Poland Information Technology Report Q1 2010

Poland is expected to maintain its status as one of the Central and Eastern Europe (CEE) region's fastestgrowing IT markets over the 2010-2014 forecast period, thanks largely to EU funding for information and communication technologies (ICT) and information society-related initiatives. We forecast growth in many IT market segments over the next few years, particularly as EU funds support new public sector IT initiatives.

IT spending per capita of around US$205 is considerably below the level of, say, the Czech Republic. Poland accounts for less than 2% of EU IT spending and also lags behind fellow EU newcomers Hungary and Slovakia on per capita IT spending. There are also broad disparities in PC penetration between urban and rural areas.

The IT market is expected to grow at a compound annual growth rate (CAGR) of 9% between 2010 and 2014, with IT services driving growth for the sector as a whole. Enterprise IT spending should pick up in 2010, with an improvement in the external trading envrionment triggering upgrade cycles postponed from 2009. Business and consumer investment will remain vulnerable, however, to any sign of weakness in the eurozone or global economic recovery.

Industry Developments

Poland's National IT Infrastructure Plan for 2007-2013 was formally adopted by the government in 2008, following a public sector IT spending slowdown in preceding years. In 2009, EU funding drove a series of projects, with the IT component to be worth nearly EUR1bn. According to Poland's National IT Infrastructure Plan, some 75% of funds spent on government IT projects over the next five years is expected to come from the EU.

We forecast that wireless internet access will grow rapidly. Poland's broadband operators are also encouraging xDSL and cable-based broadband take-up by offering new innovative services, such as IPTV, video on demand and VoIP in double- and triple-play packages. Such services will encourage subscriptions and drive spending on computers and other household electronics products.

Competitive Landscape

In September 2009, the European Commission approved a regional aid packaged of EUR54.5mn for Dell Poland to support the establishment of a manufacturing facility in Lodz. In H109, Dell said that it would move its European manufacturing base from Ireland to Poland and cut 1,900 out of 3,000 jobs at its Limerick plant.

In 2010, Microsoft hopes that sales of its Windows 7 operating system, launched in October 2009, will boost its sales in the Polish market. In the summer of 2009, Microsoft continued to lay the groundwork for the new operating system launch and released the enterprise version of the software in August. Going forward, IT service providers will focus on providing specialised vertical solutions, particularly for key segments such as financial services and telecoms. In 2009, Comarch, a global provider of software and services for the telecoms industry, completed a major project for leading telecoms company Polkomtel. The solution was to facilitate billing of mobile virtual network operators (MVNOs) and content providers.

Computer Sales

Poland's computer hardware sales are projected at US$3.1bn in 2010 and are forecast to reach around US$4.2bn in 2014. The Polish addressable market for computers is estimated at around 3.2mn units in 2010 and this annual total could increase to 5.9mn by the end of our forecast period. PC penetration reached around 50% in 2008 and we project that it could reach 70% by 2013. Falling prices of both desktops and notebooks have been a major growth driver for the hardware market, along with EU aid and overall economic recovery. Research has revealed that Poles are starting to purchase more high-end computers.

Software

The Polish software market is projected to be worth US$1.7bn in 2010 and is likely to grow to US$2.6bn by 2014, giving a CAGR of 11%. The launch of the Windows 7 operating system has the potential to impact positively on sales in 2010. Rising computer penetration in the enterprise sector has driven continued growth of software demand, despite software piracy issues.

The procurement of basic software packages such as enterprise resource planning (ERP) still accounts for about half of enterprise software spending, particularly in the manufacturing sector. However, vendors are increasingly focused on more specialised applications, such as customer relationship management (CRM) and business intelligence, where faster growth is possible.

IT Services

IT services spending, projected at US$3.0bn in 2010, is the fastest-growing sector of the IT market and is expected to rise to US$4.5bn by 2014. In 2010, vendors are expected to benefit from IT projects tendered across sectors ranging from universities to banks and financial institutions, utilities to the public sector. With a larger installed IT base, acceptance of the need for IT services is spreading through many organisations. While systems integration as wellas hardware and software support and installation still collectively account for more than one-half of total IT spending, outsourcing has become the fastestgrowing segment.

E-Readiness

The internet market continues to be constrained by high telephone charges and relatively low levels of computer penetration. Moreover, there are wide regional disparities, with internet penetration about twice as high in urban as in rural areas.

A recent Forrester survey revealed that, while overall online banking uptake and PC availability remained low, Polish internet consumers already matched southern Europeans in online shopping. Poland even outperformed Spain, with 30% of online consumers having previously purchased something online, compared with just 29% in Spain.

How broadband will develop in the longer term will greatly depend on the Polish regulator's success at forcing Telekomunikacja Polska (TPSA) into a functional split, as well as its continued liberalisation of the market. The regulator believes that the split will happen in 2010 or 2011, but there are high risks that it could be delayed longer than this. How wireless technologies are deployed to the rural regions will also be a major factor in the proliferation of broadband.