical Data And Forecasts, 2008-2015 ............................................................................................... 36
Macroeconomic Forecast ................................................................................................................................................................................... 37
Czech Republic – Economic Activity ................................................................................................................................................................... 39
Competitive Landscape ................................................................................................................................ 41
Hardware ............................................................................................................................................................................................................ 41
Software .............................................................................................................................................................................................................. 43
IT Services .......................................................................................................................................................................................................... 44
Internet Competitive Landscape ......................................................................................................................................................................... 46
Company Profiles .......................................................................................................................................... 49
Microsoft............................................................................................................................................................................................................. 49
HP....................................................................................................................................................................................................................... 51
Xanadu ................................................................................................................................................................................................................ 52
BMI Methodology .......................................................................................................................................... 53
How We Generate Our Industry Forecasts ......................................................................................................................................................... 53
IT Industry .......................................................................................................................................................................................................... 53
IT Ratings – Methodology ................................................................................................................................................................................... 54
Table: IT Business Environment Indicators ........................................................................................................................................................ 55
Weighting ............................................................................................................................................................................................................ 56
Table: Weighting Of Components ....................................................................................................................................................................... 56
Sources ............................................................................................................................................................................................................... 56