Market Overview ; The Swedish IT market is largest in the Nordic region and, despite current economic headwinds, is projected to grow at a compound annual growth rate (CAGR) of 5% over the 2010-2014 period. The addressable domestic market for IT products and services is projected to reach US$14.9bn in 2010 and US$18.0bn by 2014.

The market fell by around 6% in 2009 due to the global economic crisis, which hit business spending in particular. Over the five-year forecast period, however, vendors should benefit from a growing emphasis on cost efficiency as export-oriented Swedish enterprises look to enhance productivity through automation.

The overall Sweden IT market outlook in 2010 is one of moderate recovery. In our core IT forecast scenario, IT market growth will be around 4% in 2010. Several major IT services agreements were signed or renewed in January-April 2010, boding well for positive growth outturns in 2010.

Computer Sales ; According to figures, Sweden's addressable computer hardware market will be worth around US$3.1bn in 2010, up from US$2.9bn in 2009. Total PC revenues, including notebooks, desktops and accessories, are forecast at US$2.5bn in 2010 and are expected to rise to US$3.1bn by 2014 at a CAGR of 6%.

Business segment sales were hit in 2009 as global economic headwinds caused Swedish companies to cut IT budgets by around 7% on average in 2009. In 2010, sales of Microsoft's new Windows 7 operating system has the potential to help trigger a new cycle of hardware upgrades, although much will depend on business confidence.

Software ; In 2010, Swedish market software sales are projected at US$4.6bn, and, despite the uncertain economic conditions, revenues are expected to rise to US$5.4bn in 2014. Software CAGR from 2010- 2014 should be in the region of 4%. Drivers of software spending by Swedish companies include increasing the efficiency of global supply chains and logistics functions.

We estimate that the Swedish software market managed to record low single-digit growth in 2009, despite the economic headwinds. Internet-based software delivery models like cloud computing and software-as-a-service (SaaS) are likely to enjoy greater adoption in Sweden over the five-year forecast period. Among early adopters in the Swedish market are Swedish hotel chain Scandic.

Services ; Swedish IT services spending is forecast to reach around US$7.2bn in 2010, up from US$6.9bn in 2009. The economic crisis and political uncertainty had an impact in 2009, with projects being put on hold. Sectoral CAGR is projected at 5% over the forecast period, as the market reaches US$8.6bn by 2014. Spending in some verticals held up relatively well during the economic slowdown. IT service companies such as HP, IBM and Oracle won new contracts in 2009 from companies such as Lansforsakringar, Sony Ericsson and Indkiska, in the financial services, telecoms and retail segments respectively.

Competitive Landscape ; Acer and HP are leaders in the Swedish PC market, ahead of Dell, Lenovo and Fujitsu Siemens. In 2009, China's Lenovo expanded its Swedish distribution network, adopting a multi-channel approach. In September, the company launched a cooperation with regional telecoms leader Telenor to launch eight laptop models. The cooperation covered Norway and Denmark as well as Sweden.

The drive to leverage emerging technologies such as cloud computing will support IT spending in the financial services sector. In April 2010, IBM announced that it signed a new six-year IT services agreement with Nordea, the leading bank in the Nordic region. The agreement, which runs through 2015, includes a commitment by IBM to help Nordea utilise cloud computing. Meanwhile, EDB Business Partner signed an agreement with FOREX Bank for the delivery of banking software solutions as a service.

An uptick in new services contacts boosted hopes in H110 of a recovery in IT spending. Accenture announced in April 2010 that it signed a contract to provide Electrolux IT Solutions, a subsidiary of Electrolux, with application development and management services. Under the global multi-year outsourcing agreement, Accenture will develop and manage a portfolio of enterprise applications for Electrolux including JD Edwards, Cognos and Lotus Notes.

Industry Developments ; In 2009, IT companies expressed fears that a Swedish government proposal concerning comprehensive signals surveillance could damage Sweden's competitiveness as an IT nation. The Lex Orwell proposal requires Swedish telecoms operators to cover costs for channelling traffic to so called 'cooperation points'. Vendors have argued that the legislation could hit foreign investment in sectors such as data storage and telecommunications.

E-Readiness ; Sweden has one of the most mature telecoms market in Europe, having been among the first to liberalise the provision of basic services as early as the mid-1980s. Despite this, its relatively small size and geographically dispersed population and business centres mean that major foreign investors have been reluctant to establish a presence in the telecoms market.

Sweden scores highly for information and communication technology (ICT) regulatory independence. The National Post and Telecom Agency (PTS) was established in 2004 and has a high degree of autonomy from the Swedish government. The PTS has been a strong supporter of competition in the telecoms sector – including the early liberalisation of the mobile communications market – and encouraged the merger of the Swedish and Finnish state-owned incumbent fixed-line operators to create TeliaSonera in 2002.

The take-up of premium broadband and mobile services such as wireless broadband has been decidedly muted in Sweden; this may be attributed to a general slowdown in the Swedish economy and rising interest rates.