Czech IT Market Dynamics

Despite a host of more recent economic and political problems, the Czech Republic continues to field one of the most dynamic i...

Despite a host of more recent economic and political problems, the Czech
Republic continues to field one of the most dynamic information technology
markets among the countries of Central and Eastern Europe. This can be seen
from an examination of IT ratios for the country, which are now beginning to
reflect spending patterns common in Western European markets in which IT
expenditures are being shifted to implementation services, networking
hardware/software, application solutions development and support. Moreover, the
country retains the highest ratio of
IT spending to GDP in the region. ICT spending levels as a percentage of the
Czech Republics GDP are also comparable to those of most Western European
Nonetheless, IT market growth slowed in the 1997 to 1998 period in the wake of
a devaluation of the Czech crown and series of economic and political problems.
Total IT market value declined by 1 percent in 1997 to $1.438 billion.
Preliminary figures for 1998 suggest that the market reached $1.51 billion.
Development by Sector
Growth recorded thus far for 1998 was derived from greater spending on software
and services, as revenue from hardware sales declined across the board, with
the exception of datacommunications. Software and services now comprise up to
53 % of annual spending in the Czech market. In 1998, the Czech Republics
personal computer market rebounded marginally from the decline in shipments
recorded for the previous year. IDC estimates that a total of 243,165 personal
computers were shipped in this country market during 1998, for revenue of
$350.81 million. While unit sales increased by 4.3 percent over the previous
years figure of 233,200 systems, the value of the market contracted by 9.5
percent. Despite a rise in unit shipments, the legacy of the countrys economic
downturn in 1997 continued to undermine demand in market segments which
historically represented areas of high growth potential for most vendors. For
the second consecutive year, Compaq was the overall market leader in terms of
both units and shipment value, followed by AutoCont, Dell, ProCa and ComFor.
Market Forecast
The IT market in the Czech Republic is expected to increase in value by an
annual growth rate exceeding 10 percent through the year 2000. The value of the
market will exceed $1.8 billion into the new millennium. While most spending
will remain focused on hardware, software and services will comprise an
increasingly larger share of annual IT expenditures. Particularly strong areas
of growth aside from personal computers include networking hardware/software,
LAN servers, networking services (implementation/management), software
application development, professional services and customer support services.
Major investment will also continue in
datacommunications and Internet-related techologies.
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Important factors driving growth in the Czech IT market now:
the impact of the Year 2000 problem
rising usage of the Internet
new government initiatives for IT development in the public sector (SIS)
the European Unions Accession Program
ongoing improvements in telecommunications infrastructure
growing popularity of client server ERP software application solutions
efforts by Czech firms to streamline operations and cut costs
rising demand for complex professional services
trend toward shared and networked solutions

Major factors undermining growth in the Czech IT market now:
political instability
stagnation in the economy
rising unemployment
absence of concrete programs for computerization of the public sector
curtailment in public expenditures
delays in privatization of major banks
stagnating wage rates

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