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Russia Information Technology Report Q2 2011


Russia Information Technology Report Q2 2011

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Price $530.00
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Publisher Business Monitor International
Date of Report Apr 15, 2011
Quick Overview
Market Overview Russian IT spending is expected to record double-digit growth in 2011, continuing its recovery from 2009 when the market experienced a sharp contraction across all main IT spending verticals. The IT market is forecast to grow to nearly US$34.6bn by 2015, surpassing its 2008 level, as it gradually recovers from recent external shocks.
PC sales grew strongly in 2010 as the market bounced back. The broader use of ICT in government and other sectors will ensure an upward market trajectory in the medium term, along with major projects in key sectors such as banking and oil and gas. In 2011, vendors will look to opportunities in the public sector, which in 2010 launched a number of e-government service pilots in areas ranging from universal identity cards to online fee payments.
Russia is showing signs of becoming a market that through its scale can influence global industry developments. Growing computer penetration, government ICT projects and immense potential for IT spending by Russia’s traditional industries could drive an increase in IT spending per capita from around US$138 in 2011 to US$250 by 2015.
Industry Developments In December 2010, Prime Minister Vladimir Putin signed a decree that approved a plan for the federal government and subordinate agencies’ transition to open source software The plan is due to be implemented between 2011 and 2015. In the first stage, a solution covering routine government work is expected to be implemented in 2011 and the implementation of other solutions is expected to be completed by 2014.
In 2010, the government earmarked RUB2bn (SU$64mn) for e-government infrastructure projects through the end of the year. The government launched test projects in 2010 for a number of e-government initiatives, with the aim of meeting targets for the introduction of information technology to deliver government services.
The government also proceeded with test projects for a number of e-government initiatives, with the aim of meeting targets for the introduction of information technology. One key pilot concerned the introduction of a universal identity card, which would replace various individual forms of identification such as medical and pension insurance cards.
Competitive Landscape With the business climate still very cost sensitive, some vendors have spotted a growing opportunity to promote cloud computing solutions such as Software-as-a-Service (SaaS) and Infrastructure-as-a-Service (IaaS). In January 2011, I.T. Co announced that it had deployed the first private cloud based on its partner Microsoft’s Hyper-V Accelerate program for one of the largest universal banks of Russia.
Government open source initiatives have put pressure on Microsoft to reduce prices to win Russian public sector contracts. Russia is one of Microsoft’s top 10 global markets and state contracts account for about 10% of the company’s local revenues. However, in 2011 Microsoft launched a number of programmes designed to strengthen its position in the Russian market.
The Russian PC market leader is Acer, ahead of fellow Taiwanese firm Asus. Acer’s overall Russian market lead is based on its strength in the consumer notebooks, while HP is a strong challenger in the desktop segment.
Hardware BMI forecasts double-digit growth for the the Russian computer hardware market in 2011, cosolidating a strong recovery in 2010. According to BMI projections, the computer hardware market is forecast to recover to US$10.9bn in 2011, up from US$9.1bn in 2010, driven by notebooks. In H110, shipments bounced back robustly, with growth driven mainly by notebook sales, which accounted for about 60% of PC shipments.
Computer hardware sales will find support from a number of fundamental drivers, including low PC penetration, rising incomes, government IT initiatives and industrial reform in many sectors. The PC market compound annual growth rate (CAGR) for the next five years is projected to be in the region of 15%, with PC spending reaching US$15.2bn by 2015.
Software The addressable domestic software market is forecast to be close to US$3.5bn in 2011. Spending in this sector is forecast to return to positive growth territory after demand was hit in 2009 by the much sharper decline in PC sales. The market is projected to grow at a CAGR of 18% to US$6.6bn by 2015, making Russia potentially one of the most significant global software market opportunities.
Although Russia has the fifth highest software piracy rate in the world (87%), BMI expects government efforts to strengthen intellectual property protection will mean this falls closer to the Eastern European average, boosting the market. Unsurprisingly there are regional disparities, with Moscow some way ahead of its closest rival St Petersburg in terms of enterprise resource planning (ERP) deployments.
Services BMI projects an IT services market value of US$4.9bn in 2011, which will mean a continued strong recovery from the sharp 2009 contraction across all main IT spending verticals. The IT services opportunity is forecast to grow steadily to US$9.5bn by 2015, surpassing its pre-crisis level, as the market gradually recovers.
Systems integration is the largest IT services component, accounting for as much as a third of revenues, and together with the implementation of hardware and software it probably accounts for about half of all IT services. However, value-added services such as consulting and applications development are growing fast. Outsourcing is also on the rise, although it is below the levels in some other Central and Eastern European (CEE) countries.
E-Readiness The government’s ambitious policy is that every locality in Russia should be provided with fixed-line telephony infrastructure, mobile phone coverage and internet by 2015. According to the Ministry of IT and Communications’ target, every populated area in the country should be provided with all three elements irrespective of its economic weight and population. Former IT and communications minister Leonid Reiman described the ‘digital divide’ as a very challenging issue for all countries in the Commonwealth of Independent States (CIS) and one that the Russian government was seeking to overcome.
Internet use is forecast to experience robust growth over our forecast period. However, tight credit markets are limiting the ease with which broadband operators are able to source much needed funds to invest in network proliferation. Coupled with economic uncertainty, this is creating a troublesome environment for operators to plan their investment decisions. That said, growth will still be strong, just not meeting its full potential.
Competition between the incumbent’s holdings and alternative operators such as Comstar-UTS, Golden Telecom and Net By Net will continue to drive the sector forward. Expansion of fixed and wireless networks should see penetration increasing in the regions, while uptake remains strong in the more urbanised areas. Alternative technologies such as WiMAX and fibre will also play their part in expanding the market by introducing competition, as well as offering services over a wider area.
Table of Contents
Executive Summary ........................................................................................................................................ 5
SWOT Analysis ................................................................................................................................................ 8
Russia IT Sector SWOT ......................................................................................................................................................................................... 8
Russia Telecoms Sector SWOT ............................................................................................................................................................................. 9
Russia Political SWOT ........................................................................................................................................................................................ 10
Russia Economic SWOT ..................................................................................................................................................................................... 10
Russia Business Environment SWOT .................................................................................................................................................................. 11
IT Business Environment Ratings ................................................................................................................ 12
Europe ................................................................................................................................................................................................................ 12
Table: Regional IT Business Environment Ratings ............................................................................................................................................. 15
Europe IT Markets Overview ......................................................................................................................... 16
Russia Market Overview ............................................................................................................................... 22
Government Authority ......................................................................................................................................................................................... 22
Background ......................................................................................................................................................................................................... 23
Table: Russia’s IT Market Structure, 2002-2004 (US$bn) .................................................................................................................................. 25
Hardware ............................................................................................................................................................................................................ 26
Software .............................................................................................................................................................................................................. 28
Services ............................................................................................................................................................................................................... 30
End-User Analysis .............................................................................................................................................................................................. 32
Government IT Market Policy ............................................................................................................................................................................. 34
Table: Russia’s Technopark Expenditure, 2006-2010 (US$mn) .......................................................................................................................... 36
Industry Forecast Scenario ........................................................................................................................... 37
Table: Russian IT Sector, 2007-2015 (US$mn Unless Otherwise Stated) ............................................................................................................ 40
Country Context .................................................................................................................................................................................................. 41
Table: Rural/Urban Breakdown, 2005-2030 ...................................................................................................................................................... 41
Table: Consumer Expenditure, 2000-2012f (US$) .............................................................................................................................................. 41
Internet ............................................................................................................................................................................................................... 42
Table: Internet Sector, 2008-2015 ...................................................................................................................................................................... 42
Macroeconomic Forecast ................................................................................................................................................................................... 44
Russia – Economic Activity ................................................................................................................................................................................. 46
Competitive Landscape ................................................................................................................................ 47
Hardware ............................................................................................................................................................................................................ 47
Software And Services ........................................................................................................................................................................................ 49
Internet Competitive Landscape ......................................................................................................................................................................... 52
Table: Svyazinvest Regional Companies – Broadband Subscribers ..................................................................................................................... 53
Company Profiles .......................................................................................................................................... 57
IBS Group ........................................................................................................................................................................................................... 57
IBM Russia ......................................................................................................................................................................................................... 59
Kraftway ............................................................................................................................................................................................................. 60
NCC .................................................................................................................................................................................................................... 61
HP....................................................................................................................................................................................................................... 62
Oracle ................................................................................................................................................................................................................. 63
Country Snapshot: Russia Demographic Data ........................................................................................... 64
Section 1: Population .......................................................................................................................................................................................... 64
Table: Demographic Indicators, 2005-2030 ....................................................................................................................................................... 64
Table: Rural/Urban Breakdown, 2005-2030 ...................................................................................................................................................... 65
Section 2: Education And Healthcare ................................................................................................................................................................. 65
Table: Education, 2002-2005 ............................................................................................................................................................................. 65
Table: Vital Statistics, 2005-2030 ....................................................................................................................................................................... 65
Section 3: Labour Market And Spending Power ................................................................................................................................................. 66
Table: Employment Indicators, 2001-2006 ......................................................................................................................................................... 66
Table: Consumer Expenditure, 2000-2012 (US$) ............................................................................................................................................... 66
Table: Average Annual Wages, 2000-2006 ......................................................................................................................................................... 67
BMI Methodology .......................................................................................................................................... 68
How We Generate Our Industry Forecasts ......................................................................................................................................................... 68
IT Industry .......................................................................................................................................................................................................... 68
IT Ratings – Methodology ................................................................................................................................................................................... 69
Table: IT Business Environment Indicators ........................................................................................................................................................ 70
Weighting ............................................................................................................................................................................................................ 71
Table: Weighting Of Components ....................................................................................................................................................................... 71
Sources ............................................................................................................................................................................................................... 71




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