Romanian IT spending is expected to report a modest expansion in H111, which should then accelerate in H211, as the economy recovers. Consumer and business IT spending remain constrained by deleveraging and a fiscal austerity programme, keeping spending below 2008 levels. In 2010, total IT spending again contracted, although household computer sales outperformed Romania's general retail sector, which has shown little sign of recovery since 2008.
In the medium term, a fundamental equation of rising computer penetration, rising incomes and the effects of EU membership should support resumed IT market expansion. The government is faced with implementing a fiscal austerity drive, but has pledged to use EU structural funds to try and encourage continued information society development.
Industry Developments
Despite its fiscal constraints, the government has pledged to use EU structural funds to try and encourage continued information society development. E-government and e-public service projects such as the ERomania portal will help to drive ICT investment across various sectors, with a new e-justice tender being rolled out in Q111, supported by EU funding. Meanwhile, the National Tax Administration Agency (ANAF) is reportedly planning a major upgrade of its IT systems.
In July 2010, there were concerns among IT companies that the government's introduction of a 24% value-added tax (VAT), from July 1 2010, could have a negative impact on demand for IT products and services. Retail sales were expected to be most affected, because of the likelihood that retailers would pass on the tax to consumers in the form of higher prices. Meanwhile, demand for IT services from companies in the consumer goods and retail sectors could also be affected.
The Romanian government will continue to look to EU structural funds to support ICT investment. A total of EUR383mn has been earmarked for Romania's ICT sector for the 2007-2013 period. Around 70% of the money earmarked for the Ministry of Communications and IT is to expand broadband communications infrastructure.
Competitive Landscape
In 2011, IT vendors and retailers are focused on tablet notebooks, as an emerging growth area, with more vendors expected to release rival tablet devices to Apple's iPad. In December 2010, Vodafone Romania started offering its residential subscribers the Samsung Galaxy Tab, which was available from the operator with a three-year mobile data subscription for EUR399.
In September 2010, fellow US leader IBM signed a 10-year, multi-million dollar datacentre services agreement with Petrom, the largest oil and gas producer in South East Europe. Under the agreement, Petrom will outsource the operation of its datacentre infrastructure to IBM, which will provide services such as cloud computing, hosting, installation and co-location to Petrom and affiliated companies. One IT services market trend has been the greater movement of telecoms service providers into the IT services space. In May 2010, the Ministry of Education and Research awarded leading Romanian telecoms company Romtelecom a EUR5.2mn contract to create an e-learning portal. Romtelecom will partner with local software company Siveco Romania to provide customer software and educational software development and training services, as well as supplying hardware such as computers and photocopiers.
Computer Sales
BMI forecasts that the Romanian computer hardware market (including desktops, notebooks and accessories) will be worth US$776mn in 2011, with 6% growth compared with 2010. In 2010, PC shipments grew strongly, with total shipments of around 600,000 units. However, average prices also declined sharply, and Romanian demand for computer hardware will remain constrained in both consumer and business segments due to continued deleveraging and rising unemployment.
The low level of computer penetration, at less than 25%, still represents an opportunity for vendors during our forecast period. While recent statistics suggested that 43.5% of urban inhabitants in Romania owned a computer, the nationwide figure for home computer ownership was just 24.6%.
Software
The market value of legal packaged software in 2011 is projected by BMI at around US$205mn, with a resumption of growth. As the economy emerges from recession in the second half of 2011, investments by businesses and the public sector should see spending on software increase to US$305mn by 2015. In early 2011, Romania's Banca Transilvania, which has a 500 branch and agency network, said that it had invested US$19.4mn in a new core banking system.
The enterprise resource planning (ERP) market is still in its early phase, where larger companies and organisations still provide strong demand. In other Central and Eastern European (CEE) states, the focus of opportunity has now shifted more towards the small and medium-sized enterprise (SME) sector. However, demand has gradually become more sophisticated, with increasing interest in support and technical assistance.
Services
The Romanian IT services market is projected to be worth US$323mn in 2011, accounting for around 26% of total IT spending in the country. Spending on IT services remained constrained in 2010 as enterprises cancelled or postponed IT projects as a result of the economic situation. However, a gradual recovery is forecast for 2011.
BMI expects IT services spending to increase to US$469mn by 2015, driven by an inflow of EU funds and foreign investment. Demand for basic enterprise software and hardware systems is far from saturated and will continue to be an underlying driver for the services market.
E-Readiness
The issuance of a WiMAX licence to National Radiocommunications Company in Q408 as well as a CDMA450 licence should help boost broadband growth in the country, particularly in the rural regions. After receiving no bids in its tender for two further WiMAX licences in Q109, the communications authority, the ANC, announced that it was slashing the licence fee and would relaunch the tender. This signalled the regulator's intent to drive growth in the sector.
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