EITO2007

European Information TechnologyObservatory 2007

Euro

pean

Info

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bservato

ry 2007

ISSN 0947-4862

European Information Technology Observatory – EITO

Deutsche MesseMessegelände, 30521 Hanover, GermanyPhone: +49 - 5 11- 89 33 - 100, fax: +49 - 5 11 - 89 33 - 102Internet: http://www.cebit.de

IFEMA – SIMO TCIParque Ferial Juan Carlos I, 28067 Madrid, SpainPhone: +34 - 91 - 7 22 - 50 00, fax: +34 - 91 - 7 22 - 58 07Internet: http://www.simo.ifema.es

Bitkom Servicegesellschaft mbHAlbrechtstrasse 10, 10117 Berlin, GermanyPhone: +49 - 30 - 2 75 76 - 0, fax: +49 - 30 - 2 75 76 - 1 51Internet: http://www.bitkom-service.org

The leading business-to-business trade fair for IT, Media and Communications

Messe München GmbH Messegelände, 81823 Munich, GermanyPhone: +49 - 89 - 9 49 - 2 03 61, fax: +49 - 89 - 9 49 - 2 03 69 Internet: http://www.systems.de

Telecom Italia S.p.A.Direzione Generale Corso d’Italia 41, 00198 Rome, ItalyPhone: +39 - 06 - 36 88 - 1, fax: +39 - 06 - 36 88 25 41Internet: http://www.telecomitalia.it

KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft WirtschaftsprüfungsgesellschaftGanghoferstrasse 29, 80339 Munich, GermanyPhone: +49 - 89 - 92 82 - 12 63, fax: +49 - 89 - 92 82 - 2 12 63Internet: http://www.kpmg.de

Fujitsu Siemens Computers GmbHDomagkstrasse 28, 80807 Munich, GermanyPhone: +49 - 89 - 32 22 - 44 58, fax: +49 - 89 - 32 22 - 44 15Internet: http://www.fujitsu-siemens.com

The world’s leading ICT event

European CommissionEnterprise DG, Information Society and Media DGRue de la Loi 200, 1049 Brussels, BelgiumPhone: +32 - 2 - 2 99 11 11, fax: +32 - 2 - 2 95 01 38Internet: http://ec.europa.eu

OECDDirectorate for Science, Technology and Industry2 rue André Pascal, 75775 Paris Cedex 16, FrancePhone: +33 - 1 - 45 24 - 82 00, fax: +33 - 1 - 45 24 - 85 00Internet: http://www.oecd.org

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AlmavivA Via Luigi Rizzo 22, 00136 Rome, Italy Phone: +39 - 06 - 3 99 31, fax: +39 - 06 - 39 93 - 54 06 Internet: http://www.almavivaitalia.it

ANIE Federazione Via Gattamelata 34, 20149 Milan, Italy Phone: +39 - 02 - 3 26 41, fax: +39 - 02 - 3 26 42 12 Internet: http://www.anie.it

Federation of Innovative and Technological Services Via Barberini 11, 00187 Rome, ItalyPhone: +39 - 06 - 42 14 01, fax: +39 - 06 - 42 14 04 44 Internet: http://www.confindustriasi.it

http://www.cebit.de

http://www.simo.ifema.es

http://www.bitkom-service.org

http://ec.europa.eu

http://www.oecd.org

http://www.systems.de

http://www.telecomitalia.it

http://www.kpmg.de

http://www.fujitsu-siemens.com

http://www.almavivaitalia.it

http://www.anie.it

http://www.confindustriasi.it

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The European Information Technology Observa-tory – EITO, now available in its 15th edition, has established a reputation as one of the most authorita-tive and trustworthy reports for the market analysis of Information and Communications Technology (ICT) and Consumer Electronics (CE) in Europe.

In an increasingly globalised and competitive environment, European industries understand the need to innovate. The EITO 2007 features a spe-cial study looking at sector perspectives on e-busi-ness activity in industries producing and using ICT. ICT convergence is expected to be the key enabler of innovation and business transformation in European companies. Convergence is not a new topic to the ICT and CE industry. EITO therefore continues its analy-sis of the CE market in Western Europe. This EITO also includes scenarios for the evolution of the Euro-pean e-economy.

As an indispensable source of information in mar-keting and technology the EITO is intended for Euro-pean market players, ICT users, trade organisations and trade fair visitors, market analysts, politicians, members of the European Commission and national government representatives worldwide, organisations involved in research and development, standardisation and education relating to ICT, and last but not least, the media. Thus, it takes into account that up-to-date and valid information plays an increas-ingly important role in business and political deci-sion-making.

Preface

The EITO is a broad and unique European ini-tiative to support the creation of the Global Informa-tion Society as well as to make its contribution to the further economic integration and political unification of Europe. The idea of a European Observatory origi-nated from the former President of SMAU, EITO’s Honorary Chair Enore Deotto. The EITO founding members consist of the European ICT trade fairs CeBIT in Hanover and SIMO in Madrid, and BSG, the research company of the German ICT and New Media association BITKOM.

From the very beginning the EITO has received strong support from the European Commission, Direc-torate General Enterprise and Directorate General Information Society and Media, and since 1995 from the Directorate for Science, Technology and Industry of the OECD in Paris.

The EITO 2007 has been supported by the EITO sponsors, the trade fair Systems, Telecom Italia, KPMG, Fujitsu Siemens Computers, AlmavivA, the Federation of Innovative and Technological Services and ANIE. It has been produced by the EITO Task Force experts in collaboration with leading market research companies, to evaluate and guarantee the quality of the statistics and data.

The initiative will be continued with annual editions of the EITO in March and an EITO Update in the autumn as a supplement to the yearbook.

The EITO Members

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PublisherEuropean Information Technology Observatory (EITO) – European Economic Interest Grouping (EEIG)Register of companies CharlottenburgHRA 36057 BRegistered office: BerlinBranch office:Hahnstrasse 70, 605�8 Frankfurt am Main, GermanyPhone: +49 / 69 / �4 �4 16-0Fax: +49 / 69 / �4 �4 16-16Internet: http://www.eito.com

EITO founding membersCeBIT, HanoverSIMO, MadridBitkom Servicegesellschaft mbH, Berlin

EITO sponsorsSystems, MunichTelecom Italia, RomeKPMG, MunichFujitsu Siemens Computers, MunichAlmavivA, RomeFederation of Innovative and Technological Services, RomeANIE Federazione, Milan

With the support ofEuropean Commission, DG Enterprise and DG Information Society and Media, BrusselsOECD, Directorate for Science, Technology and Industry, Paris

ChairBruno Lamborghini

Honorary ChairEnore Deotto

Vice-ChairsSantiago QuirogaBernhard Rohleder

Managing DirectorCarola Peter

AssistantAngela Fauerbach

EITO Task Force

Imprint

�European�Information�Technology�Observatory�2007

Enrico BarellaWerner BenkelClaude BoiziotMarco BozzettiJean-Claude BurgelmanAntonio CimorraJohn CurtisJohn DrydenMar DuqueHolger EggsAlfred Eiblmeier

Andrea GavostoAndrej KasperMats MarcussonConcetta PeroneAxel PolsAnton SeitzLucilla SioliRoberto TriolaCharles WardSacha Wunsch-Vincent

3

Copyright 2007European Information Technology Observatory (EITO) – European Economic Interest Grouping (EEIG) for all partsandInternational Data Corporation (IDC) forPart One: The evolution of the European e-economyPart One: The ICT market in EuropePart Three: Statistical outlooke-Business W@tch for Part Two: Sector perspectives on e-business activity in industries producing and using ICTGfK forPart Two: The CE market in Western Europe

Copyright noteText, data and tables/figures included in the EITO book and CD-ROM are subject to copy-right law and must not be published without the written permission of EITO. All excerpts of text, data, tables and figures rightfully used by third parties shall mention in a manner clearly visible for the reader the source of the publication and the year of appearance. The purchase of the EITO book and CD-ROM does not authorise production of illegitimate copies of the book and/or the CD-ROM nor does it entitle making the content of the book or the CD-ROM available completely or in part by means of an intranet or the Internet.

No guaranteeAlthough the information and data contained in this issue have been carefully elaborated and checked, the authors of this publication nevertheless cannot guarantee the accuracy of such data and information.

For copies apply toEITO membersEITO sponsors

Order addressesSee inside front or back page

Price per copy (book incl. CD-ROM)€ 80,– (incl. VAT, excl. mailing)

DesignHWL & Partner Design GmbH, Frankfurt/Main

Cover-DesignMancke-Design, Trier

Editorial adviceAlan Brier, Southampton

ProductionLEiTHNER intelligente Medienproduktionen

ISSNEuropean Information Technology Observatory ISSN 0947-486�

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Contents

Part One

The need for an internal market in ICT for investment and innovation

By Viviane Reding, European Commissioner for Information Society and Media . . . . . . . . . . . . . . . . .12

Speeding up Europe’s digital challenge

By Bruno Lamborghini, Chair of the EITO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16

The evolution of the European e-economy

1. Generalindicatorsofthee-economy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .211 1 . Internet .users . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .221 2 . Internet .commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2�

2. Focusonspecificissues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 1 . ICT .convergence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 252 2 . The .transformation .of .the .software .industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .312 3 . R&D .ICT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .352 � . ICT .skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38

3. EuropeanICTbusinessarena . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .�3

5

The ICT market in Europe

1. ICTmarketsizeandstructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ��

2. ICTtrendsbycountry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �62 1 . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . �82 2 . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 502 3 . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .522 � . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5�2 5 . United .Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 562 6 . Czech .Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 582 7 . Hungary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 602 8 . Poland . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 622 9 . Other .countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6�

3. ICTtrendsbyproductsegment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 653 1 . Computer .hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 .3 2 . End-user .communications .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 .3 3 . Telephone .sets .and .other .terminal .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683 � . Mobile .telephone .sets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 683 5 . Office .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68 .3 6 . Datacom .and .network .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 693 7 . PBX .and .key .systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 .3 8 . Packet .switching .and .routing .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 703 9 . Transmission .and .switching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 .3 10 . Cellular .mobile .infrastructure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70 .3 11 . Other .datacom .and .network .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .713 12 . Software .products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 723 13 . IT .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7�3 1� . Carrier .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .76 .3 15 . Fixed .voice .telephone .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .763 16 . Fixed .data .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 773 17 . Mobile .telephone .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78

4. Europeasaconsumptionarea . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79� 1 . ICT .penetration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 79� 2 . ICT .adoption .by .industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .81

5. TradeintheEuropeanUnion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8�

6

Sector perspectives on e-business activity in industries producing and using ICT

. Acknowledgement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 901 1 . The .revival .of .“e-business” . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90 .1 2 . A .conceptual .framework .for .e-business .measurement . . . . . . . . . . . . . . . . . . . . . . . . . . . 92 .1 3 . The .e-Business .Scoreboard .2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9�

2. E-businesssectorstudies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 962 1 . Food .and .beverages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 962 1 1 . Sector .profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 962 1 2 . E-business .activity .in .2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 96 .2 1 3 . Current .trends .in .ICT .use .and .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1022 1 � . Drivers .and .inhibitors .of .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1072 1 5 . Policy .implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1092 2 . Tourism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1092 2 1 . Sector .profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1092 2 2 . E-business .activity .in .2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110 .2 2 3 . Current .trends .in .ICT .use .and .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1182 2 � . Drivers .and .inhibitors .of .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1212 2 5 . Policy .implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1232 3 . Telecommunications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1232 3 1 . Sector .profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1232 3 2 . E-business .activity .in .2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12�2 3 3 . Drivers .and .inhibitors .of .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1332 3 � . Policy .implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13�2 � . The .hospital .sector . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1352 � 1 . Sector .profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1352 � 2 . E-business .activity .in .2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 135 .2 � 3 . Current .trends .in .ICT .use .and .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1392 � � . Drivers .and .inhibitors .of .e-business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1�32 � 5 . Policy .implications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1�6

Part Two

7

3. Conclusionsandoutlook . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1�73 1 . ICT .impact .on .firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1�7 .3 2 . Scenario .for .the .evolution .of .e-business .until .2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 151 .3 2 1 . The .end .of .ICT .scepticism .– .and .a .new .role .for .information .management . . . . . . . . . . 151 .3 2 2 . Further .digitisation .of .business .processes .– .large .firms .and .public .sector .to .lead . . . . 151 .3 2 3 . ICT .to .change .the .business .– .a .longer-term .scenario . . . . . . . . . . . . . . . . . . . . . . . . . . 152 .3 2 � . VoIP .– .from .cost .savings .to .process .innovation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 153 .3 2 5 . Digital .convergence .– .new .challenges .for .e-business .integration . . . . . . . . . . . . . . . . .15�

4. AppendixI:E-businesssurveyresultsbycountry . . . . . . . . . . . . . . . . . . . . . . . . . . . . 155

5. AppendixII:Methodologyofthee-BusinessSurvey2006 . . . . . . . . . . . . . . . . . . . . . .156

The CE market in Western Europe

1. CEmarkettrends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159

2. CEcountrymarketcomparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1602 1 . France . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1602 2 . Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1622 3 . Italy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16�2 � . Spain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1652 5 . United .Kingdom . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 167

3. Datatables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 169

4. Definitionsandmethodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 175

8

Statistical outlook

1. Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

2. Methodology . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 180

3. EuropeanICTmarketsandpatternsoftrade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 181

4. Listoftables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 182

5. Listoffigures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18�

6. Economicbackground . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 185

7. InternationalICTmarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 189

8. MajorEuropeanICTanddigitalCEmarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .196

9. EuropeanICTmarkets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .197

10. IThardwareshipments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .230

11. ICTtradeflows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .237

12. MarketstructuresandpenetrationofICT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2�1

13. Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2�6

14. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2�91� 1 . ICT .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2501� 1 1 . Computer .hardware . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2501� 1 2 .End-user .communications .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2521� 1 3 . Office .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2521� 1 � . Datacom .and .network .equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2521� 2 . Software .products . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2551� 3 . IT .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2561� � . Carrier .services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2561� 5 . Performance .measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2571� 5 1 . Trade .statistics . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2571� 5 2 .Industry .leader’s .market .share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2581� 5 3 .Industry .concentration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2581� 5 � .Inf lation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2581� 5 5 .Exchange .rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .259

Alphabetical index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .260

Part Three

Part One

12

European Information Technology Observatory · EITO 2007

Ever since the mid-nineties, EU growth rates have been slowing down, while labour produc-tivity growth (the underlying motor of growth and competitiveness) has been in decline. The EU productivity slowdown is a serious risk for our long-term prosperity and standards of liv-ing. I am convinced that it stems from an outdated and inf lexible industrial structure: too much dependence on low-medium tech-nology industries and too slow adjustments to global competition and rapid technological change. It also relates to a lack of scale effects in the European economy: we are still waiting for the inter-nal market.

We can see the costs of resist-ance to innovation very clearly in the slow take-up of Information and Commu-nication Technologies (ICTs) in European busi-nesses, which accounts for most of the growing productivity growth gap between the EU and the US1. Since the mid-1990s, efficiency gains from ICT use have provided 50 % of productiv-ity growth in the US, whereas in Europe they are very small, only 2 %. Industries that deliver productivity growth are heavy users of ICT. The substantial investment in ICT in the US has meant more growth and more jobs especially in service industries.


ICT is the place to look for these effects because it is the carrier of organisational inno-vation and more efficient business processes. As this EITO edition’s report on the 2006 findings

of the e-Business W@tch2 shows, half of companies surveyed have felt direct business efficiency gains from adopting ICT, espe-cially amongst the larger firms. This may be good news for that half of the business world, but it is not a good scorecard over-all. While half of firms are get-ting gains, especially the larger firms, the other half, especially the small and medium enterpris-es, are missing out. This means weaker contributions to Europe’s Lisbon goal of growth and jobs objectives: this is what I call an opportunity gap.

If we are to meet our Lisbon goals we have to step up the contribution of ICT and we have to come together at a European level to make gains from the scale of a Europe of 500 million people. The Commission will continue to do this in 2007 with two major policy impulses: the launch of the 7th Framework European Programme for Research and Development and new proposals on the regulatory framework for electronic com-munications.

Viviane RedingEuropean Commissioner for

Information Society and Media

1 Van Ark, B. and Inklaar, R. (2005), “Catching up or getting stuck? Europe’s trouble to exploit ICT’s productivity potential”, Research Memorandum GD-79, Groningen Growth and Development Centre

2 www.ebusiness-watch.org

http://www.ebusiness-watch.org

13

Part One · EITO 2007

The 7th Framework Programme

Technological change in ICT is an important source of productivity growth. This makes invest-ment in ICT research and innovation a must. ICTs are the generic technologies on which all other high-tech and knowledge industries, such as aerospace, pharmaceuticals or automotive, depend for innovation and added value.

Over many years, the research and develop-ment framework programmes have been helping to build scientific and technological excellence on a European scale. With the launch of the 7th Framework Programme (FP7), Europe will see the launch of a new generation of ICT projects that will raise our research performance to a higher level in the face of increased global competition.

The first ICT Work Programme under FP7 seeks to strike the balance between playing to Europe’s strengths, enabling Europe to seize the opportunities ahead and recognising Euro-pean specificities. First, Europe has to build on its leadership in areas such as communica-tions, embedded systems and semiconductors. Second, Europe should expand the borders of ICT research, for example digital convergence between ICT and other disciplines will be at the heart of the next technology revolutions. Third, Europe should shape the future ICTs to fit the needs of its businesses and citizens. This means bringing technology closer to people and organi-sational needs, and paying more attention to issues such as service innovation.

The European Commission has identified seven strategic challenges for Europe’s indus-try, economy and society. Some are the key to ensuring industrial leadership in the next ten years (pervasive and trusted network and serv-

ice infrastructure; cognitive systems, interactive environments and robots; and higher perform-ance and reliable components, subsystems and embedded systems). Some are instrumental in meeting the socioeconomic challenges (the European content and knowledge systems; ICT for sustainable health systems; ICT for safer mobility, sustainable development and energy efficiency; ICT for an inclusive society, innova-tive governance and independent living). Finally, future and emerging technologies as well as international co-operation will help in prepar-ing for the future Work Programmes and sup-port European competitiveness through research partnerships with third countries.

I am a strong supporter of European Tech-nology Platforms (ETPs), because they build on Europe’s ability to collaborate: bringing together industry and research institutes around a strate-gic agenda. These open partnerships share risks, pool resources and speed up innovation. We are convinced that they are already attracting more investment into research and they also provide a forum for a more efficient European Intellectual Property Rights (IPR) policy.

The nine European Technology Platforms in the ICT area have played a valuable role in shaping an ICT Work Programme in FP7 that is more strategic and better focused. I am certain that by EITO 2008 two ETPs will have been launched as Joint Technology Initiatives (JTIs), one on embedded systems and another on nano-electronics research. In both cases they will per-mit a strong step towards the realization of the European Research Area based on European scale excellence with industry, Member States and the European Community all on board.


14


Review of the regulatory framework for electronic communications

If we want the scale effects of the European market, we also need open and competitive mar-kets in the network industries: energy, transport and electronic communications.

According to EITO, the electronic commu-nication sector continues to represent the largest segment of the overall ICT sector, accounting for almost half of its total value. This sector is adjusting to stronger competition and digital con-vergence. Today, hundreds of operators are com-peting on the market for both fixed and wireless networks and services. About 94 % of European consumers have mobiles. Consumers nowadays enjoy significantly lower prices and more choice than they did five years ago. European consum-ers spend about 30 % less on bills, for the same services, than they did in 1996. Broadband, the key to a knowledge-based society, has been pick-ing up very rapidly. The number of broadband lines in the EU grew by over 40 % from July 2005 to July 2006 and has now reached almost 70 million lines. Investment in EU telecoms is now ahead of that in the USA and Japan. Finally a recent independent study finds that regulatory regimes that are efficient lead to more invest-ment. These are all clear signs that the pro-com-petitive stance of EU legislation is encouraging innovation and stimulating investment by both new entrants and incumbent operators.

These points of proof indicate that the fun-damental principles of the regulatory framework are right: market-based, ex-ante regulation and technological neutrality. But, we are also looking for concrete improvements as regards:

– better, more focused and more efficient regu-lation overall;

– consistency of implementation to create a level playing field in Europe especially in trans-national markets and cross-border serv-ices;

– better equality of access to bottleneck assets, which is crucial to the development of the market;

– a more f lexible and efficient use of spec-trum.

First, the incentives built into the framework for investment and innovation can only work when the framework is implemented rigorously and consistently. Principles are fine, but effective implementation is what delivers results.

Second, changes are needed to ref lect a new telecom industry that has started to emerge since the framework was adopted in 2002. The search for economies of scale and the implemen-tation of pan-European strategies, cross-border investment has driven merger and acquisition activity to above € 70 billion in 2005, the highest level since 2000. Incumbents today are receiving between 5 and 27 % of their income from Euro-pean business outside their home country. Some are becoming challengers in other EU markets even while remaining incumbents at home. This development is changing the market position, business orientation and also the policy view of many operators.

We therefore if anything need greater con-sistency and effectiveness in the application of remedies to repair the fragmentation of the internal market in the telecom sector.

15

Part One · EITO 2007

The Commission has proposed, as one pos-sible option, to extend the internal market-con-trol that is already exercised today by the Com-mission with regard to market analyses, also to the remedies. In my view, the Commission, as guardian of EU law, must be able to tell a national regulator that a measure proposed to remedy a competition problem is inadequate, and to request that a national regulator adopts speedily an adequate remedy.

Third, radio spectrum is worthy of special mention as it is a critical resource for growth in Europe: wireless communications-based services already represent 2.5 % of the EU economy. The potential for further growth is huge if we can overcome the patchwork of national regulatory approaches in our European system of 27 dif-ferent allocation and licensing regimes. This is essential if we want to keep pace with techno-logical developments, and the emergence of new services and of global markets. Member States are beginning to recognise the need to coor-dinate better at the EU level. But we need to

move quickly if we are to benefit from the digital dividend that will come from the switch over to digital TV and so that our strong telecom equipment sector can remain globally strong in areas such as mobile TV, RFID and transport-based ICTs.

Europe must overcome its current fragment-ed approach. There is so much to gain and so much to lose. We need to reform our inf lex-ible and innovation-phobic approach to the new especially by tearing down artificial barriers to new services; we need to link arms to make sure that European research remains at the head of the pack and we need to make sure that our network industry markets are open and competi-tive. This requires a brave look at the future and if necessary the sacrifice of some of our sacred cows both at European and national level.

I look forward to reporting further on progress in the next edition of EITO.


16


A global IP-based network

During 2006 the ICT industry has entered into a new technological cycle. This cycle is driven by digital convergence and the complete diffusion of the Internet as the main architectural network based on the Internet Protocol (IP) standard for all communications channels. It is open to new appli-cations under the label of the so-called Web 2.0.

What is completely new is its global diffusion: the new cycle is now covering all areas of the whole planet simultaneously, with a special impetus coming from India and China. And as a second relevant factor, it will not be limited to a specific industry, but is reshaping many industry sectors worldwide.

According to the OECD, the strong growth of the world ICT market in 2006 was driven mainly by the so-called BRIC countries (Brazil, Russia, India and China), with an annual growth of more than 20 % since the year 2000, China being the world’s leading ICT exporter and the sixth world major market for ICT. The United States also performed well. The new EU Mem-ber States again showed high growth in 2006, with an average increase in ICT of more than 7 %, but, moreover, with striking growth rates around 12 % for IT in some countries.

Speeding up Europe’s digital challenge

The Internet’s pervasiveness in terms of World Wide Web addresses or Uniform Resource Locators (URLs) has doubled in a period of two

years from 50 to 100 million in 2006. There are substantially more than one billion users of the World Wide Web and most of the new users come from the new emerging markets.

By the end of 2006 there was one mobile subscription for every two people living on earth, 2.7 bil-lion cell phone lines, 180 million Digital Subscriber Lines (DSL), and 100 million Third Genera-tion (3G) lines in the world, with boundless expectations of further growth.

The extraordinary diffusion of DSL technol-ogy in fixed-line telecommunications networks, and of 3G technologies such as Universal Mobile Telecommunications System (UMTS) and High-Speed Downlink Packet Access (HSDPA) in the mobile networks, with an exponential increase in bitrates and the new opportunities opened by the development of wireless technologies, e. g. Wi-Fi and WiMAX, can be seen every day.

Based on the common standard IP, the dig-ital convergence scenario is advancing rapidly, while the Internet is entering into a new life cycle (Web 2.0) as an infinite grid of shared exchange of self-produced/self-distributed con-tent on a Peer-to-Peer (P2P) basis. This is shown by the example of MySpace, YouTube, and other blogs, podcasting and social networks communi-ties.

Bruno LamborghiniChair of the EITO

17

Speeding up Europe’s digital challengePart One · EITO 2007

New business models and new value chains

Recently I defined the impact of the new technological cycle on economic development as the “Digital Sharing Economy”, which means totally new ways and new business models in exchanging information, content, services and also physical products, followed by dramatic changes in all value chains and in industrial structure.

New business models and new players are appearing more and more every day. Consider the entry of supermarkets and retail chains or large consumer brands into the telecommunica-tions markets using mobile virtual networks and Voice over IP (VoIP). The borders of traditional industry are under strong competitive pressure from new players. Mergers and Acquisitions (M&As) are transforming the value chains.

Europe’s will to face the global challenge

The European Union is moving in the same direction taken by the world’s digital scenario, having understood the relevance of the global challenge and showing a clear will to accept the change, actively taking advantage of the new economic and social opportunities.

Strong growth in software and IT services in 2006–2007, according to the EITO evaluations, is a clear signal of the will to diffuse ICT widely into the European economic fabric and to take advantage of technological innovation as the main driver for the future.

The EU today has many strengths, but also some weaknesses.

Europe is not yet a “flat region”

Weak points are market fragmentation, the difficulties of achieving industrial co-operation on a European scale, and insufficient, and not fully finalised, investment in high-tech research and new skills.

If we can refer to Thomas L. Friedman’s well known book, “The World is Flat”, we should conclude that Europe still has to move faster to become itself a really “f lat region”, while Asian countries certainly are understanding the mes-sage better.

What Europe requires is reduced fragmenta-tion, full acceptance of change by industry and governments, and focusing of policies and strate-gies on common targets.

The strategic assets of digital Europe

In the EU there are now favourable opportu-nities to be exploited, to take advantage of the extraordinary increase in both fixed and wire-less broadband access by business and house-hold users, the number of large European firms and new entrants into the digital arena, and the strong and sometimes unique capacity for inno-vation and creativity of many European players.

Advanced innovative telecommunications infrastructures, 69 million DSL broadband lines by the end of 2006, representing one third of the world’s total and expected to reach 100 million well before 2010, close to 800 million mobile lines (a penetration rate of 150 % or more than one and a half lines for every European citizen), 300 million Internet users – these are all significant strategic assets for Europe to build a competitive role for itself in the new global environment.

18


Since the beginning of mobile telecommuni-cations, Europe has played a major role. Europe-an entrepreneurs have developed and launched new wireless technologies and advanced file sharing programmes, while the number of M&As and Initial Public Offers (IPOs) in the ICT and media industry in Europe increased considerably during 2005 and 2006.

Many Web 2.0 initiatives

Many P2P/Web 2.0 developments, such as Kazaa or Skype, originate from European initia-tives. More than 20 million European comput-ers are now using P2P software. This number is expected to double in four years time.

As noted in a special study in the EITO 2006, close to 60 million households in the EU 25 at the beginning of 2006 had already subscribed to a broadband Internet access service. With the development of 3G services, broadband Internet is now going mobile.

Other important initiatives are coming from new entrants from other industries such as Con-sumer Electronics (CE). There is a growth of online advertising, parallel to the growth of the online audience. Some services have proven that it is in fact possible to market paid content on the Web.

The online content market (video, music, publishing, games, and adult content) is thus also expected to more than double in four years, from € 1 billion in 2006 to € 2.2 billion in 2009.

Strong recovery in the European IT markets

Most of the European ICT markets, and especially the IT markets, have recovered faster than the general economy from the recession phase in 2001–2003, when the average growth rate was –2 %, following the double-digit growth rates of 11–12 % in the years 1998–2000. However, IT investments in many European countries are still too low when compared with the US, with a correspondingly lower impact on productivity gains.

According to EITO evaluations, the average growth of the EU IT markets in 2006 and 2007 is around 4 %, compared with a growth rate of 2 % for the telecommunications markets which are experiencing strong price competition in fixed voice services, while mobile services have reached a high penetration, and sometimes satu-ration level. Voice services still are a cash cow but no longer a driver of growth. The future is in broadband services, for the home market, IPTV, new online content and new opportunities com-ing from new applications related to the Web 2.0 development. For the business market it lies in advanced IP networks and digital ecosystems for SMEs, corporate organisation and public admin-istration.

New business models for telecommunications

The changing telecommunications industry based on new business models represents the most active driver of the process of digital con-vergence and a fundamental basis for strength-ening the competitive role of Europe in the dig-ital scenario.

19

Speeding up Europe’s digital challengePart One · EITO 2007

A major impetus for growth and innovation is coming from strong development in the Medi-terranean region from countries like Spain and Greece and from the new EU Member States.

The European Union of 27 Member Coun-tries appears to be an important area for the development of new broadband services, new Internet applications, new online content and also of new Web-2.0-based content and serv-ices.

Not a “free lunch”, but now more collaboration

But, as I have frequently said, it is not a “free lunch” or something that is happening under its own inertia.

The time is absolutely ripe (if this is not the last chance!) in Europe for strengthening this process and taking advantage of the new oppor-tunities.

From the industry side there is now a clear perception of the challenge facing us, and the restructuring of industry, M&As, and changes of management currently taking place are showing that the European ICT industry is not sleeping.

New investment programmes and new busi-ness models have been introduced, and finally more collaboration is being developed between countries and also between competitors (the term co-opetition, a combination of co-operation and competition, is today better perceived as a fundamental business policy instrument).

Main problems and obstacles

There are still some problems to be solved.

On the side of business:

– low productivity gains due to still too lim-ited IT investments, especially by SMEs, and inadequate IT implementation and reorgani-sation of firms around the Internet;

– the scarcity of skilled human resources;

– the limited investment in R&D (Europe spends less than half of what its competitors are spending on ICT research);

– a not yet favourable environment for new high-tech entrepreneurship;

– the permanence of protected public markets;

– very few pan-European leading edge projects.

On the side of government:

– still fragmented policy approaches by nation-al regulators;

– the need for clear European rules regarding Intellectual Property Rights (IPR), interop-erable Digital Rights Management (DRM), security and interoperability issues;

– the need to define a single information space for electronic communications and media services;

– the revision of spectrum management strat-egy;

– new approaches for the European Research Programmes to get closer to market needs;

– harmonisation and interoperability between national e-government programmes, e-citi-zens programmes, and e-procurement;

– action against the broadband divide, favour-ing e-inclusion.

20


“i2010” policy as a major driver for new R&D programmes

The EU policy initiative “i2010 – a Euro-pean Information Society for growth and jobs” launched in June 2005 by EU Commissioner Viviane Reding within the framework of the Lis-bon strategy represents a significant strategy for moving to a common European digital informa-tion economy, with the year 2010 as the strategic deadline.

We very much appreciate the action taken by the European Council to invest over € 9 billion in ICT, as planned in the 7th Research Framework for the years 2007–2013. This means an increase of 75 % compared to the previous programme. The decision taken at the informal EU Summit in Lahti to change the method of financing key technological research by launching the Joint Technology Initiatives (JTI), using Article 171 of the EC Treaty to pool private, public and EU research investment on defined technological targets, is also highly appreciated.

The Joint Technology Initiatives

The nine European Technology Platforms in the ICT area have been instrumental for estab-lishing Strategic European Agendas and defin-ing the path for focusing and coordinating Euro-pean technological efforts.

With the JTI, there is now a clearer instru-ment for a better collaboration between the European ICT players, with the direct involve-ment of industry resources together with the resources of the EU.

“Teaming up” through new open partnerships

Commissioner Reding said clearly: Europe needs to “team up”, collaboration being a key factor for real innovation, through open partner-ships between industry and universities, public and private sectors to create a critical mass.

The first such JTI, the Artemis initiative, expected to start in 2007, will focus on embed-ded systems, a technology which is crucial for many sectors.

Other JTI projects will hopefully follow, and their implementation should become a signal of the new European will to change minds and move faster, fully accepting the challenge of the new digital scenario as a main driver of the dra-matic global competitive battle which faces us all.

For our part, the EITO has already devot-ed 15 years of continuous effort to contribut-ing analysis and proposals for the strengthening of the European ICT industry and market. We intend to continue, in close co-operation with the European Commission, to monitor the evo-lution of the digital scenario and in benchmark-ing the new directions taken by the European industry and EU policy compared with the other major world players.

21

The evolution of the European e-economyPart One · EITO 2007

This paper has been developed by IDC in close co-operation with the EITO Task Force. Unless otherwise stated the source of all figures and tables is IDC.

�1.�General�indicators��of�the�e-economy�

In an increasingly globalised and competi-tive environment, European companies under-stand that they need to innovate. Nevertheless, Europe’s path to innovation is proving to be long and challenging. There are some characteristic trends in this process.

– ICT convergence is expected to be the key enabler of innovation and business transfor-mation of European companies.

– The deep transformation which is taking place in the software market is expected to create a new wave of ICT adoption.

– Some structural problems will continue to affect the European ICT landscape: decreas-ing Research and Development (R&D) on the one hand and lack of ICT skills on the other will act as key inhibitors of innovation.

Before moving to the analysis of these topics which are dealt with in detail in the following scenarios, it is useful to understand the status of the art of today’s European e-economy, with particular reference to the evolution of Internet usage and adoption.

The�evolution�of�the�European�e-economy

Definitions

E-economy: economy based on the pervasive use of the Internet in social and business activi-ties; the digitisation of the entire economic fab-ric, the penetration of ICT into every area of our lives.

Web users: individuals who access the World Wide Web at least once every month. The rela-tively small and diminishing group of people not using the Web but text-based POP/SMTP e-mail is not included in the data.

Web buyers: individuals that have conducted Internet commerce within six months.

Internet commerce: includes the value of all transactions resulting from a buyer’s clicking an order button on the Internet as a commitment to transfer funds in exchange for goods or services. It includes purchases from an individual or a business, for personal- or work-related reasons, and from a PC, a Web TV, or a mobile device. It includes e-interactions and e-transactions. Elec-tronic Data Interchange (EDI) transactions that do not use a Web-enabled gateway as a front end of the EDI system are not included.

22


E-interactions: include the full range of e-transactions, and in addition collaborative business processes (e. g. collaborative design) that are not directly transaction-focused. E-transactions are B2B (Business-to-Business), B2C (Business-to-Consumer), and B2G (Busi-ness-to-Government) commercial exchanges conducted electronically, including processes during the pre-sale or pre-purchase phase, the sale or purchase phase, and the after-sale /pur-chase phase.

E-business: the digitisation of all business processes within an enterprise.

1.1.�Internet�users

The number of Internet users keeps on increasing. In 2006, some 64.5 % of the total European population was accessing the Inter-net, and by 2010 more than 82 % of population will have access to the Internet. Given very high penetration, a slowdown in growth is expected in the next few years, especially in the most advanced countries like the UK, which is set to reach a penetration rate of nearly 86 %, and the Nordic countries where Internet users are expected to account for some 96 % of population by 2010.

2006 thousands

as % of population

2010 thousands

as % of population

CAGR % 2006–2010

France 37,893 62.2 50,696 82.2 7.5

Germany 55,919 67.8 69,825 84.9 5.7

Italy 31,303 53.8 43,894 75.6 8.8

Nordic countries 19,769 81.3 23,534 96.0 4.5

Spain 22,412 55.5 29,282 72.2 6.9

UK 43,173 71.2 52,506 85.7 5.0

Other Europe 43,988 64.7 56,641 82.4 6.5

EU 15 plus Norway and Switzerland

254,457 64.5 326,378 82.2 6.4 Note: Data may not add up due to rounding.

Table 1 Web users by country, 2006 and 2010

Table 2 EU 15 plus Norway and Switzerland, broadband access connections, in thousands, 2006–2010

2006 2007 2008 2009 2010

Broadband access connections 76,809 89,432 98,482 105,516 111,312

% growth n. a. 16.4 10.1 7.1 5.5

23


2006 2007 2008 2009 2010

Share of mobile users on total Web users

15.9 17.6 20.0 22.7 25.9

Table 3 EU 15 plus Norway and Switzerland, share of mobile users versus total Web users, in %, 2006–2010

While Internet adoption is reaching record levels, some trends are evident:

– Dial-up connections are decreasing steadily in favour of broadband.

– Remote access is becoming mainstream.

– The adoption of WLANs continues to increase.

– Access to the Internet through mobile phones is gaining acceptance in the market-place, even if the low uptake of UMTS is still having a negative impact in the short term.

– The availability of new content and services is acting as a key driver for both broadband and mobile access.

2006 confirmed the contours of the Euro-pean Internet landscape, with Germany being the largest country in terms of Web users, and the Nordic region displaying the highest penetra-tion rates.

0 35050 100 150 200 250 300

38 2010

2006

51

5670

3144

2024

2229

4353

4457

254326

France

Germany

Italy

Nordic countries

Spain

UK

Other Europe


Figure 1 Web users by country, comparison 2006 and 2010, million users

24


1.2.�Internet�commerce

Similarly to what is happening with Internet adoption, Internet commerce also continues to grow rapidly. At the end of 2006, it accounted for some € 1,450 billion and is expected to reach just over € 2,600 billion in 2010. The B2C seg-ment continues to increase relative to B2B. With a CAGR of 33.6 %, B2C will account for some 22 % of total Internet commerce by 2010.

The number of initiatives devised by the mar-ket to assure security of transactions is reducing the reluctance of consumers to use the Internet as a marketplace. Indeed, although security is a top concern, B2C is set to grow more strongly than B2B across all leading European com-panies, particularly in France and Italy which are catching up with the other major European countries.

0 10020 40 60 80

62.282.2

67.884.9

53.875.6

81.396.0

55.572.2

71.285.7

64.782.4

64.582.2

France

Germany

Italy

Nordic countries

Spain

UK

Other Europe


Figure 2 Web users as a percentage of population, 2006 and 2010

2010

2006

Table 4 Internet commerce in EU 15 plus Norway and Switzerland, 2006 and 2010, € billion

2006 2010 CAGR % 2006–2010

€ bn % € bn %

Business-to-Consumer (B2C) 181.7 12.5 578.4 22.1 33.6

Business-to-Business (B2B) 1,269.0 87.5 2,039.0 77.9 12.6

Total Internet commerce 1,450.7 100.0 2,617.4 100.0 15.9

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2.�Focus�on�specific�issues

2.1.�ICT�convergence

Convergence is not a new topic to the ICT industry. However it is only today that compa-nies’ strategies towards convergence are becom-ing mainstream. Many of today’s ICT trends can be read in the framework of convergent ICT.

This convergence process is increasingly broad and is now happening at several levels:

– voice and data and media content,

– fixed and mobile,

– networks and IT,

– user and devices.

�Voice�and�data�and�media�content��convergence�solutions

Voice and data convergence covers differ-ent solution areas, from Internet Protocol (IP) Private Branch Exchange (PBX), managed IP services, hosted Voice over IP (VoIP), Video over IP, and IPTV to the emergence of new voice/data applications.

The core concept of VoIP is the process of utilising broadband connections not only to handle all data transfer needs, but also voice. Voice and data have always run on separate lines with data lines mostly underutilised. By converting analogue voice signals into pack-etised data, voice can be merged onto the same existing data line allowing companies to save on both resource and infrastructure costs. Enterprises have been putting voice and data on the same Wide Area Network (WAN) backbone networks for years; by partitioning

2006€ bn

2010€ bn

CAGR % 2006–2010

France

Business-to-Business 183.9 298.4 12.9

Business-to-Consumer 28.2 102.4 38.2

Total Internet commerce 212.1 400.8 17.3

Germany




Italy




Spain




United Kingdom




Table 5 Internet commerce in the top 5 European countries, 2006 and 2010, € billion

26


the bandwidth – now that it is all IP, they do not need to split the bandwidth but do need to classify the traffic based on its nature, in order to ensure appropriate network latency and quality.

The convergence of voice and data into a single communications platform is only the starting point of future network evolution.

to encompass mobile customer relationship management, mobile inventory, and mobile field service support. The move from desktop to laptops is evident in all European countries. Implementations of Wireless LANs (WLAN) are steadily increasing.

The next step in this process is full Fixed-to-Mobile Convergence (FMC). A converged fixed and mobile service is one that enables the user to access the same set of communi-cation services, regardless of the end terminal s/he uses, the underlying network over which those applications run, or the user’s location. With this service, the user’s subscription is independent of the access points and termi-nals employed in order to access services. The user should be able to roam between locations and terminals without interruptions in service and receive a single bill with usage of all services included.

Fixed�and�mobile�convergence�solutions

Fixed and mobile convergence follows the increasing penetration of mobility solutions and services in the business and consumer markets. The need for seamless mobility is here to stay: mobile solutions are find-ing increasing acceptance in the market, going beyond the traditional mobile office

Figure 3Convergence: enabling ICT innovation and business transformation

IP PBX

Managed IP PBX

Voice/data applications

IPTV

Seamless mobility

Managed wireless services

Wireless routers

Laptop mobility

Mobile over WLAN

Single sign-on

Dual-mode handsets

Converged devices

Location-independent numbers

Multimedia conferencing/collaboration

Managed services

Utility computing

Virtual services

Pay-per-use options

SaaS

Voice/data applications

Managed wireless services

Mobile over WLAN

Dual-mode handsets

Location-independent numbers

Multimedia conferencing/collaboration

Pay-per-use options

Networ

ks an

d IT

Voice a

nd da

ta an

d med

ia co

nten

t

Fixed and mobile

User and devices

27


Opportunities�and�challenges�

Convergence is finally starting to become the key enabler of ICT innovation and business transformation.

Overall there are two key drivers of conver-gence. They are:

– cost savings, achieved by:

1. converging separate voice and data net-works onto a single IP network, in voice and data convergence;

2. lower costs of mobile phone calls while in the office in FMC;

3. reduction in maintenance and manage-ment costs, in networks and IT conver-gence;

4. enhanced productivity, in user and device convergence;

– f lexibility and related gains in quality, effi-ciency and profitability.

Moreover, each of the four areas of conver-gence described above has specific drivers that are accelerating its uptake.

In the voice and data convergence area, reduc-ing costs has been the key driver so far. The provision of IP-enhanced voice features and productivity applications will increasingly be the key drivers of VoIP adoption in the near future. Companies are beginning to trial the integra-tion of personal calendars, instant messengers, personal directories, and real-time VoIP com-munications, to create richer collaboration and increase employee productivity.

In the FMC area, key expected benefits include a single bill combining services over fixed and mobile networks, improved Quality of Service (QoS), coverage, and bandwidth efficiency, new business communication services such as pres-ence, instant messaging, instant conferencing, and other multimedia services.

Networks�and�IT�convergence�solutions

The past few years have seen notable developments in the way IT is delivered and purchased by European companies. The advent of managed services, utility comput-ing, virtual services and pay-per-use options are examples of this trend. With these options, companies can reduce capital spending, over-come skills problems, and have access in a more f lexible way to the applications and ICT infrastructure they need.

User�and�device�convergence�solutions

Business benefits of ICT can be realised only if access is always ensured to relevant information. This is driving increasing adop-tion of mobile devices (mobile phones, lap-tops, smart-handled devices), and fostering some new trends, including:

– the increasing adoption of converged devices, capable of synchronising with a desktop or laptop computer;

– the transition of mobile phones into com-puter devices, due to rapidly enhanced functionality;

– dual-mode handsets (with seamless handover between the fixed and mobile networks) entering the market, following the launch of FMC services.

At the same time, f lexibility is a key requirement in the new converged world. Solutions such as single sign-on, location- independent numbers, but also multimedia collaboration, are all part of what can be defined a convergence between the user and the device.

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In the networks and IT convergence area, drivers include predictability of costs, but also compa-nies’ ability to reduce their ICT infrastructure complexity, avoiding problems connected to lack of skills as well as those connected to the increasing time needed to manage IT inter-nally. A recent development in this area is the so-called Software as a Service (SaaS) delivery option, which includes both hosted application management and software on demand. A sce-nario on this emerging topic is presented in sec-tion 2.2.

In the user and device convergence area, the key driver remains the ability to access to all relevant information independently of the location. This is of course a clear response to companies’ need to increase profitability and enhance efficiency.

Some key inhibitors are however working against the widespread adoption of convergence in Europe. They include:

– Companies’ overall cautious approach to innovation. Despite considerable develop-ment in the past few years, convergence is still perceived as an immature segment, especially by Small and Medium Enterprises (SMEs), and Return On Investment (ROI) is a key requirement.

– Costs. While cost savings are seen as the key driver of the convergence process, it is also true that the costs of migration to new platforms (in VoIP or FMC for example) are also perceived as a key inhibitor in the move towards convergence.

Source: IDC European vertical market survey, 2006

Figure 4 EU 15 plus Norway and Switzerland, key obstacles to the adoption of an IP telephony solution (% of companies)

0 20 30 40

Relationship with existing provider

ROI

Uncertainty on quality of voice communications

Immaturity of the market

Cost of migration to the new platform

Other

10

29


– Security concerns have a strong impact on all four convergence areas under examination.

Looking at the different convergence areas, some specific inhibitors are also evident:

– Voice and data:

uncertainty of quality of voice communica-tions.

– FMC:

1. commercially available offers are still lim-ited;

2. its proliferation depends on the availability of a corporate mobility strategy and wire-less access (Wireless Fidelity, Wi-Fi) in the enterprise environment;

3. the importance of standards, interoperabil-ity, and collaboration cannot be underesti-mated. UMA (Unlicensed Mobile Access) is only an interim technology on the way to full SIP (Session Initiation Protocol) functionality and has to be more reliable for the business market to speed up adop-tion;

4. regulatory obstacles in Europe are expected to limit the ability of fixed-only providers to offer mobile services as a Mobile Virtual Network Operator (MVNO).

Figure 5 EU 15 plus Norway and Switzerland, business and consumer VoIP paid subscriptions in thousands, 2005 and 2010

200,000

180,000

160,000

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0

2005

2010

ConsumerBusiness

30


– Networks and IT:

1. uncertainty over quality and reliability of service;

2. perception of limited customisation and integration capabilities of on-demand offers;

3. perception of a barrier between the com-pany and the service provider.

– User and devices:

1. spectrum availability for mobile solutions;2. standards and interoperability;3. quality of services.

How�the�scenario�is�evolving

Convergence is the future of ICT. However, not all convergence areas will show the same speed in their uptake.

– Voice and data convergence will continue to grow rapidly. The main reason for migra-tion to IP telephony will change from cost savings to improved efficiency in the busi-ness area. In the consumer area, low cost or free service will continue to be highly appre-ciated, but the value of VoIP will begin to be recognised as well.

0 20 30 50

Currently use

Plan to implement by end 2006

Plan to implement in the future

No plans to implement

Don’t know

10

Source: IDC European vertical market survey, 2006

Figure 6 EU 15 plus Norway and Switzerland, organisations status regarding employees’ access to enterprise applications via mobile or wireless technology (% of companies)

40

31


– Fixed-mobile convergence solutions will take some more time to find acceptance. FMC is likely to appeal first to early adopters in the consumer market. As the penetration of FMC services and devices increases, if sim-plicity and cost-effectiveness are proven, the value of these services will also become more appealing in the business segment.

– Managed services will grow very rapidly. The process is still very cost-driven, but as ben-efits become clearer, reliance on managed services is expected to increase. The SaaS delivery models will also continue to gather momentum in the years ahead as global soft-ware firms transform into SaaS players and emerging SaaS-focused companies enter the marketplace. Still SaaS represents and will account for only a small part of the software market in the next few years.

– The transformation in the device market will continue. Mobility will be the rule.

�2.2.�The�transformation�of�the�software�industry�

The software industry is undergoing a major transformation process. The increasing customer need to deal with IT complexity, the demand for optimised infrastructure, and companies’ focus on reducing costs have given rise to a new soft-ware landscape. This has resulted, on the one hand, in the consolidation of some major indus-try players and, on the other hand, has impacted several areas of the software market, including:

– its basic architecture, with the advent of Service-Oriented Architecture (SOA);

– the way it is delivered, with the emergence of Software as a Service (SaaS).

�Definitions

Service-Oriented Architecture (SOA) is a tech-nology architecture based on disaggregation. It promotes the utilisation of autonomous applica-tion and system “services” abstracted from one another, independent of implementation. Ideally, a SOA should be modular, with separate lay-ers of functional code, data, and presentation interfaces. Each service should be self-describ-ing with a published interface and accessible to other elements of the system, most commonly over a network. In a SOA, services are designed to be dynamically invoked.

Software as a Service (SaaS) refers to the ongo-ing support of applications where the core value to the customer lies in alleviating maintenance and daily technical operation and support of business and consumer software. Key character-istics of software delivered as a service are as follows:

– network-based access to, and management of, commercially available (i. e., not custom) software;

– activities that are managed from central loca-tions rather than at each customer’s site, ena-bling customers to access applications via the Internet;

– application delivery that typically is closer to a one-to-many model than to a one-to-one model, including architecture, management, pricing, and partnering characteristics.

SaaS includes:

– Hosted Application Management (AM): com-prises traditionally licensed packaged appli-cations hosted as a service. Customers either purchase an application and have a service provider maintain and run it, or customers no longer want to support their current appli-cation and look for a service provider to take over the management of that application.

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– Software on demand: is characterised by the software, services, and support offerings that are specifically built and designed for one-to-many delivery over the Internet. Soft-ware-on-demand providers typically embrace a Web services strategy, and customers share the same public infrastructure.

Software on demand offerings are character-ised by their subscription licensing models. A software subscription consists of bundled soft-ware and services where the value of the licence fee is not separately determinable from mainte-nance/support.


SOA: SOA is attracting strong interest as it helps companies in facing some of today’s most pressing business requirements:

– the need to respond rapidly to changing mar-ket requirements and achieve first-to-market competitive advantage;

– the need to optimise end-to-end processes rather than just individual activities;

– the need to implement regulatory require-ments and be able to prove compliance with these;

Source: IDC European vertical market survey, 2006Source: IDC European vertical market survey, 2006

Figure 7 EU 15 plus Norway and Switzerland, level of understanding of SOA by employee company size (scale 1–5: 1 = no understanding; 5 = detailed understand-ing)

2.2 2.4 2.5 2.7

500+ employees

100–499 employees

20–99 employees

2.3 2.6 2.8 2.9 3.0 3.1

33


– the need to provide an enhanced experience for customers, whether by self-service appli-cations, or by service-centre staff with more complete awareness of the total customer situation;

– the need to provide greater real-time vis-ibility of the performance and activity in the organisation;

– to achieve all of these in a timely and cost-effective manner, and without a major “rip and replace” of existing IT systems.

Key inhibitors to SOA development include:

– Performance: concerns in this area are expected to slow adoption in the short term.

– Complexity: products are not configured for ease of implementation and use by small companies with few technical resources, restricting the impact of SOA to large enter-prises.

– Standards: the increasing complexity of standards will not be solved in the short term.

SaaS: The SaaS delivery model is only at the early stage of adoption, but its role in the software industry continues to grow. Traditional software players have recognised the importance of SaaS and numerous SaaS-focused companies are also entering the marketplace. Key drivers of adoption include:

– increasing offerings available in the market;

– costs savings, both to acquire and maintain software;

– predictability of software management costs;

– complexity reduction, through the elimina-tion of implementations and daily software maintenance;

– increased productivity and efficiencies;

– improved relationship with providers thanks to:

1. a change in perception of software costs and

2. the increasing provider accountability due to the ongoing need to demonstrate the value of their offerings to customers.

Beyond functionality concerns, on-demand adoption is still inhibited by perceptions of service provider viability, reliability of software-on-demand products and services, as well as a perceived lack of functionality, security, customi-sation, and integration capabilities. Web services help to alleviate some of the integration con-cerns, but this does not address the challenge of legacy systems or those applications that are not Web services enabled. SaaS/on-demand vendors are incorporating increased options for configu-ration, but for some customers, this may not be enough.


The initial deployment phase of SOA is tar-geted primarily at the large enterprise sector. A process-driven deployment model is particu-larly important for industries currently engaged in rolling out new products and services. This favours the telco and financial services sectors, and to a lesser degree central and regional gov-ernment. This has biased the initial country-level adoption patterns towards countries where these industries have a strong presence, resulting in the UK, Germany, and France having the largest initial adoption.

34


Later in the adoption cycle it is inevitable that SOA must extend its reach to the middle market and to a broader set of industries. Over the course of the forecast period, therefore, the overall balance of revenue will return towards the more normal geographic distribution, with the Southern European countries accounting for a larger share of the overall revenue.

In the SaaS area, traditional software compa-nies will continue to use the hosted AM deliv-ery model as a stepping stone towards delivering true on-demand software to customers.

Online application delivery will find increas-ing acceptance also among SMEs, allowing them to pass the IT skills and capital investment burdens on to the service provider. In the short term, however, SaaS will remain more appeal-ing to large companies. SMEs are traditionally cautious adopters and are expected to adopt a wait-and-see approach also towards SaaS. Lack of knowledge of new products and services as well as the lack of an indirect channel for SaaS will also act as key inhibitors in the SME mar-ket. Telecommunications companies and service providers will increasingly act as a sales channel and offer targeted on-demand applications such as collaborative applications, security software, and basic accounting and contact management functionality.

0 500

2006

2010

1,000 1,500 2,000 2,500

Figure 8 EU 15 plus Norway and Switzerland, market forecast for Service-Oriented Architecture (SOA) software infrastructure, 2006 and 2010, € million

35


2.3.�R&D�ICT

The EU is behind other regions in terms of percentage of GDP spent on Research & Development (R&D), and the gap is widening. It looks as if, despite the comprehensive regulatory framework set up by the European Commis-sion and the moves undertaken by the member countries and Switzerland, the three components of the knowledge triangle, education, research and innovation, have not been integrated effectively. In particular, Europe has had difficul-ties in translating R&D results into commercial opportunities and difficulty in reaching critical mass in certain fields.

R&D expenditure as % of GDP Share financed by business sector

2001 2002 2003 2004 2001 2002 2003 2004

EU 25 1.93 1.93 1.92 1.90 55.3 55.0 54.3 n. a.

EU 15 1.98 1.98 1.97 1.95 55.6 55.3 54.6 n. a.

France 2.20 2.23 2.18 2.16 54.2 52.1 50.8 n. a.

Germany 2.46 2.49 2.52 2.49 65.7 65.5 66.3 67.1

Italy 1.12 1.10 1.16 1.20 n. a. n. a. 47.8 n. a.

Spain 0.92 0.99 1.05 1.07 n. a. 48.9 48.4 n. a.

UK 1.89 1.89 1.88 1.78 n. a. 46.1 43.9 n. a.

Table 6 R & D expenditure

Source: Eurostat – R & D statistics, OECD – MSTI 2005-1, National Statistics

2000 2003

EU 25 27 24

EU 15 32 28

Euro area 29 27

Table 7 European high-technology patents, per million inhabitants

Source: Eurostat 2006

Key challenges include:

– Lack of skilled workforce: the level of sci-ence and engineering graduates, including ICT graduates, who make up the backbone of skilled human resources for R&D, has recently increased but it is still quite limited.

– R&D investments are primarily undertaken by large companies, rather than by SMEs, which are the backbone of the European economy. These companies face several issues, including that of raising the neces-sary funding to undertake R&D projects.

– Costs of R&D are increasing and time to market is becoming more and more a crucial point for companies competing in the global market.

36


Large European companies realise that their success is strictly connected to their R&D invest-ments. To face these challenges they are putting in place several initiatives, including:

– setting strategic partnerships and cooperation agreements;

– Mergers and Acquisitions (M&As) among large companies to share research and expand product portfolio;

– strengthening cooperation with national gov-ernments;

– developing R&D centres in lower-cost coun-tries.

This latest initiative has been gaining momen-tum in the past few years. Companies across all industry segments, including ICT, have under-taken steps to move their R&D offshore. All major IT and telecommunications equipment industry players have opened development cen-tres in India or China.

Decreasing R&D business expenditure in Europe is also linked to this relocation. This is particularly true in the ICT sector, as con-firmed by the reduction of high-tech patents in the EU 15.


There is no doubt that among the prima-ry drivers of R&D offshoring is saving costs (including lower cost of labour, cheaper land and office rental, and favourable tax regimes). Tradi-tionally, market-driven initiatives are leading to increased reliance on offshore development cen-tres (India, China), whilst strategic R&D is still located in Europe. Nonetheless, increasing R&D investments in China and India are challenging this situation.

The presence of highly-educated intellectual capital is also fostering the trend. Other benefits include:

– improved performance;

– faster introduction of new products into the market.

In the last few years, an increasing number of countries have been using fiscal incentives to encourage R&D and Europe does not lag behind. An overview of the tax incentives in EU member countries shows that existing R&D incentives in the EU are mainly aimed at reduc-ing the cost of research by reducing the amount of corporate tax paid, be it in the form of tax deferral, tax allowance or tax credit. Whilst most tax incentives are based on relief for R&D current expenses, covering mostly costs for per-sonnel and related expenses, in some cases it is also possible to deduct R&D-related capital expenditure such as infrastructure and equip-ment. EU R&D tax incentives are generally open to all companies irrespective of size, sec-tor, or location, though some provide specific benefits for SMEs and some are specifically tar-geted at SMEs. Despite the initiatives, the high fragmentation of European R&D tax incentive schemes continues to challenge effective expan-sion of R&D in the area. In this environment countries like the US, Canada and Australia, but also emerging economies like China, continue to gain ground in terms of attracting foreign R&D investments and are expected to do so in the near future.

37


Although drivers are clearly evident, there are some inhibitors that are affecting the deci-sion to move R&D abroad. They include:

– some costs may not be evident, such as those related to the management of offshore con-tracts and those related to educating people to companies’ culture and methodologies;

– high turnover rates with Indian and Chinese engineers;

– the loss of proprietary business knowledge, which is essential in the ICT market;

– connected intellectual property risks, par-ticularly pressing in the R&D area;

– effective collaboration among international R&D teams.


The challenges illustrated above had led many companies to adopt a hybrid model, including nearshore and offshore R&D.

There is a strong debate concerning the business sustainability of the model in the low-cost countries. Indian IT salaries, for example, continue to climb, favouring China, Russia and Vietnam. However, R&D offshore is expected to continue to gain acceptance. This trend poses several challenges to Europe as it may weaken competitiveness, due to a lack of innovation and potential loss of business knowledge.

To avoid that, a careful balance of internal R&D capabilities and external collaboration is required. This calls for:

– increasing cooperation with higher educa-tion institutions and governments to create a favourable environment for R&D develop-ment in the European countries;

– increased leverage of the EU Commission’s strong support to R&D (see The “Financial Perspective” plan);

The�“Financial�Perspective”�plan

In order to guarantee sufficient resources to finance long-term EU activities such as R&D, the EU implemented a multi-annual spending plan called the ‘‘Financial Perspec-tive’’. One of the key points presented in the “Financial Perspectives” – Competitiveness for Growth and Employment – puts emphasis on research themes in areas where the EU should reinforce its competitiveness.

The financial allocations cover the follow-ing objectives:

– research and technological development;

– connecting Europe through EU networks;

– education and training initiatives;

– promoting competitiveness in a fully-inte-grated single market;

– social policy;

– nuclear decommissioning.

For the above objectives, the EU projected a € 72 billion spending plan, to be fulfilled by 2013 and increasing from € 8.2 billion in 2007 to reach € 12.6 billion in 2013. The European Council therefore believes that EU funding for research should be increased and that the resources available by 2013 should be around 75 % higher in real terms than in 2006.

The EU currently invests just below 2 % of GDP in R&D and devotes only 20 % of research expenditure to ICT, compared with 30 % by its major competitors in the OECD. The “Financial Perspective” plan will allow the EU to take the necessary steps to achieve the 2010 target of 3 % of GDP invested in R&D.

38


– increasing coordination of activities among different laboratories (both within the com-panies’ boundaries and with other research companies);

– stronger ICT investment by European R&D organisations in all industry segments, including ICT itself, and along all the key business processes of R&D, from strategic planning down through performance man-agement, portfolio management and project management to resource management. This will drive projects aimed at centralising data-warehousing and Business Intelligence (BI) systems to enable easier access to their glo-bally dispersed research and development capabilities, but also the deployment of high performance networking systems – able to provide the density, scalability and resilience required to guarantee predictable network performance for scientists and connected organisations – and on upgrading high-end computing to support increasingly large scale management of data. Of course, all these will need to be backed up by advanced security systems.

2.4.�ICT�skills

European companies across all size segments increasingly recognise ICT as having a major impact on their business. Indeed, investments aimed at controlling costs and development and/or implementation of new strategic applications to improve the organisation’s competitiveness are at the top of the agenda for the majority of businesses.

The latest IDC European vertical market sur-vey shows that security, industry-specific applica-tions, Enterprise Resource Planning (ERP), and collaborative technologies, among other factors, will drive short-term demand for IT solutions. Furthermore, the increasing acceptance of the SaaS delivery model is projected to have a posi-tive impact on ICT penetration, driven initially by investments in large organisations and subse-quently in SMEs.

As adoption of new technologies makes headway, full exploitation can only be achieved by matching the correct competences. Indeed, in the long run sustained use of ICT is likely to lead to higher profits and increased market share only if it is combined with organisational change and continuous upgrading of skills.

Evidence from the same survey suggests that quality of skills in the internal IT department is a significant concern for IS managers as an area requiring urgent improvement. Further-more, with ICT recruitment specialists reporting a series of shortcomings in terms of experienced security specialists, database administrators, and system development and programming person-nel, as exemplified by an ICT specialist recruiter claiming it had 21,000 vacancies on its books in the IT and telecoms sector in 2006 in the UK alone, the question as to where Europe stands in terms of ICT skills is back in the spotlight.

In the past few years several initiatives driven by government, industry, and educational insti-tutions have supported building of ICT skills among the emerging and existing workforce, resulting in narrowing skills shortcomings. Nonetheless shortages continue to be an issue and are expected to be so in the near future should the supply fail to meet changing require-ments.

39


Definitions

– ICT professionals: support and develop tech-nology environments in the industries that use ICT (or services vendors selling their ICT professional resources time);

– E-business professionals: focus on supporting business strategies related to the Internet.

The ICT skills required will differ according to the scope of involvement in ICT deployment. Similarly, the lack of skills can be categorised according to their intrinsic nature. On the one hand, skill shortages refer to the insufficient number of skilled people in the labour market, and can be affected by divergence of supply and demand competences, whereas skill gaps refer to competence shortfalls of a worker within the company. The current situation reveals potential problems in both these areas.

Opportunities�and�challenges

Key drivers:

– Structural funds available through the European Commission financial perspec-tive spending plan, presenting a structured framework focused on, amongst other top-ics, research and technological development, connecting Europe through EU-wide net-works, and increased educational and train-ing initiatives, represent solid grounds for the narrowing of the skills shortages and build-ing of interest by the emerging workforce in ICT-intensive sectors. Eventually the objec-tive is to achieve a 3 % of GDP investment on R&D across all EU countries, to stimu-late ICT adoption and renew interest in ICT-intensive sectors as an attractive segment for the younger generation.

– Government initiatives such as eInclusion, aimed at reducing the digital divide, will gen-erate increased competences as long as the focus is directed equally to increasing com-puter deployment and infrastructure access as well as to providing the necessary edu-cation skills to make the most of new ICT technologies.

Key challenges:

– Traditionally, companies used to turn to “imported” talent as a means to counteract skills shortages. A new trend is now emerg-ing as companies are increasingly sourcing IT services offshore. Emerging countries such as China are growing at a sustained pace and intensification of ICT across the economy and the growth prospects these countries offer, are likely to create a new brain-drain phenomenon with increasing numbers of researchers looking towards emerging coun-tries as opposed to the “usual” US alterna-tive.

– Chief Information Officers (CIOs) are increas-ingly faced with budget constraints, which if, on one side, translate into difficulties in hiring new ICT staff directly affecting the organisation’s ability to adopt new technology at a sufficient pace to meet all business objec-tives, on the other, also reduce the possibility to provide ongoing training schemes to the existing workforce.

– Despite joint efforts to align educational institutions curricula to the real needs of industry, formalised through cooperation between industry and education, with train-ing in the field, IT certification courses are time-consuming, costly and still poorly struc-tured, with evident mismatches in the skills provided versus the skills effectively required to perform the job.

40



Overall, demand for ICT professionals and e-business professionals will remain high across Europe, though the market will require increas-ingly advanced skills from the emerging work-force, complemented by business-specific skills. Indeed, if initially the European challenge was to achieve penetration of basic ICT skills across all sectors of the economy, nowadays the trend is to outsource/offshore basic programming, and to a lesser extent innovation and development, to low-cost areas where skilled workers are at hand. In this environment, short-term demand for IT professionals who can design, implement and manage increasingly complex technology systems is set to remain high. High-level techni-cal skills, as well as business and project man-agement skills, will therefore increasingly be demanded.

The “offshoring model” exposes the mar-ket to some risks. Whilst the anticipation is that demand will not be heavily impacted in the short term, as companies continue to pre-fer maintaining their core business processes in-house, from the supply side the impact may be wider. Indeed, if on the one hand data from the US shows that companies that have gained capacities due to offshoring tend to use these capacities to strengthen their core business thus creating new jobs, on the other hand the per-ceived reputation of the technology profession as a whole is heavily jeopardised by the offshoring trend. Should clear messages as to the prospects of an ICT career not be conveyed, in the future it could be even more difficult to convince the emerging workforce actually to take on studies in science and engineering disciplines. Increas-ing numbers of graduates will fear limited career development in ICT and ICT-intensive sectors,


90

75

60

45

30

15

0Informal trainingLearning-by-doingSelf-study

with aidTraining at

education centres on employer account

Training at education centres on own initiative

Formal training at educational institutions

ICT professionals

Non-ICT professionals

Figure 9 EU 15 sources of eSkills competences – ICT vs non-ICT professionals, in %

Note: Based on individu-als who have ever used a computer.

41


resulting in widening skills shortcomings, with supply not matching demand. Overall, emphasis should be placed on customer-oriented system integration and, especially, IT service manage-ment both revealing relatively stable against off-shoring.

Figures 9 and 10 show a relatively positive pic-ture for 2006 in terms of the percentage of ICT professionals and non-ICT professionals hav-ing taken a computer course and the source for e-skills acquisition. Nonetheless, it is also evi-dent that ongoing education is still far from being a reality. The vast majority of professionals reveal that they have taken courses over a year ago, with the largest proportion having taken a course over three years ago. In a rapidly develop-ing environment, with increasing focus on new technologies as a means to contain costs and face increased competition, this is far from opti-

mal. E-skills UK estimates reveal, for example, that less than 40 % of UK-based organisations have an IT training plan in place, reducing to 30 % for IT and telecoms companies. Again, this is expected to have a strong impact on the skills gaps issue. Indeed, should action not be taken to change this picture, the mismatch between the supply- and demand side is set to widen.

The results discussed above, taken together with data published by the OECD (see Table 8) show an even more worrying picture. Indeed, many European countries lag behind the US in terms of expenditure on educational institutions as a percentage of GDP. This is true for primary, secondary and post-secondary non-tertiary edu-cation, and even more for tertiary education.

40

30

20

10

0More than three years agoOne to three years agoThree months to a year agoLast three months

ICT professionals

Non-ICT professionals


Note: Based on individu-als who have ever used a computer.

Figure 10 EU 15 percentage of individuals having taken a computer course – ICT vs non-ICT professionals

42


The European picture is quite varied in terms of supply and demand. On the one hand Nordic countries have been quick in narrowing the gap between the two market forces. A number of research reports indicate that Nordic countries more than others are experiencing a supply sur-plus resulting from years of decreasing demand and increased supply. Nonetheless with the market expanding at a fast pace and the overall decrease in students entering higher education in ICT, countries like Sweden are likely to incur widening gaps. In Germany, where the skills gap has been narrowing given an initial supply-side increase exemplified by an increasing number of graduates in informatics, there is evidence sug-gesting that supply will fail to meet demand in the years to come as the number of students in informatics has been falling steadily for the past six years, whereas the number of graduates in electrotechnical engineering has been declining for the last three years.

Demand for skilled staff is likely to con-tinue to exceed supply if measures to balance the two forces are not taken. Furthermore, the proportion of professionals gaining competences through self-study, learning-by-doing, and infor-mal training is still too high and funds dedicated to educational institutions are still too low across many European countries. Again, if measures are not taken to enhance formal training and ongoing training, the skills gap, be it in the form of shortage of skilled workforce or a simple mis-match of skills, is likely to widen. This will be particularly evident in the following areas:

– advanced network technology,

– security,

– SOA and Web services,

– composite applications,

– Linux and open source.

Primary, secondary and post-secondary

non-tertiary education

Tertiary education

Austria 3.8 1.1

Belgium 4.1 1.3

Denmark 4.3 1.8

Finland 4.0 1.8

France 4.2 1.4

Germany 3.5 1.1

Greece 2.8 1.3

Ireland 3.2 1.2

Italy 3.6 0.9

Netherlands 3.4 1.3

Norway n. a. 1.5

Portugal 4.2 1.1

Spain 3.0 1.2

Sweden 4.5 1.8

Switzerland 4.6 n. a.

United Kingdom 4.6 1.1

United States 4.2 2.9

Table 8 Expenditure on educational institutions as percentage of GDP, by level of education, 2003

Source: OECD, Education at a glance 2006

43


3.�European�ICT�business�arena

Figure 11EU 15 plus Norwayand Switzerland,ICT business arena,2005, € billion

Telecom(321)

Distribution(119)

Office(8) Consumer electronics

(95)

Marketing and advertising(240)

Media andpublishing

(254)Computer systems and services

(292)

Total value = 1,329 billion

Serv

ices

Pro

duct

s

Message Medium

Office: typewriters, calculators, copiers, other office equipment

Consumer electronics: TVs, DVD/HDD players and recorders, digital personal audio, digital cameras, game consoles etc.

Media and publishing: f ilms, TV programmes, videos, CDs, records, tapes, DVDs, MP3s

Computer systems and services: hardware, packaged software, services

Marketing and advertising: online databases, online shopping, mail order catalogues, advertising, direct marketing, other business services

Distribution: broadcasting, Internet, mail, parcel, courier

Telecommunications: voice network services, data network services, customer premise equipment, service providing equipment, installation and maintenance

44


The data and forecasts presented in this paper have been jointly prepared by IDC and the EITO Task Force on the basis of the latest information available at the beginning of December 2006.

1. ICT market size and structure

In 2006 the European economy has shown a small but evident improvement with respect to its general performance in 2005. While other major economies worldwide, such as the US and Japan, remained substantially sta-ble, in Europe countries like Germany, Italy and – to a lesser extent – France and the UK, have performed remarkably better in 2006 than in 2005. In spite of this encouraging trend, the European economy nevertheless remains rather weak compared with the worldwide average. In the EU 15, the total GDP is expected to increase by 2.3 % in 2007 (against 2.4 % in the US) and by 2.4 % in 2008.

The gradual improvements in the economic outlook and business confidence had a posi-tive impact in some areas of the ICT market in 2006, especially on software and professional services. However, a poor performance in com-puter hardware, due to declines in desktop PCs and servers, hampered overall growth in IT, which showed a declining trend compared to 2005. Within computer hardware, only portables and Multi-Function Peripherals (MFPs) showed positive growth in 2006, while demand for soft-ware was stimulated by increasing spending in both system infrastructure and applications. In professional services, outsourcing continued

The ICT market in Europe

to drive the market, but consulting and imple-mentation services also registered faster rates of adoption. In 2007, a better performance in computer hardware, accompanied by continuing demand for software and IT services, will trans-late into higher growth in the IT market. The telecommunications market will continue to be dominated by data services (both in the fixed and the mobile area) and by some sales in the telecom equipment market, where mobile prod-ucts will register a positive, but moderate growth in the forecast period.

Table 1European* Information and Communications Technology (ICT) market, 2006, € billion**

2006 Value

% ofICT

Computer hardware 83 12.2

End-user communications equipment 29 4.2

Office equipment 9 1.3

Datacom and network equipment 44 6.4

Total ICT equipment 164 24.1

Software 76 11.1

IT services 140 20.6

Carrier services 300 44.1

Total ICT 680 100.0

Note: * Europe includes the EU, Norway and Switzerland. ** It should be noted that all f igures have been rounded

to the nearest € billion at 2005 constant exchange rates. Total and percentages may not add up due to rounding.

45

The ICT market in EuropePart One · EITO 2007

The total value of the ICT market in Europe was € 680 billion in 2006, representing 5.7 % of total GDP. The IT market (that is, office equip-ment, electronic data processing and data com-munication equipment, software and services) amounted to € 310 billion, while the telecom-munications market represented a total value of € 327 billion. The total ICT market in the US continued to show a robust growth of 4.5 % reaching a value of € 574 billion. The IT compo-

nent of the US ICT market registered an encour-aging 4.6 % of growth, while in the telecommu-nications sector the increase was 2.0 % with a total value of € 197 billion. In contrast, Japan’s ICT market registered a more modest increase of 0.9 % in 2006 totalling an overall value of € 291 billion in the same period.

Figure 1 (left)European Information and Communications Technology (ICT) market by product, 2006

Table 2 (left)Worldwide IT market by region: percentage breakdown calculated on market values, 2005–2007, € billion

Table 3 (right)Worldwide ICT market by region: percentage breakdown calculated on market values, 2005–2007, € billion

Figure 2 (right)Worldwide ICT market by region, 2006

End-user communications

equipment 4.2 %Computer

hardware 12.2 %

Office equip-ment 1.3 %

Datacom and network equipment

6.4 %

Software 11.1 %

IT services 20.6 %

Carrier services 44.1 %

Total value = € 680 billion

Total value = € 2,033 billion

Europe 33.4 %

US 28.3 %

Japan 14.1 %

Rest of World 24.2 %

2006Value

2005%

2006%

2007%

Europe* 324 35.5 35.0 34.6

US 347 37.1 37.5 37.7

Japan 129 14.5 13.9 13.5

RoW** 126 12.9 13.6 14.2

Total 927 100.0 100.0 100.0

Note: * Europe includes the EU, Norway and Switzerland. ** RoW = Rest of World

2006Value

2005%

2006%

2007%

Europe* 680 33.9 33.4 33.1

US 574 28.1 28.3 28.4

Japan 286 14.5 14.1 13.7

RoW** 492 23.5 24.2 24.8

Total 2,033 100.0 100.0 100.0

Note: * Europe includes the EU, Norway and Switzerland. ** RoW = Rest of World

46


2. ICT trends by country

Table 4European IT market by country: percentage breakdown and growth calculated on market values, 2006–2008, € billion

Table 5European telecom-munications market by region: percentage breakdown and growth calculated on market values, 2006–2008, € billion

2006Value

2006%

2006/05%

2007/06%

2008/07%

France 55 16.9 3.1 4.6 4.7

Germany 68 20.8 2.8 3.5 3.7

Italy 25 7.8 1.5 2.1 2.9

Spain 14 4.2 6.2 6.1 6.6

UK 66 20.4 3.6 5.0 5.0

Other EU 79 24.4 5.1 5.0 5.5

Other Europe 18 5.4 2.8 3.7 4.6

Europe 324 100.0 3.6 4.4 4.7

Note: Total and percentages may not add up due to rounding.

2006Value

2006%

2006/05%

2007/06%

2008/07%

France 42 11.7 1.2 1.7 1.4

Germany 66 18.6 0.2 –0.3 0.1

Italy 45 12.7 2.1 1.9 1.5

Spain 31 8.8 4.0 1.7 0.9

UK 57 16.1 2.6 0.5 0.0

Other EU 101 28.3 3.6 3.0 2.3

Other Europe 13 3.7 1.1 1.0 0.9

Europe 356 100.0 2.3 1.5 1.1

Note: Total and percentages may not add up due to rounding.

47


Figure 3EU 15 GDP, investment, IT and TLC market actual growth and forecasts, 2004–2007,in %

Figure 4European IT market by country, 2006

France 16.9 %

Germany 20.8 %

Italy 7.8 %

Spain 4.2 %

UK 20.4 %

Other EU 24.4 %

Other Europe 5.4 %


2005/04 2006/05 2007/06 2008/07

10

5

0

–5

2.83.3

2.01.5

4.5

ITTelecomGDP (nominal)Investment

4.2

2.6

4.2

2004/03

4.4 4.2

48


2.1. France

After a rather disappointing 2005, econom-ic activity in France recovered in 2006 and is expected to continue its positive performance in 2007, driven by healthy private consumption, resuming gross fixed investments and a positive inventory cycle. As a result, GDP is expected to grow at 2.1 % and 2.2 % in 2006 and 2007 respec-tively.

The overall ICT market grew by 2.3 % in 2006 and is set to increase by 3.3 % in 2007. Total IT spending registered a 3.1 % growth in 2006 and is expected to grow by a further 4.6 % in 2007. This positive trend is underpinned by the IT services and the software sector, which should confirm their 2006 growth in the forecast period. Tele-communications spending increased by 1.2 % in 2006 and will continue this positive trend well into 2007 at an expected higher rate of 1.7 %. The vigour of wireless services (particularly data wireless services), the improving diffusion of the Internet, and the strength of the equipment mar-ket in the business area will remain the major drivers in the next few years.

ICT equipment

– In 2006 total hardware spending declined, particularly in the PC and server segments. A return to positive growth is, however, expected for 2007.

– In the PC segment, consumer demand for notebooks remained high in 2006, while sales of traditional desktops declined and are not expected to recover significantly in 2007. In volume terms, France saw overall PC ship-ments expand moderately compared with previous years; these results were driven by a stronger than expected commercial demand in desktops and a considerable increase in notebooks shipments in both the consumer and commercial segments.

– The server market declined in 2006 and is not anticipated to improve in 2007, notwith-standing the overall positive performance of mid-range and volume servers. However, infrastructure updates leading to relatively high levels of sales of these server types, will not be enough to counterbalance the overall negative trend of the declining server market in France.

– Communications equipment sales in the consumer area will confirm their deteriorat-ing trend, although all the principal French telecom operators launched a number of new handsets with new applications and function-alities over the last few months of 2006.

Figure 5France ICT market, 2005–2008, € billion

2005

160.0

140.0

80.0

60.0

40.0

20.0

02006 2007 2008

94.5 96.799.9

103.2

4.0

2.3

3.3

3.3

120.0

100.0

10.0

8.0

4.0

3.0

2.0

1.0

0.0

9.0

7.0

6.0

5.0

Telecommunications IT

Growth rate ICT (%)

49


– The growth of the total telecom equipment market remained positive in 2006 and will accelerate slightly in 2007. Network service providers will account for the majority of this growth, as investments in mobile infrastruc-ture will continue to increase in the next two years.

Software

– The software market shows solid and stable growth over the forecast period.

– Growth of software spending is sustained by demand for security, content management, unified messaging and business process management software.

– Overall system software is expected to grow faster but applications are also showing posi-tive demand.

IT services

– The growth of the IT services market almost matches that for software.

– The outsourcing market remains dynamic but French companies are still rather hesitant to outsource their entire IT function or busi-ness functions to IT service providers, mainly because of cultural barriers and labour laws.

– The focus on cost cutting by French IT departments (which is stronger than in other European countries), together with the neces-sity to face massive IT personnel shortages, will force French enterprises to consider new business processes and, inevitably, to devote more attention to business process outsourc-ing.

Carrier services

– In accordance with most of its European counterparts, the French wireless and mobile communications market demonstrated a con-siderable vitality in 2006 and will continue to do so in the coming year.

– Adoption of Third Generation (3G) services will increase over the forecast period, with all telecom operators proactively promoting new products and services in the field of fixed-mobile convergence and triple-play services to business and consumer clients.

– Fixed-line services will continue to show a disappointing drift, with fixed voice services shrinking in absolute values and percentage rates in both 2006 and 2007.

Figure 6France ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

1.5

2.7

1.5

1.2

4.7

4.0

2.1

2.6

5.9

6.0

5.8

5.3

1.3

1.1

2007/06

2008/07

0.0 1.0 2.0 3.0 4.0 6.0 8.0 10.09.07.05.0

0.7

0.6

50


2.2. Germany

The German economy experienced a signifi-cant upswing in 2006: real GDP grew by 2.6 % and is expected to expand by 1.8 % in 2007 – a positive outlook after five years of sluggish economic growth between 2001 and 2005. Non-residential investment was the major driver of growth in 2006. Net trade and private consump-tion also contributed to growth, however, to a smaller extent. Households and business con-fidence remain high, sustaining the positive economic outlook for 2007 in spite of concerns about increasing interest rates in the Eurozone, the impact of the planned VAT increase at the beginning of 2007, and high oil prices affecting production costs.

Overall ICT spending grew by 1.5 % in 2006, with a further increase of 1.6 % expected in 2007. The continued strong pressure on prices in a number of market segments prevents higher overall revenue growth. IT spending increased by 2.8 % in 2006 and a further 3.5 % growth is expected in 2007. The respective growth rates for the telecommunications market (equipment and services) are 0.2 % in 2006 and –0.3 % in 2007.

ICT equipment

– Declining spending in 2006 is mainly caused by the fall in the PC and some server seg-ments, as the shift towards less expensive PCs and smaller server systems continues.

– The PC market continues to be hit by aggressive pricing and corporate reshuff le cycles, with only notebook PCs showing a positive (but declining) growth over the forecast period.

– Continuing consolidation of servers and stor-age equipment through the strengthening of the virtualisation process, together with the ongoing price war in the x86 segment, will exercise a negative effect on the overall hard-ware market in Germany over the next few years.

– Spending on end-user communications equip-ment also decreased in 2006 and is anticipat-ed to decline in 2007 as well, thus confirming the modest performance observed in 2005.

– In the network equipment area, negative trends in mobile infrastructure, circuit switch-ing and Private Branch eXchanges (PBX) restricted overall market expansion in 2006. The same trend is expected to apply also in 2007.

Software

– The improved business outlook has a positive impact on the overall software market, with particular emphasis on system and infrastruc-ture software, where infrastructure upgrades, which started in 2005, will continue in 2006 and 2007.

Figure 7Germany ICT market, 2005–2008, € billion

2005

160.0

140.0

120.0

60.0

40.0

20.0

02006 2007 2008

131.8 133.8 136.0138.7

2.5

1.5 1.6

2.0

80.0

100.0

10.0

8.0

4.0

3.0

2.0

1.0

0.0

9.0

7.0

6.0

5.0


Growth rate ICT (%)

51


– Fuelled by information access and delivery software, the application development and deployment segment is also expected to show positive growth in the forecast period.

– Demand for messaging applications, content applications and business performance man-agement/financial analytics tools and Web-based applications will sustain the German software application market.

IT services

– IT services activities are continuing to sus-tain growth in IT spending in both 2006 and 2007. As in 2005, the growth will be driven by robust outsourcing demand.

– Outsourcing projects are fuelled by the necessity to reduce market risks and catch up – or even surpass – the aggressive inter-national competition through leaner and

more efficient cost models. In addition, Ger-man companies are becoming less reluctant to outsource, as general cultural acceptance increases.

Carrier services

– Fixed voice telecommunication services con-tinue their declining trend, while fixed data services show a positive trend thanks to the high penetration rate of broadband applica-tions.

– The Digital Subscriber Line (DSL) subscrib-er base continued to grow in 2006 on the strength of the incumbent’s massive invest-ment in network infrastructure, complement-ing improvement in cable, which has seen 10 Mb/s services extending to an increasing number of subscribers.

– In mobile telecommunication, Germany remains one of the key competitive markets in Europe, with bundled services on voice and data and a growing number of Mobile Virtual Network Operators (MVNOs) bat-tling for new customers.

– 3G has been slow to develop, but during 2006 the sector grew considerably at the expense of Global System for Mobile communica-tion (GSM) and the trend is expected to be confirmed in 2007. The market leader (and incumbent) T-Mobile is currently extending its Universal Mobile Telecommunications System and High Speed Data Packet Access (UMTS/HSDPA) network to over 1,000 cities in Germany, thus reaching more than 60 % of the population and offering a wider range of content and entertainment services, includ-ing song downloads, ringtones and wallpa-pers. Vodafone and most recently O2 Germa-ny are also investing in HSDPA networks.

Figure 8Germany ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

–2.0 –1.0 2.0 4.0 6.0 8.0 10.0

–1.3

–1.3

5.7

5.8

5.0

5.0

2007/06

2008/07

1.00.0

0.2

–0.3

0.0

0.4

–0.4

0.0

–0.5

0.0

0.3

9.07.05.03.0

–0.8

52


2.3. Italy

The Italian economy continued its recovery during the second half of 2006 and is expected to expand in 2007 thanks to high business con-fidence, sustained orders in the manufacturing sector, and a decreasing unemployment rate which will bolster income and consumption. However, future prospects remain fragile due to a persistent lack of competitiveness and an excess of specialisation, the absence of structural reforms, high energy prices and a strong Euro that works against a heavily export-oriented economy. As a result, Italy’s economic perform-ance will remain weaker than its major Western European counterparts with real GDP up by only 1.8 % in 2006 and by 1.4 % in 2007.

The ICT market experienced a growth of 1.9 % in 2006 and is set to increase by 2.0 % in 2007. The IT market will grow at a slower rate than in other European countries: in 2006, IT spending was at 1.5 %, with a 2.1 % increase expected in 2007. The telecommunications mar-ket registered a total growth of 2.1 % in 2006 and will record a lower but still positive growth of 1.9 % in 2007.

ICT equipment

– Computer hardware continues to be one of the market segments that will sustain growth of ICT spending over the forecast period.

– The computer hardware market will be driven essentially by continuing replacement cycles of desktop computers and a boom-ing demand for PC notebooks. However, the servers segment decreased considerably with only volume servers marking a very modest positive growth in 2006. This declining trend is expected to continue in 2007.

– The market for telecommunications equip-ment will continue to experience a positive growth thanks to moderate demand for mobile telecom sets, Internet Protocol (IP) PBX, and other datacom hardware.

Software

– Software market demand continued to climb in 2006 and is expected to repeat its good per-formance in 2007 due to increased require-ments for infrastructure upgrades and con-tent management and Business Intelligence (BI) packaged software, which will produce a positive development in applications soft-ware.

Figure 9Italy ICT market, 2005–2008, € billion

2005

160.0

140.0

80.0

60.0

40.0

20.0

02006 2007 2008

69.1 70.4 71.8 73.2

2.7

1.9 2.0 2.0

120.0

100.0

10.0

8.0

4.0

3.0

2.0

1.0

0.0

9.0

7.0

6.0

5.0


Growth rate ICT (%)

53


– High demand in security will be responsible for sustained growth in system infrastructure software and application and deployment software, contributing to the overall positive dynamics of software demand in the Italian market.

IT services

– In IT services, the market remained quite f lat in 2006 with a minor increase in 2007 thanks to an expected take-off of outsourc-ing services, as Italian companies (especially those with a high international dependency, such as automotive, machinery, engineering textile and furniture) seek to cut costs and catch up with other big EU economies.

– Reforms in business processes among Italian firms are very necessary and, notwithstand-ing the traditional cautiousness of Italian entrepreneurs towards outsourcing services, the country seems to have finally embraced this policy with conviction.

Carrier services

– Much in accordance with most of its Euro-pean counterparts, Italy’s fixed voice serv-ices continued to decline in 2006 and are not expected to reverse this trend in the follow-ing years.

– Fixed-data services will show a noticeable vitality throughout the forecast period, with optical fibre infrastructure deployment pro-gressing rapidly across the country.

– The rise of broadband subscribers in Italy continues unabated and Telecom Italia (the Italian incumbent) enjoys one of the largest market shares among the European incum-bents in their respective countries.

– Since the opening up of 3G networks in the first half of 2006, the Italian mobile market retains all its energy and dynamism, showing positive growth in both 2006 and 2007. The number of active UMTS lines in the country reached 17.3 million in 2006 and is projected to reach an impressive 24.5 million in 2007. Meanwhile, TIM pursues the deployment of HSDPA services thus sustaining the market for telecommunication equipment.

Figure 10Italy ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

1.1

1.5

2.0

1.7

1.3

1.3

4.3

6.0

1.9

2.9

2.0

1.5

2007/06

2008/07

0.5

0.0 1.0 2.0 3.0 4.0 6.0 8.0 10.09.07.05.0

0.7

0.7

0.8

54


2.4. Spain

Spain’s economic activity will continue above average growth over the forecast period. The Spanish economy will continue to be driven by healthy levels of domestic demand and private consumption, expanding business investment in industrial plants and equipment, and export recovery. All in all, notwithstanding risk fac-tors such as heavily indebted consumers, fall-ing property prices and a slowdown in sectors like construction, Spanish GDP will increase by 3.7 % in 2006 and by 3.3 % in 2007.

The Spanish ICT market recorded a growth of 4.6 % in 2006 – the highest in Europe – and is set to increase by 3.1 % in 2007. IT spending increased by 6.2 % in 2006 and is set to grow at the same pace in 2007, fuelled by high house-hold consumption in the consumer market and by government and enterprises investments in the business sector. The telecommunications market grew by 4.0 % in 2006 and is anticipated to be up a further 1.7 % in 2007.

ICT equipment

– In the computer hardware market, after an exceptional 2005, 2006 and 2007 will also record robust growth. Notebooks will consti-tute the great bulk of hardware purchases.

– Demand for printers and Multi-Function Peripherals (MFPs) will register a decreas-ing, although positive, growth. Equally, desk-top PCs and servers will continue to grow in the forecast period, although the latter will record a much more modest increase in demand, with only volume servers leading the way in this segment.

– The market for end-user communications equipment remained f lat in 2006 but is anticipated to rebound in 2007 due to a solid increase in consumer spending on mobile phones.

– In the network equipment area, growth in 2005 and 2006 was driven by buoyant invest-ment in network equipment for mobile com-munications. More moderate growth in this area will be responsible for a weaker per-formance of the overall network equipment market over the forecast period.

Software

– Healthy growth is expected in software, where demand for system infrastructure and application and deployment software is pro-jected to increase over the forecast period.

– Application software, as in other European countries, will also account for a considerable share of growth in the sector, although this positive trend is expected to lose momentum in the coming years.

Figure 11Spain ICT market, 2005–2008, € billion

2005

160.0

140.0

80.0

60.0

40.0

20.0

02006 2007 2008

43.045.0 46.4 47.6

7.1

4.6

3.1

2.7

120.0

100.0

10.0

8.0

4.0

3.0

2.0

1.0

0.0

9.0

7.0

6.0

5.0


Growth rate ICT (%)

55


IT services

– IT services spending will remain substan-tially unchanged and will continue to grow steadily in both 2006 and 2007.

– The relative lack of competitiveness of Span-ish companies is indicative – among other causes – of an inappropriate use of internal and external resources. For this reason, IT services in areas such as implementation, planning, support and operations are all exhibiting buoyant trends in Spain over the forecast period.

– As in the other major European countries, the outsourcing market will be a driver of growth. To a large extent outsourcing will be realised nearshore – where large compa-nies relocate their processes out of their own country but inside a lower-cost country in the EU.

Carrier services

– Demand for fixed voice telecommunications services will continue to fall steadily, while a positive impetus will come from fixed data services where broadband adoption is expanding rapidly and is expected to con-tinue this trend in the following years.

– In line with most of its European counter-parts, the Spanish mobile market showed a considerable vitality in 2006, which will be confirmed in 2007 as well.

– All three of Spain’s mobile operators (Movi-star, Orange and Vodafone) have already launched 3G services and subsequent HSDPA enhancements, and are battling aggressively over wireless data services to reinforce their marketing and communication strategies and increase customer loyalty.

– The launch of new data services such as mobile number portability and the offering of subsidised new handsets with advanced technical features and inexpensive bundles of voice calls and text messages are likely to exacerbate price plans and promotions poli-cies in the Spanish market.

Figure 12Spain ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

0.0 1.0 2.0 3.0 4.0 6.0 8.0 10.0

2.7

4.7

4.4

3.6

2.6

2.2

3.0

3.6

7.0

7.1

9.2

8.7

1.5

2007/06

2008/07

0.3

9.07.05.0

0.3

0.6

56


2.5. United Kingdom

The UK economy remains remarkably resil-ient despite the consumer boom that sustained GDP growth over the last decade now coming to an end. Real GDP expanded by 2.6 % in 2006 and growth is forecast to remain stable in 2007 (2.6 %). The pattern of economic growth will be quite different to most of the past few years, however, with moderate growth in domestic demand, allied to slightly stronger demand in key EU export markets. This will contribute to a gradual rebalancing in the UK economy from internal demand to external demand.

The ICT market recorded a growth of 3.1 % in 2006 and is expected to reach a growth of 2.9 % in 2007. As public investment is contracting, the IT market remains highly dependent on healthy household demand and a dynamic service sec-tor. As a consequence, total IT spending in the UK grew by 3.6 % in 2006 and will expand in 2007 by a further 5.0 %. The telecommunication market reached a growth of 2.6 % in 2006 and is expected to increase by a further 0.5 % 2007.

ICT equipment

– The market value for PCs continues to dimin-ish in the forecast period due to continuously falling prices. Aggressive pricing strategies deployed by most top-tier vendors, together with a reinvigorated interest in renewals and mobility, will effectively sustain the demand for laptop computers, for which the market value will continue to decline but volume growth will remain strong.

– Infrastructure upgrades and server/storage consolidation, will not be sufficient to reverse the negative trend which is currently affect-ing UK storage and systems segments where only mid-range servers will show a certain vitality in 2006 and 2007.

– Due to a strong increase in the mobile hand-set market, the market for end-user commu-nications equipment showed almost double-digit growth in 2006. It will remain rather f lat, however, over the forecast period.

– Total network equipment spending in the UK is expected to show stable growth in 2006 and 2007, sustained by investment related to operators’ introduction of new services.

Software

– The software market will continue to record significant growth over the forecast period. As security remains one of the top priori-ties of Chief Information Officers (CIOs) in the UK, system infrastructure software will

Figure 13United Kingdom ICT market, 2005–2008, € billion

2005

160.0

140.0

80.0

60.0

40.0

20.0

02006 2007 2008

120.0123.7

127.3130.8

4.4

3.1 2.9 2.8

120.0

100.0

10.0

8.0

4.0

3.0

2.0

1.0

0.0

9.0

7.0

6.0

5.0


Growth rate ICT (%)

57


record double-digit growth and the applica-tion market will also achieve a sustained growth thanks to higher demand in content, collaborative, Enterprise Resource Manage-ment (ERM), and Customer Relationship Management (CRM) application software.

– The current focus on Business Intelligence, information access and delivery solutions displayed by UK enterprises ensures posi-tive developments in the area of application development and deployment for both 2006 and 2007.

IT services

– The IT services market will continue to grow at a solid rate in 2007 and beyond, even though at a slower pace than in the past few years.

– Although rather mature, the UK will remain the most dynamic and advanced outsourcing market in Europe with companies struggling with issues like cost control, increasing busi-ness demand (especially in large enterprises) and short Return on Investments (ROI).

Carrier services

– Fixed voice services will continue to decline steadily in the UK as opposed to fixed data services, which will portray a considerable vitality throughout the forecast period.

– Fuelled by improved functionalities and per-formance, wider choice and falling prices, broadband Internet connections are expect-ed to increase beyond the threshold of 11 million (according to COCOM data the number of broadband Internet connections at the beginning of July 2006 was 11,622,929), marking considerable expansion in the home and small business markets.

– Converged services including IPTV, televi-sion to mobile devices, and Voice over IP (VoIP) offerings are also rapidly becoming widespread, thus effectively sustaining the total spending in data services in the coun-try.

– The mobile market demonstrated a substan-tial vitality in 2006, with mobile call volumes and revenues rapidly increasing year on year. The take-up of digital services continued to increase and 3G mobile services are now available to over 90 % of the population, with all three major operators active in this area. Moreover, operators continue to focus on new mobile products and services thus rein-forcing their offerings in the field of fixed-mobile convergence, tariffs and pricing and new value-added services for both business and consumer customers.

Figure 14United Kingdom ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

–2.0 2.0 4.0 6.0 8.0 10.0

2.5

3.5

1.2

0.9

2.4

2.0

2.1

2.5

7.4

7.1

5.6

5.2

2007/06

2008/07

–0.2

0.5

0.4

0.3

0.0

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2.6 Czech Republic

Czech economic performance in 2006 remained healthy despite the political stalemate following elections in June. GDP growth was 4.2 % in 2006 and is expected to be 4.1 % in 2007. Exports grew at a double-digit rate in 2006 and the level of unemployment continues on a down-ward trend.

The ICT market registered an impressive 9.2 % growth in 2006 and a growth rate of 8.4 % is expected for 2007. IT spending increased by 10.6 % in 2006 which represented a modest slow-down from the previous year and ref lected a weakening of both the software and IT services markets. Overall IT market growth will remain above 10 % in 2007. The telecommunications market grew by 8.2 % in 2006, continuing a trend of falling growth that is expected to continue in 2007.

ICT equipment

– The PC market continues to be characterised by a shift from desktop to notebook sales. Shipments of desktops barely increased dur-ing 2006 due to a lack of large deals and the increasing demand for portable PCs.

– Falling prices helped to stimulate significant growth in shipments of notebooks. Strong demand from Small and Medium Enterpris-es (SMEs) for volume servers contributed to a newly buoyant server market.

Software

– The software market grew by 14.1 % in 2006. This represents a slowdown after tremendous growth in the previous year, but still places software as the fastest growing sector of the IT market.

Figure 15Czech Republic ICT market, 2005–2008, € billion

2005

20.0

16.0

8.0

6.0

4.0

2.0

02006 2007 2008

6.36.9

8.4

6.4

12.5

9.2 7.58.0

12.0

10.0

25.0

15.0

0.0

20.0

10.0

5.0

18.0

14.0


Growth rate ICT (%)

59


– One of the main engines of growth is increased spending by mid-sized companies, and more progressive small enterprises, as they turn to more sophisticated IT solutions in order to maintain a competitive advan-tage.

– The strength of the Czech manufacturing sector continues to drive spending on ERM upgrades, operational and manufacturing applications and Supply Chain Management (SCM).

IT services

– The IT services market expanded by 10.0 % in 2006, driven by such factors as an increas-ing number of outsourcing contracts and increased spending by the public sector as EU structural funds are accessed.

– The single largest market segment contin-ues to be hardware support and installation. There is, however, an ongoing shift towards application-centric services.

Carrier services

– As in other Central European countries, the fixed voice telephony services market expe-rienced a marked contraction as some users gave up their fixed connections entirely, while residential subscribers overall turned increasingly to the mobile networks for mak-ing voice calls.

– Spending on mobile telephone services grew in double digits as mobile penetration increased towards 120 % and as users increas-ingly migrated to contract subscriptions.

Figure 16Czech Republic ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

0.0 3.0 6.0 9.0 12.0

12.8

8.8

16.6

4.2

2.1

2.2

10.0

5.6

10.2

10.4

9.8

9.8

6.7

5.0

2007/06

2008/07

1.2

18.015.0 24.021.0

0.2

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2.7. Hungary

The Hungarian economy is expanding at a slower rate than the other New Member States. Economic growth is set to be 3.9 % in 2006, which nevertheless significantly exceeds the EU average. Export growth remains strong, but domestic demand has weakened following gov-ernment measures to tackle the country’s high budget deficit.

The ICT market grew by a modest 5.4 % in 2006 and is anticipated to grow at a marginally lower rate of 5.0 % in 2007. IT spending grew by 5.6 % in 2006, the lowest of all the New Mem-ber States. Spending in the government sector remains especially weak. The market is expected to regain momentum in 2007 to record growth of 7.2 %. The telecommunications market regis-tered a 5.2 % growth in 2006, a slight increase from the previous year.

ICT equipment

– The computer hardware market grew by a modest 2.5 % in 2006. The value of the PC market stagnated despite a rise in shipments. A shift in the market towards lower-priced models was partly a result of increased demand from SMEs stimulated by EU struc-tural funding.

– A notable feature of the market in 2006 was a shift from desktop to notebook sales. A dynamic expansion in shipments of note-books ref lected increasing sales to both con-sumers and SMEs as models with attractive price/performance ratios entered the retail and dealer channels.

– The market for computer peripherals grew fairly strongly due to increasing demand among consumers.

– Spending on mobile telephone sets increased in double digits due to strong replacement sales.

Figure 17Hungary ICT market, 2005–2008, € billion

2005

20.0

16.0

8.0

6.0

4.0

2.0

02006 2007 2008

5.86.1

5.04.4

5.85.4

6.46.7

12.0

10.0

25.0

15.0

0.0

20.0

10.0

5.0

18.0

14.0


Growth rate ICT (%)

61


Software

– The software market expanded by 7.8 % in 2006, showing little deviation from long-term growth trends. The fastest growing segments of the market are security software, Business Intelligence, data management applications, and Enterprise Resource Planning (ERP) solutions for mid-sized companies.

– Access to EU structural funds has fuelled demand for application software among SMEs and has also contributed to increased software spending by elements of the public sector.

IT services

– Spending on IT services grew by 7.5 % in 2006, representing a slight slowdown in the market compared to the previous year. One of the key emerging trends partly driven by an increasing focus on Return on Investment, is for companies to replace larger projects with a series of smaller and more f lexible projects, each of which is offered to tender separately.

– A high-growth segment of the market is in providing solutions that deliver rapid ROI, often through improving the cost efficiency of existing IT systems. A related trend is a renewed interest in infrastructure services as expanding financial services, telecommuni-cations and business services companies, as well as larger SMEs, aim to improve the effi-ciency of existing infrastructure.

Carrier services

– The value of the fixed voice telephone serv-ices segment declined steeply as both con-nection numbers and traffic continue to fall, but was compensated by increased growth in data communications and mobile telephone services.

Figure 18Hungary ICT market by segment, 2007–2008, growth in %

Computer hardware

Carrier services


equipment

Off ice equipment

Total ICT equipment

Software products

IT services

Datacom and network

equipment

–3.0 3.0 6.0 9.0 12.0

5.9

6.2

8.4

6.4

3.1

5.4

4.2

8.6

8.9

8.5

9.2

3.8

2007/06

2008/07

0.6

18.015.0 24.021.0

–0.1

0.0

2.8

2.0

62


2.8. Poland

Economic growth in Poland was 4.4 % in 2006. Inf lation remains low and the rate of unemployment continues to fall. In 2006, for-eign direct investment reached its highest level for several years.

The ICT market reached a growth of 10.3 % in 2006, but is expected to expand by only 7.7 % in 2007. The IT market is one of the fastest growing in the EU. Growth in 2006 of 14.0 % was ref lected across all sectors of the market. An increase of 9.9 % is expected for 2007. The tele-communications market grew by 8.5 % in 2006.

ICT equipment

– Sales of computer hardware grew by 15.3 % in 2006. This represented a marked slowdown from the previous year, but is still one of the highest rates of growth in Europe.

– Shipments of PCs expanded by 23 %. The desktop market was enhanced by large projects in the government, financial servic-es and telecommunications sectors. Demand from consumers and small businesses fuelled strong growth in sales of notebooks.

– The server market increased by a modest 5.6 % in value, although shipments grew at twice that rate.

Software

– The software market in Poland expanded by 14.7 % in 2006 and is expected to continue at this rate of growth in 2007. Strong growth in sales of enterprise application software was evident both among very large enterprises and in the mid-market.

– Many larger companies in Poland have had Enterprise Research Management modules in place for some time and are now looking at other functionalities essential for further business development.

– Demand for new implementations is being driven by greenfield investments and by mergers between state-owned corporations. The Polish manufacturing sector is a major contributor to increased spending in this segment. Faced with increasing competition, larger manufacturers are turning to more advanced software solutions in the areas of production, supply chain, mobile infrastruc-ture and business intelligence. Meanwhile, mid-sized and small manufacturers are replacing discrete off-the-shelf products with basic Enterprise Resource Planning (ERP) suites.

Figure 19Poland ICT market, 2005–2008, € billion

2005

20.0

16.0

8.0

6.0

4.0

2.0

02006 2007 2008

14.4

15.9

7.77.0

14.9

10.3

17.1

18.3

12.0

10.0

25.0

15.0

0.0

20.0

10.0

5.0

18.0

14.0


Growth rate ICT (%)

63


– More generally, high levels of investmentamong large companies and public-sectororganisations in upgrading their IT infra-structure are driving increased spending inareas such as IT security, andnetwork andsystemsmanagement.

IT services

– SpendingonITservicesisgrowingdynami-cally.Thefinancialservices,telecommunica-tions and government sectors are themostactivecustomersforITservicesproviders.

– Financialinstitutionsareinvestingintoolstoaddress securityandmanagedata, spurringdemand for data processing services. Theyarealsoincreasinglyinterestedinfront-officesystems, with investments in implementingCRMande-banking.

– GovernmentsectorspendingisbeingdrivenbyongoingreformsandaccesstoEUstruc-tural funds.Witha focusoftenonexpand-ingtheirbasicITinfrastructure,governmentinstitutionsarenowmajorusersofhardwaresupportandinstallationandnetworkintegra-tionservices.

– TheSMEmarketforITservicesisbeginningtodevelopasaresultofvendors’initiativestoofferproductsandservicesdesignedforthiscustomersegment.

Carrier services

– Despite relatively low mobile penetration,mobilesubstitutionoffixedtrafficisbegin-ningtooccurandhencethemarketshowedasimilarpatterntootherCentralEuropeancountries in that fixed voice services con-tractedinvalue.

– Spendingonmobilevoiceservicesincreasedby over 17% in 2006. Subscriber numberscontinue to increase, with faster growth inpre-paid subscribers indicating the relativeimmaturityofthemarket.Besidessubscrip-tion fees, increased spending is also beingdrivenbyShortMessageService(SMS)and,increasingly,mobiledataservices.

Figure 20Poland ICT market by segment, 2007–2008, growth in %

Computerhardware

Carrierservices

End-usercommunications

equipment

Off iceequipment

TotalICTequipment

Softwareproducts

ITservices

Datacomandnetwork

equipment

–3.0 3.0 6.0 9.0 12.0

5.2

6.9

6.3

6.2

3.1

4.7

4.7

14.5

11.3

16.1

16.3

7.3

6.0

2007/06

2008/07

–1.9

18.015.0 24.021.00.0

0.6

–0.6

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2.9. Other countries

IT spending will be particularly strong in Greece, Ireland and the Netherlands where growth rates for 2006 and 2007 will all be well above 4.5 %. In these countries demand will be mainly driven by software products and IT serv-ices, with computer hardware continuing to play a less significant but impacting role, especially in the area of MFPs and notebooks. With respect to 2005, the IT market in the Nordic countries will suffer a moderate slowdown in 2006 with Finland and Norway showing a positive growth of 3.5 %, followed by a 2.8 % growth in Denmark and 2.7 % in Sweden. This negative trend is like-ly to be confirmed in 2007 for Finland, Norway and Denmark although Sweden will improve its overall IT market performance in 2007. A sus-tained growth in the software sector and the IT services will in fact account for an overall 3.1 % growth in Sweden for the year 2007.

In the telecommunications market, Greece, Switzerland, and Sweden will lead the way in Europe thanks in particular to buoyant fixed data services demand in both 2006 and 2007. The overall picture, however, will be less positive than in 2005 with countries like Ireland, Greece, the Netherlands, Denmark and Finland all pre-senting declining growth rates in telecommuni-cation demand over the forecast period.

The IT markets in all three of the Baltic States displayed reduced growth in 2006 com-pared to the previous year. The least mature of the three markets, Lithuania, continued to see double-digit growth in spending on IT due to sustained investment in basic IT infrastruc-ture. In contrast, the Estonian IT market grew by only 5.8 %, in part due to a slow-down in PC shipments. Latvia, meanwhile, was notable for the 10.1 % growth in its telecommunications market driven by increased spending on mobile services.

The Slovakian IT market saw robust growth of 11.4 % in 2006, and a similar rate is anticipated for 2007. The software and IT services sectors expanded most, but the value of PC sales also increased by over 10 %. Slovakia has now expe-rienced two years of substantial foreign direct investment, which has led to strong spending on IT in the manufacturing sector.

The Slovenian IT market grew by 5.9 % in 2006 and is set for an even more modest 5.0 % growth in 2007. The software sector is relatively strong with double-digit growth in both years. Growth in spending on telecommunications was weakened by a poorly-performing mobile serv-ices sector.

In the final phases of preparation for acces-sion to the EU, the IT markets of Bulgaria and Romania displayed very different dynamics. The Bulgarian IT market grew by only 6.2 % in 2006, following a tremendous expansion in the pre-vious year. Software was the only high growth area, as a slowing market for computer hardware also affected an IT services sector that is still reliant on basic infrastructure services. Spend-ing on telecommunications grew by 8.8 % with a rapidly growing mobile services sector balanced by a major fall in fixed telephone services. In contrast, the Romanian IT market grew by 19.0 % overall in 2006, with the strongest sector being computer hardware. Continued govern-ment reform efforts, privatisation in the energy sector, high levels of foreign direct investment and economic growth exceeding 6 % all contrib-uted to substantially increased spending on IT. The telecommunications market grew by 14.5 % as a large increase in the number of subscribers boosted spending on mobile services.

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3. ICT trends by product segment

3.1. Computer hardware

Overall, Europe’s computer hardware sector suffered a setback in 2006 (–1.1 %) due to par-ticularly sluggish market demand in desktop PCs and servers systems. However, positive growth is expected to resume in the coming year with printers, multifunction peripherals and notebook PCs accounting for a general recovery of the market in 2007 (1.3 %). The negative per-formance of Europe’s PC market will be charac-terised by declining sales values of desktop PCs, with shipments decelerating less rapidly than sales values thanks to stronger than anticipated corporate demand, especially in SMEs.

Notwithstanding a limited increase in ship-ments, the European server market declined slightly in terms of revenue during 2006. A nar-row recovery is expected in 2007 thanks to the positive developments of volume servers and – to a lesser extent – of mid-range servers, which will benefit from revitalised sales cycles and improved price/performance offerings across all major European economies. The market pref-erence for volume servers will continue to be ref lected in high sales levels for blades, which are becoming more and more attractive to SMEs thanks to reduced prices and enhanced scalabil-ity features. As European IT departments contin-ue their cost-cutting exercises, Windows servers and Linux servers will maintain their position in the market thus eroding the market share of Unix and NetWare servers. Linux is expected to gain more traction in commercial applications and EPIC alternative operating systems, whereas Windows is anticipated to pick up speed again in 2007, as a new version will hit the market and virtualisation and multicore processes will reach mass-market adoption.

European firms remain cautious in evaluat-ing any changes in IT infrastructure. However, improving price/performance ratios will not be the only drivers behind the server markets. Other factors need to be taken into account such as:

– European companies, and especially SMEs, increasingly need to install applications more quickly and optimise their f loor space;

– the increasing tendency for companies to build clusters of two-way servers instead of purchasing high-end symmetric multiproc-essing servers;

– technical advances in chips and significant improvements in virtualisation processes, which make customers translate an increas-ing number of business-critical applications from high-end to mid-range and volume servers. The spectacular migration from the x86-32 to the 64-bit space, which has char-acterised these last few years, is part of this process.

The positive performance of the European PC market suffered an arrest in 2006, with a negative growth of –2.3 %. In 2007, however, the market will regain a certain degree of vitality to show a limited but positive growth of 0.9 %. In the desktop PC segment, the trends that pre-vailed during 2005 – slow consumer and corpo-rate replacement activity – will continue to con-strain overall sales. However, a strong demand in a buoyant notebook segment, will continue to sustain the overall PC market in 2007.

66


Figure 21EU ICT market value growth by product segments in %, 2006–2007

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

–1.0

–2.0Computer hardware

Total ICTEnd-user communications

equipment

Off ice equipment

Software Services Carrier services

2007/2006

2006/2005


3.8

2.9

6.3

5.5

3.5

4.2

2.9

2.3

5.3

6.3

2.7

–1.0

3.9

1.71.4

2.7

Figure 22EU 15 plus Norway and Switzerland personal computer market, unit shipments, 2004–2006

40,000,000

35,000,000

30,000,000

25,000,000

20,000,000

15,000,000

10,000,000

5,000,000

02004 2005 2006

PowerPCOthers8th Generation (IA–64)7th Generation < 1 GHz

7th Generation ≥ 1 GHz6th Generation < 1 GHz6th Generation ≥ 1 GHz

67


Desktop systems will not disappear in the near future. The following trends will still act as powerful drivers in the European PC market:

– Regional diversity: Europe continues to por-tray a rather regionally diverse picture, with countries like Belgium, Spain and Greece still enjoying positive demand thanks to a dynamic retail sector, and countries like Germany or the Nordic declining rapidly because of a sharp decrease in consumer and business demand.

– Healthier than anticipated trends of some PC manufacturers in mature markets like France and the UK. Increasing market share of IT vendors will continue to offset the shrinking demand for desktop PCs in these countries.

– Greater focus of European enterprises on issues like security, manageability and ease of deployment. Desktops still appear better suited than notebooks to fulfil these needs, and demand from the business sector will benefit accordingly.

Following a temporary slowdown during the World Cup of 2006 – where growing popularity of set-top boxes, Liquid Crystal Display (LCD) TVs, and other consumer electronics devices par-tially diverted consumers’ attention away from portable computers – demand for notebooks will remain high thanks to increasing portable adop-tion trends, improved performance and capabili-ties, and diminishing consumer prices. In line with previous years, the market for laptop com-puters will continue to expand at the expense of the market for desktop computers thanks to buoyant SME sales in the business sector and a better retail environment in the consumer space.

Until it becomes possible to sell printers for PC-independent devices, the overall printer mar-ket remains very much tied to the discontinuous behaviour of the PC market. Demand for printers in Europe is expected to shrink in 2006 and 2007 in favour of multifunction peripheral products. It is fair to notice, however, that the segment will continue to benefit from a healthy level of sales of colour page printers, which will impact nega-tively on the monochrome laser printers market. This is not expected to decline rapidly, however, as monochrome will continue to be the most widespread type of laser printer in the office in the coming years. Also, more and more vendors in Europe are constantly introducing faster mon-ochrome models with higher specifications and lower prices together with innovative technology such as wireless printing solutions. Moreover, it needs to be taken into account that, although colour printers are more attractive thanks to reduced prices and improved functionalities, the incremental price of printing in colour and the inevitably higher acquisition cost of colour page printers will hinder their march towards the full replacement of monochrome products.

On the other hand, the Multi-Function Peripherals (MFPs) market continues its trium-phant march across Europe, increasing its share in both shipments and value in the years 2006 and 2007. As in the past, significant differences within the market need to be highlighted. Tradi-tionally, the home market will continue to domi-nate MFP demand in Europe with colour inkjet devices registering double-digit growth rates in the forecast period. In contrast, the business sec-tor will continue to purchase inkjet monochrome products especially in the small office sector. In general, colour laser MFPs will continue to grow significantly but their market share will continue to represent a relatively limited part of the over-all MFP sector.

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The unstoppable decline in value and ship-ments of traditional workstations will character-ise the other computer hardware sector over the forecast period. The segment will continue to show a certain degree of vitality in the areas of PC additions and accessories, where f lat-screen monitors, wireless mouse and keyboards, and memory card readers will attract the consumer market in the foreseeable future.

3.2. End-user communications equipment

End-user communications equipment is fore-cast to show modest growth through 2006 and 2007. In particular the market grew by 2.7 % in 2006 and will show an increase of 2.0 % in 2007.

3.3. Telephone sets and other terminal equipment

The market for telephone sets in Europe is mature and therefore decreasing slowly. In 2006 growth over the previous year was negative (–1.3 %) and a similar reduction will characterise the coming year (–1.2 %).

Although this negative trend is expected to continue, replacement cycles will continue to gen-erate some demand. Telephone manufacturers are expected to continue to add new and more appealing features in order to increase the speed of replacement of older devices. In addition demand for VoIP telephone sets is increasing: Telephone manufacturers are launching on the market not only Universal Serial Bus (USB) VoIP telephones but also home handsets that can be used both as a VoIP phone and as a traditional phone. The value proposition is to enable users to call with the same device via the standard telephone connection or to make calls over the Internet.

3.4. Mobile telephone sets

The total European mobile phone market is experiencing good growth. The market contin-ues to profit from intensification in competition in the high-end feature phone segment due to the proliferation of media, specifically, imaging- and music-oriented handsets in highly innova-tive form factors that have served to maintain healthy renewal cycles. Global System for Mobile communication (GSM)-only is rapidly being replaced as a technology for entry-level hand-sets by EDGE and the proportion of handsets using Wideband Code Division Multiple Access (WCDMA) is growing substantially. The uptake of 3G services and the rollout of HSDPA infra-structures across Europe is continuing to gain ground although not at an exceptionally high rate. The converged device (smartphones and wireless handhelds) market is enjoying healthy sales volumes thanks to a wider range of avail-able handsets, price reductions, and aggressive promotional activity.

3.5. Office equipment

The European office equipment market is forecast to show very modest growth throughout 2006 and 2007. In particular the market grew by 1.5 % in 2006 and is expected to show a limited growth of by 1.0 % in 2007.

The copiers market is continuing to behave as a mature market with a growth rate of 1.7 % in 2006 and a projected growth of 1.4 % in 2007. In this context, colour laser copiers are gain-ing increasing importance together with mono-chrome laser copiers, while copiers based on col-our inkjet technology are rapidly losing ground. The process of digitalisation, which started a few

69


years ago and continues to add functionalities to copier machines, continues its unstoppable march, thus impacting negatively on demand for traditional printers and scanners. For these rea-sons, the office equipment sector in Europe is expected to continue its decline throughout the forecast period.

3.6. Datacom and network equipment

The market for datacom and network equip-ment is going to show quite modest growth. In 2006 datacom increased by 2.6 % and in 2007 growth will be even slower (2.4 %). In spite of this, continuously rising demand for connectiv-ity, particularly from the Small Office Home Office (SOHO) market, and the increasing use of bandwidth will drive demand for broadband services. In addition large enterprises and serv-ice providers will continue to require additional capacity in the core of their networks and add-ed functionality at the edge of their networks. However, this is not going to create a high IT spending increase since fierce price competition will drive spending down in all segments of the European network equipment market.

3.7. PBX and key systems

With the increasing adoption of voice-data convergence, companies tend to migrate to IP telephony. Therefore European organisations are increasingly replacing their traditional Time Division Multiplexing (TDM) PBX voice systems with IP-based PBX systems. This transition is fuelling demand for Local Area Network (LAN) switches that have layer 3 and Power over Ether-net (PoE) functionality. In particular SMEs are looking seriously at converged communications solutions due to the main attractiveness of VoIP:

the cost savings that this technology brings, that are achieved by converging separate voice and data networks onto a single IP network. Indeed IP telephony adoption is now highest among the medium and large company segments but is now gradually moving down to the SME seg-ment, thereby tapping into the great opportu-nity that this segment represents since the small company segment is the largest across Europe. An increase in competition, and the appearance of new products such as open source IP PBXs or Peer to Peer (P2P) IP PBXs are leading to decreasing prices of IP PBXs, which are in turn increasing the appeal of IP PBXs in the market, and especially in the price-sensitive SME seg-ment.

Meanwhile the European IP PBX market is also finding new drivers for growth that add up to the expectation of reduced costs. These are VoIP applications such as presence, instant mes-saging, unified messaging, and other collabo-ration-focused applications that are extremely appealing especially for those complex organisa-tions that need to manage an increasing number of geographies and business lines.

The United Kingdom currently is the largest country with regard to IP PBX revenue. Ger-many and France are second and third. In the medium term Germany will overtake the UK as the largest market in Europe.

Therefore the trend for 2006 and 2007 for PBX and key systems is going to be positive but not bright due to increased competition and pressure on prices.

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3.8. Packet switching and routing equipment

The packet switching and routing equipment market is going to be almost f lat in 2006 and 2007 due to the high maturity of the market, continuously increasing competitiveness and to the commoditisation of the sector.

Some growth in router revenues will be fuelled by continued strong demand for residen-tial routers while the enterprise router segments, mid-range, low-end and SOHO, are not going to show positive growth. The main reason for this is that demand for them from organisations has declined strongly in Europe, especially in Germany and Italy. Despite this, the high-end segment is expected to show some dynamism, as telecom operators gradually start to increase their capital expenditures fuelled by the fact that they need to expand their (core and edge) net-works to cope with increased demand for band-width. Demand in other router segments (mid-range, low-end, and SOHO) will be weak. In addition increasing competition will continue to affect these router segments negatively since the router market in Europe is becoming increas-ingly mature and commoditised. This trend is further strengthened by an increasing number of new vendors entering the router market who hope to win market share by offering more for less.

3.9. Transmission and switching

The transmission market is showing quite good growth trends. The bulk of this market is produced in the Metro Wavelength Division Multiplexing (WDM) and MultiService Provi-sioning Platform (MSPP) spaces, and the growth of WDM rings is the fastest growing portion

because of cost benefits at higher bandwidth rates, while the Synchronous Optical NET-work (SONET) / Synchronous Digital Hierarchy (SDH) portion of the ring market growth is slow-ing slightly.

Drivers for optical networking deployments are datacentre backup, storage and recovery systems, and site consolidation. Deployment of optical networks, once dominated by the finan-cial services companies, is now expanding to include major health institutions, state and local governments, and pharmaceutical companies. European regulation of the stock exchange is still pending, which could create new networks to interconnect these exchanges in the future.

3.10. Cellular mobile infrastructure

Cellular mobile infrastructure is going to experience quite good growth over the next two years thanks especially to the increasing demand for broadband and the rollout of UMTS by telecom operators, which creates demand for network equipment across major European countries. In 2006 the market for cellular mobile infrastructure grew by 2.9 % while this year growth is likely to slightly accelerate (4.1 %).

Demand for next generation WCDMA mobile network infrastructure will remain healthy in the long term, especially given the interest of corporate users and consumers in mobile solu-tions. The increasing awareness of the useful-ness of 3G applications and the wider range on offer coupled with better-suited and better-priced packages, in particular targeting enterprises, is expected to fuel growth. In contrast, spend-ing on legacy mobile infrastructure is expected to continue to decrease. In addition the GSM replacement market is also going to contribute to strong growth due to network modernisation in major countries.

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Currently, most European operators have complied with their licence requirements, and coverage (in particular in the most densely popu-lated cities) has been achieved. Nevertheless, the number of 3G customers remains limited and therefore demand for data-enabled applications remains low. Operators will invest further in 3G infrastructures as soon as they can achieve more return on investment and growth in 3G custom-ers. Competition in the network infrastructure market remains intense obliging operators to be cautious in new investments.

3.11. Other datacom and network equipment

In most European countries, broadband access has become a commodity service that is widely available and demand for broadband access in Europe will continue to grow strongly thus generating an increased number of connec-tions. Despite of this strong growth the average revenue per user for access will remain under pressure, as fierce competition continues. Indeed strong competition is generating more affordable pricing, higher speeds, and growing awareness among the businesses and consumers. These factors have made broadband access the main alternative for Internet access. In this context, operators will increasingly have to turn towards offering additional services that are enabled by broadband, such as voice and different types of video services. These services will increasingly become drivers for overall broadband penetra-tion.

Digital Subscriber Line’s (DSL) dominance in European broadband access networks has been increasing consistently over recent years. Supe-rior geographical coverage, the backing of major Internet Service Providers (ISPs) that promote the technology enthusiastically, and the benefit of economies of scale in marketing compared to cable operators, thanks to their broader cover-age, has resulted in a growing share for DSL.

The average speed per broadband connec-tion has been increasing substantially over the past few years. Enabled by network upgrades and forced by competitive pressure, most opera-tors have gone through multiple rounds of speed upgrades, typically without corresponding price increases. Many DSL operators have upgraded their networks to Asymmetric DSL2+ (ADSL2+) or are doing so, while cable operators have been making similar increases as the price per down-stream port has been driven down. There is also an increasing number of operators that “open up the pipe”, allowing an end user to have access to the technological maximum performance of the connection. While these factors still allow for further upgrades in the future, the average bandwidth will be driven further by substantial deployments of high-capacity services based on Very high data rate DSL2 (VDSL2), Data Over Cable Service Interface Specifications 3.0 (DOC-SIS 3.0) and fibre-based solutions.

Organisations across Europe are gradually shifting from 10/100 Mbps Fast Ethernet to 100/1,000 Mbps Gigabit Ethernet. The growth in the Gigabit Ethernet segment is at the expense of Fast Ethernet port shipments and revenues. This will have a positive effect on the European LAN switch forecast and is the reason why the strong growth in Gigabit Ethernet shipments is going to have only a limited impact on the total LAN switch forecast.

The strong growth in the Gigabit Ethernet segment is fuelled by three trends that are shap-ing the European LAN switch market:

– There are rapidly declining prices of Giga-bit Ethernet LAN switches, especially in the unmanaged Gigabit Ethernet segment.

– Increasingly organisations are using Gigabit Ethernet LAN switches for desktop connec-tivity and to interconnect servers in datacen-tres.

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– NetworkvendorsarecontinuouslyexpandingtheirGigabit Ethernet LAN switch productportfolio.

ThegrowthintheGigabitEthernetsegmentistoalargeextentattheexpenseofFastEther-netportshipmentsandrevenues.ThatiswhythestronggrowthinGigabitEthernetshipmentshasonlyalimitedimpactonthetotalLANswitchforecast.Anotherimportanttrendthatishavinga major impact on the European LAN switchmarket is that organisations across Europe arereplacingtheirtraditionalTDMPBXvoicesys-temswithIP-basedPBXtelephonesystems.

As a result of these trends, theother data-comandnetworkequipmentsegmentregistereda growth of 4.4% in 2006 and is projected togrowby3.0%in2007.

3.12. Software products

Forecasts for software spending are posi-tiveandcontinuetostaywellabovetheaveragerate for theoverall ITmarket. In 2006 growthfor softwareproductswasat 6.3%with systemsoftwarespendinggrowingevenfasterat6.6%,while spending forapplication softwarewillbecharacterised by a slightly lower growth rate(5.7% in 2006). In 2007 trends will be similarwith system software growing at a faster pacethanapplicationsoftware.

Within the application solution softwarearea,someneedsareattractingspecialattention.Inthiscontextthemostrelevanttrendsare:

– TheERPmarketisexpectedtoperformquitebrightlythroughout2006and2007.Vendorsareshowinggoodresultsachievedthankstocontinuous demand for both upgrades andnew installations. Growth is driven mainlyby investments from different product cat-egories such as financials, human capital

Adopting Planningduring2006

Planningduring2007

Planninglaterinthefuture

Noplans Don’tknow

Finance 23.2 6.3 0.1 1.0 34.6 34.9

Manufacturing 20.6 5.5 2.7 4.3 56.9 10.1

Healthcare 34.8 9.2 4.6 13.7 16.2 21.4

Transport/communications/utilities

33.7 8.7 3.9 8.6 28.2 17.0

Retail/wholesale 35.7 – 3.2 8.0 48.3 4.8

Businessservices 19.8 5.4 – 4.2 49.0 21.6

Education 29.7 17.0 – 11.3 42.0 –

Government 17.0 4.2 3.7 1.8 52.9 20.4

Total 26.6 6.2 2.6 6.5 43.3 14.9

Table 6 Adoption of Wi-Fi networks by vertical markets, EU 15 plus Norway and Switzerland, % of companies with more than 20 employees

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management and procurement while inhibi-tors reside in the weak performance of com-panies working in countries like Italy, where uncertainty continues to stop investments, and by consolidation among ERP solution vendors that are focusing on internal restruc-turing and offering positioning and integra-tion.

– Business Performance Management (BPM), collaboration and compliance are three areas in which companies are investing and will continue to launch initiatives in the short term. Investments related to compli-ance are non-discretional and often urgent: Today compliance needs to become an enterprise-wide pervasive concept. For this reason compliance investments are increas-ingly coupled with BPM and enterprise gov-ernance needs. In this context spending for analytics tools will show high growth rates as they represent the most important element in order to deploy data for both compliance and for performance monitoring issues.

– Collaborative applications are increasing in importance. Integrated collaborative envi-ronments as well as stand-alone collabora-tive applications will see growth in the areas of content management platforms, product information management, enterprise portals and operating environments.

– Supply Chain Management (SCM) will con-tinue to attract attention in the manufactur-ing sector.

– CRM is expected to attract special atten-tion especially in the banking and insurance industries where new delivery channels and a changed way of conducing business due to tighter competition require financial institu-tions to invest in more innovative solutions that can enable them to interact better with customers.

– Regulatory compliance will continue to be a notable IT investment catalyst. Attention will be especially high in manufacturing, health-care and financial services.

Key trends in the space of system software can be summarised as follows:

– Security is surely an issue under the spot-light. Terrorism and increasingly sophisti-cated phishing attacks are just two examples of open questions that companies need to address. Therefore modern infrastructure software, storage replication solutions, antivi-rus protection and firewalls will see notable demand.

– IT simplification and optimisation are rel-evant priorities especially for big companies. IT optimisation can lead to cost reduction through lower maintenance costs while sim-plification can signify better IT quality and can therefore lead to improved products and services, happier customers and increased revenues.

– Demand for Business Intelligence (BI) tools will show healthy growth. The BI software market is a maturing market but BI tools will increasingly find their way into midsize companies across the European marketplace. Vendors have started directing their mes-sages towards this segment and this trend is one of the main reasons for higher growth expectations. In addition we will see a shift from stand-alone BI solutions to embedding BI in all business processes. This focus on operational BI elevates the importance of BI to a must-have component of enterprisewide software architectures. Financial services, retail, discrete manufacturing, and govern-ment are the largest vertical markets for BI software solutions.

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– Investments in Services Oriented Architec-ture (SOA) are continuing to show healthy growth rates. There are many reasons driv-ing corporations in this direction. First of all the need to speed the development and deployment of new business solutions is an increasingly important issue. Moreover the aspect of improving the quality of IT systems is becoming more and more compelling. Companies also expect to achieve cost reduc-tions from deploying a SOA approach since SOA allows the possibility of reusing already owned assets, but SOA is surely much more than a cost-saving issue.

– Protection and management of data is a top concern for European organisations, and this is ref lected in continuous investment in stor-age software. While revenues in the storage hardware markets are stagnant, revenues in the storage software markets are increasing at double-digit growth rates. Today concepts such as business continuity and disaster recovery, regulatory and standards compli-ance, and information life-cycle management are business issues that matter to the leaders of European organisations. They therefore invest in this area. These business issues are reinforced by the more technical trends of archiving (which is important to cut storage costs and ensure compliance), continuous data protection (which is a vital part of busi-ness continuity and disaster recovery), and concern about the security of information assets. In this context the fastest growing sub-market is replication software. Due to its comparatively high price, use of replication software has been limited to disaster recov-ery of critical systems, but with the increas-ing adoption of low-cost hardware, applica-tion software will increasingly be used for backup and archive purposes.

3.13. IT services

IT services in Europe grew by a healthy 5.3 % in 2006. 2007 will see a similar growth with an increase of 5.5 %. Confidence has improved especially in project-related services markets such as systems integration, consulting, and custom application development. High growth areas include investments in SOA, infrastructure improvements, and application services. The European services market is highly competitive and therefore differentiation is key to growth. As companies shift focus from cost savings to busi-ness efficiency, they need to invest in integrating business and IT.

IT services spending is not expected to be homogeneous across European countries. In this context France is experiencing increased busi-ness optimism and willingness to invest in new solutions, while outsourcing is still limited. Spain is experiencing a similar situation, although out-sourcing expectations are higher. In the UK lower expectations for outsourcing growth are offset by higher expectations in project-related services.

Outsourcing remains the fastest growing market segment, despite a greater tendency towards smaller (narrower scope, lower-priced) and shorter deals. Outsourcing segments that drive overall market growth include Application Management (AM) outsourcing, Network and Desktop Outsourcing (NDOS), Information Sys-tem (IS) outsourcing and hosting infrastructure services. For AM, availability of cheap resources from offshore or global service providers has brought prices down to a level that makes appli-

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cation management competitive compared to internal resources. In this respect AM is simply a cost-saving and efficiency tool. But AM is also gaining strategic importance. Companies are wary of developing internal competence when they implement new solutions and prefer to out-source. For legacy applications AM is often seen as a step towards a legacy migration strategy. NDOS also shows robust growth: standardisa-tion, consolidation, and remote operation are key to this segment, and the pressure on prices is strong. The IS outsourcing segment, consisting of comprehensive outsourcing deals with a broad scope, continues to be the largest foundation market, growing at healthy rates thus remaining a primary driver of the total IT services market. Despite a multisourcing trend in outsourcing, many companies still prefer a strategic relation-ship with one supplier of outsourcing services. The midmarket is increasingly turning towards IS outsourcing and providing further growth in the segment. Price pressure is high, although not as tough as for NDOS, and growth rates remain high. However, countries that have seen fast growth in IS outsourcing for years, such as the UK and the Nordic, are already beginning to see lower growth rates than in the previous years. However, we expect to see increased growth in countries that have a low penetration of IS outsourcing, such as Germany and France, towards the end of the forecast period, offsetting the lower growth rates in the mature markets and ensuring continued healthy overall growth. Hosting infrastructure services, are also grow-ing in importance, particularly in the midmarket and public sector.

Consulting and system integration will continue their positive trend as a result of the focus on business efficiency. IT investments will involve all aspects of business in an organi-sation, with special attention to solutions that address the business agenda since companies are not only looking for a strictly technical IT solution.

Software as a Service (SaaS), which includes software on demand and hosted application management (hosted AM), is a means to supple-ment the functionality of existing applications. The SaaS sphere will gain momentum since it can offer increased f lexibility, providing both the chance to access business functions remotely and the possibility to leverage on pay-per-use pricing.

Offshore sourcing is gaining ground rapidly and it is more accepted in application services than in infrastructure services, but since large parts of infrastructure outsourcing can be off-shored, with time and increased experience on the part of vendors, and as customers become used to the fact that operations can take place remotely, also this area is expected to gain ground. Southern Europe is more reluctant to accept offshoring than northern Europe, but large and mid-sized companies from Southern European countries are also starting to take this opportunity. A good option is to employ the nearshore option first, because the cultural simi-larities will overcome many of the barriers. The right mix of onshore, nearshore and offshore locations will be critical, not only to enlarge the customer base but also to spread geographic risk and to leverage on different competences and time zones.

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3.14. Carrier services

Carrier services in Europe are expected to show a modest growth: 2006 saw a growth rate of 2.2 % that will further decrease in 2007 (1.4 %).

Overall broadband services in the fixed-line area will remain dynamic while data and value-added services will drive growth in the mobile sphere.

Figure 23 EU carrier services market value growth by service segments in %, 2006–2007

3.15. Fixed voice telephone services

The market for fixed-line voice services is in permanent decline. This trend is expected to continue through 2007. Growth was nega-tive in 2006 (–5.0 %) and in 2007 the decline will be –5.0 % again. Increasing competition and a continuing switch to IP and mobile networks is effectively reducing the revenues of European fixed-lines operators. The decline of traditional voice traffic is faster than the number of fixed lines being discontinued, as users tend to retain

10

8

6

4

2

0

–2

–4Fixed voice

telephone servicesFixed data services

Mobile telephone services

2006/2005

2007/2006

CaTV services

–2.5 –3.1

9.4

6.8

4.43.8

3.4

2.4

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their connections for broadband Internet access. In addition revenues are decreasing as f lat rate tariffs (irrespective of distance and time), and tighter regulation are reducing the cost per minute of traffic. In spite of this, fixed-voice services will continue to be a valuable source of revenue for operators, and we expect intense competition through aggressive pricing, innova-tive packaging, and new marketing initiatives.

Fixed-mobile substitution is a threat to tra-ditional voice services especially in the Nordic and the Netherlands, where the trend of house-holds exclusively using mobile voice services is increasing. VoIP services have the potential to compete with traditional telephony, but this is not likely to happen in the short term, while in the longer term it is expected to become a serious issue for traditional telecom operators. Initially provided as a niche product, IP voice is now in the portfolios of many ISPs, and is gradually being provided by incumbents.

Nevertheless, despite maturity and strong competition from mobile voice services and VoIP, fixed voice is showing impressive resilience by reinventing itself. New business models have arisen, as an attempt by incumbents to defend their core business or by alternative operators to challenge the incumbents’ market share.

Convergence is the driving force accelerating change in traditional telecoms services. Carriers (primarily incumbents) are devising new ways to retain customers and increase average revenue per user, in a context of increasing competition. Voice services are increasingly marketed in new pricing schemes, and often as an integrated com-ponent in triple- or quadruple-bundled offerings. Also, the up-selling of new services generates new market value that to a degree helps carriers offset declining revenues and customer churn.

3.16. Fixed data services

Within European telecom services, fixed data services continue to show positive growth. In 2006 growth was at a healthy rate of 8.5 %, while in 2007 it will be slightly lower (6.3 %).

In most European countries, broadband access has become a commodity service that is widely available. Demand for broadband access in Europe will continue to grow strongly. The average revenue per user for access will never-theless remain under pressure, as fierce com-petition continues. Operators will increasingly have to turn towards offering additional services that are enabled by broadband, such as voice and different types of video services. These serv-ices will increasingly become drivers for overall broadband penetration. In this multi-play envi-ronment, telecom operators will compete head to head to become the end user’s single provider for voice, video, and data services. Increasingly this bundle will also include mobile services. For years, broadband access has been synony-

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mous with high-speed Internet access. This has started to change, as operators are beginning to leverage the capacity that the high-speed access link provides. Voice over BroadBand (VoBB) and IPTV are rapidly becoming integral compo-nents of any operator’s portfolio, as broadband operators evolve into multi-play providers. The increasing success of VoIP is also stimulating spending in the fixed data service area.

3.17. Mobile telephone services

As more service providers focus on mobile-related business initiatives, and also expand into network-related IT services, the overall balance of the telecom services market will continue to shift during the next few years and almost half of all service provider revenue will be derived from mobile services. Mobile telephone serv-ices growth for 2006 and 2007 in Europe shows almost f lat rates for voice services, while data services are not yet really picking up. Voice rev-enues are kept down by new regulations that are putting increasing pressure on mobile opera-tors especially for prices of international roam-ing calls within the European Union. This will affect mobile operators in the near future, since international roaming calls today are highly profitable. Furthermore, regulatory authorities in Europe are also increasingly active on fixed-to-mobile termination charges and this will affect mobile operators’ revenues possibly even more than the pressure on international call charges.

As far as data services are concerned, inter-est is growing rapidly in some sectors. For example banks are investing more than in the past in mobile banking, since cheaper, advanced devices, faster and less extensive data connec-tions and the increasing demand to access bank-ing services independently of physical location are encouraging banks as well as customers towards a growing use of this channel. Another area in which a healthy trend is clearly visible is corporate mobile e-mail which is becoming widespread throughout Europe. Other sectors, such as transportation and logistics are bound to develop rapidly and adopt mobile applications in the near future.

In addition, 3G adoption is expected to increase due to improved coverage, more devices available on the market and the accessibility of an increasing number of related services such as streamed mobile TV. Roaming prices, however, remain high notwithstanding recent EU legisla-tive initiatives to reduce end users costs in this field.

Fixed-mobile convergence will continue to remain at the heart of the mobile tele-phone service market, although it is not yet recognised as good enough for mass adop-tion. Solutions that provide seamless hand-over of mobile calls between Wireless Fidelity (Wi-Fi) and GSM environments were launched by members of the Fixed Mobile Convergence Alliance (FMCA) late in 2005 and during 2006. Despite these promising developments, such solutions will not be widely adopted by business customers during 2007 as the tech-nology is still suffering from limited handset availability and there is not enough certainty yet whether such a solution is the right approach when compared with the various mobile VoIP and PBX solutions.

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4. Europe as a consumption area

4.1. ICT penetration

IT spending/GDPin %

IT spendingper capita

in €

Number ofPCs per 100population

Europe 2.76 634 31

EU 2.74 614 31

EU 15 2.75 747 35

Austria 2.81 826 41

Belgium/Luxembourg 2.82 813 36

Denmark 3.29 1,278 63

Finland 3.27 989 50

France 3.11 888 39

Germany 2.93 797 43

Greece 1.12 190 16

Ireland 1.55 630 40

Italy 1.75 430 26

Netherlands 3.30 1,027 54

Norway 2.52 1,320 67

Portugal 1.81 264 21

Spain 1.42 326 24

Sweden 3.85 1,246 67

Switzerland 3.74 1,508 80

UK 3.57 1,070 50

Bulgaria 1.95 54 7

Czech Republic 3.01 257 20

Estonia 2.88 171 –

Hungary 2.45 192 15

Latvia 2.29 102 –

Lithuania 1.66 86 –

Poland 2.36 122 14

Romania 1.90 46 7

Slovakia 2.34 149 14

Slovenia 2.14 297 29

US 3.28 1,118 87

Japan 3.47 999 50

Source: EITO, IDC, OECD

Table 7IT penetration by country, 2005

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Figure 24 IT spending/GDP in Europe, the US and Japan in %, 2005

Figure 25 IT spending per capita in Europe, the US and Japan in €, 2005

2,000

1,500

1,000

500

0

634

614 74

7 826

813

1,27

898

988

879

719

063

043

01,

027

1,32

0

264 326

1,24

61,

508

1,07

054

257

171

192

102

86 122

4614

9 297

1,11

899

9

5.00

4.50

4.00

3.50

3.00

2.50

2.00

1.50

1.00

0.50

0.00

2.76

2.74 2.75

2.81

2.82

3.29

3.27

3.11

2.93

1.12

1.55 1.

75

3.30

2.52

1.81

1.42

3.85

3.74

3.57

1.95

3.01

2.88

2.45

2.29

1.66

2.36

1.90

2.34

2.14

3.28 3.

47

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During 2005, the total of ICT spending across Europe did not register significant chang-es. Countries like Sweden, Denmark, the UK and the Netherlands continued to show the highest IT spending and IT/GDP per capita, while Southern, Eastern and Central European countries continued to lag considerably behind in both IT spending per capita and IT spending per GDP.

The telecommunications market remained dominated by GSM penetration across the whole continent and, although on offer by the vast majority of telecom operators, UMTS adoption is not expected to experience rapid development in the near future.

4.2. ICT adoption by industry

The public sector, driven by investments from the local government and healthcare segments, is expected to generate fast and sustained ICT growth in the near future. Investments in this industry will continue to be centred on modern-isation of existing ICT infrastructure’s architec-ture and governance, converting front-end and back-end operations to increase efficiency, while complying with transparency, privacy, account-ability and regulation requirements. Continuing efforts to maximise efficiency and control costs, in particular, will stimulate the healthcare seg-ment. For example, the need to implement and manage Electronic Patient Records (EPRs) will result in sustained investments, among other

Figure 26IT spending/GDP versus per capita GDP in the EU 15, Norway, Switzerland, the US and Japan, 2005

GD

P pe

r ca

pita

(€)

60,000

50,000

40,000

30,000

20,000

10,000

00.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 5.0

IT expenditure as % of GDP

GR

AB/L

DK

SFFD

IR

I

N

P

E

S

CH

UKNL

EU 15

US

J

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things, in content management applications, con-tent access tools, industry-specific applications, storage and networking infrastructure, Radio Frequency Identification (RFID) solutions, system integration and outsourcing services. The overall aim of all these investments will be to improve quality of service and reduce potentially disruptive medical errors.

The European banking and finance industry is struggling to maintain the profitability expe-rienced in previous years. High competition, new regulation, more demanding customers,

and the increasing differentiation of distribu-tion channels have increased the importance of enterprise performance management solutions. This, together with areas of ICT focus such as credit-risk, anti-money laundering, identity management and customer analytics, will pro-duce a healthy growth in the European banking and finance industry throughout the forecast period.

Gro

wth

rat

e in

%

10

8

6

4

2

0

Relative size of IT spending

Note: * Process manufacturing

includes industries that transform raw materials into products (production and preliminary processing of metals; non-metallic mineral products; f ibres; food, drink and tobacco; textile, paper and paper products; rubber and plastics) or into substances with new physical and chemical properties (chemicals).

** Discrete manufacturing includes industries that transform semi-finished products into final products.

Size of bubbles represents relative size of opportunity (Banking = 100).

Figure 27 European IT vertical markets’ IT spending outlook, 2006

Health

Utilities

Other

Agriculture, construction and mining

Transport EducationWholesale

Insurance

Other f inanceRetail

Local government

Central government

Business services Communications

Process manufacturing*

Discrete manufacturing**

Banking

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Notwithstanding strong competition on prices and services and modest growth rates for mobile voice services, mobile data services, and declin-ing voice services, the European communica-tions sector will continue to be characterised by sustained expansion in the near future driven by high investment levels in telecom equipment to sustain revenue and profits in data services, including fixed-line broadband and next genera-tion wireless. In particular, European companies in this sector will focus their ICT investments in areas such as networking, CRM and billing solutions, and implementation solutions.

The European retail/wholesale sectors have operated in challenging market conditions for a number of years now. However, increased business confidence and consumer senti-ment have had a positive impact on the retail sector, which is expected to grow above average in coming years. Most of the growth will be contingent on increasing investments by midsize and large retailers, while small retail-ers will not be able to keep up with the pace of growth. Companies in the European retail/wholesale sectors will continue to focus their ICT investments on optimising the structure of the supply chain to support global sourcing and lean supply chain strategies.

In the utilities area, the liberalisation and deregulation of the sector is adding strong com-petition constraints to companies in Europe. Issues like unbundling of generation, storage, and transmission of energy, are forcing Euro-pean utilities to optimise their supply and deliv-ery portfolio, improve efficiency and build cus-tomer loyalty. ICT adoption in the industry will therefore remain strong in areas such as IT con-solidation/integration, network automation and control (including areas such as automated meter reading, supervisory control and data acquisition, and distributed control systems), and billing solutions.

The European business services sector is still benefiting from increasing business opti-mism, which is keeping ICT investments high. Besides increased optimism, investments are driven by increasing price pressure and competi-tion, which is intensifying with all the Merger and Acquisition (M&A) activity seen in the field. Customers are becoming more demand-ing, both in terms of quality assurance and in terms of complexity of project requirements. In many cases a high level of interaction is required across complex organisations, where efficient f low of information is a must. Companies in the sector are therefore forced to rely on technol-ogy to overcome and reduce workf low ineffi-ciencies. As a result, the business service sector will be among the fastest growing industries in Europe over the next few years. Overall, ICT investments within the European business serv-ices area will focus on networking infrastructure and IT solutions including converged/wireless IP communications networks, IP Virtual Private Network (VPN), Wide Area Network (WAN), remote access technology, and ERP and CRM applications.

European companies in the manufacturing sector are benefiting from a more favourable environment, although fierce competition both from other developed economies and from low-wage economies requires proactive measures. Furthermore, despite global increase in demand, high oil and gas prices and high raw material costs restrict profitability and limit resources. Manufacturers are therefore forced to innovate, push on cost containment solutions, and enhance new product introduction and after-market busi-

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ness processes. All of these trends, however, will not induce European manufacturers to make massive ICT investments, as a cautious attitude will continue to prevail across the industry over the next few years. Despite these trends, there will be high demand for lean manufacturing and digital factory solutions, Product Lifecycle Man-agement (PLM) and Computer Aided Design (CAD) integration solutions, demand manage-ment solutions, Supply Chain Management (SCM) solutions and RFID.

Figure 28EU total ICT equipment imports/exports by region, 2005

Imports 2005 total value = € 174 billion Exports 2005 total value = € 137 billion

EU 25

Other Europe

US

Japan

Rest of the World

34 %

53 %

8 %

4 %

1 %

71.8 %

17.8 %0.9 %

5.1 %

4.4 %

5. Trade in the European Union

In 2005 the EU trade deficit in IT and telecom-munications was € 36.6 billion, with exports at € 137.6 billion and imports at € 174.2 billion.

85


EU 25 Other Europe*

US Japan RoW Total

EU 25 Import 83,307 839 11,324 5,766 52,444 153,679Export 88,896 5,385 5,933 1,036 17,196 118,447Trade balance 5,589 4,546 –5,391 –4,729 –35,248 –35,233

France Import 10,968 70 662 327 2,524 14,552Export 3,852 164 323 42 1,457 5,840Trade balance –7,116 94 –338 –285 –1,068 –8,712

Germany Import 13,105 196 1,522 2,351 11,410 28,584Export 15,506 1,722 806 179 3,419 21,631Trade balance 2,401 1,525 –716 –2,172 –7,992 –6,953

Italy Import 6,694 30 244 81 941 7,990Export 1,478 78 199 10 297 2,062Trade balance –5,215 48 –45 –71 –644 –5,928

Spain Import 5,649 10 126 53 518 6,356Export 970 19 52 2 170 1,214Trade balance –4,679 10 –74 –51 –347 –5,142

UK Import 12,421 77 2,255 558 6,683 21,994Export 9,588 744 1,306 134 2,688 14,460Trade balance –2,834 667 –949 –424 –3,995 –7,534

Table 8 EU trade by country: office machines and electronic data processing equipment, 2005, € million

* Other Europe includes Norway, Switzerland, Bulgaria and Romania.

EU 25 Other Europe*

US Japan RoW Total

EU 25 Import 11,534 306 1,920 371 6,394 20,525Export 9,886 713 1,124 135 7,339 19,196Trade balance –1,649 407 –796 –236 945 –1,329

France Import 1,110 20 120 12 514 1,776Export 892 62 67 7 795 1,823Trade balance –218 42 –53 –5 281 47

Germany Import 1,335 66 232 120 866 2,618Export 1,315 138 214 28 1,454 3,149Trade balance –20 72 –18 –92 588 531

Italy Import 899 19 92 36 534 1,580Export 621 30 32 3 537 1,224Trade balance –277 11 –60 –33 3 –356

Spain Import 1,197 11 50 5 328 1,592Export 243 10 41 2 171 467Trade balance –954 –1 –9 –4 –158 –1,125

UK Import 2,593 43 715 48 1,640 5,039Export 1,547 140 199 13 845 2,745Trade balance –1,046 97 –516 –35 –795 –2,295

* Other Europe includes Norway, Switzerland, Bulgaria and Romania.

Table 9 EU trade by country: telecommunications equipment, 2005, € million

Part Two

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90


Acknowledgement

This chapter is based on research by e-Busi-ness W@tch (www.ebusiness-watch.org) conduct-ed in 2006. e-Business W@tch was launched by the European Commission, Enterprise and Industry Directorate General, in January 2002, as a mar-ket observatory to study the development and impact of electronic business in specific sectors. The work programme of 2006 covered ten sector studies (comprising manufacturing, construction and service industries) and two special reports (on ICT impact, and on the role of newly found-ed enterprises for e-business developments).

e-Business W@tch uses primary research, combining quantitative and qualitative methods. A cornerstone of the monitoring activities in 2006 was a representative survey among 14,000 decision-makers in European enterprises about their use of e-business (see Appendix II). To complement the statistical picture, 75 firm case studies of e-business activity in European enter-prises were conducted.

The international e-Business W@tch study team is led by empirica GmbH (www.empirica.com) and includes Berlecon Research (www.berlecon.de), Databank (www.databank.it/dbc), DIW Berlin (www.diw.de), Rambøll Manage-ment (www.r-m.com) and Salzburg Research (www.salzburgresearch.at).


1. Introduction

1.1. The revival of “e-business”

Although the “new economy” revolution has not taken place as it seemed for a short moment in history it might, the evolutionary development of electronic business does not seem to have come to an end. On the contrary, the maturity of e-business has increased substantially across sectors and regions over the past five years. It has been a quiet revolution this time, but as a result, a new picture of the digital economy is beginning to emerge. ICT and e-business do matter in the global economy – probably even more than during the hype of the late 1990s.

�Competitive�pressure�as�the�main�driver��in�recent�years

The overall economic situation and market conditions for business innovation and invest-ment have been difficult for European com-panies during the last few years. Nevertheless, e-business shows a dynamic development in the European Union. Drivers are new technological developments and the increasing competitive pressure on companies in a global economy. Firms are constantly searching for opportunities to cut costs. This has probably been the most important promise of electronic business: cut-ting costs by increasing the efficiency of busi-ness processes, internally and between trading partners in the value chain.

91

Part Two · EITO 2007 Sector perspectives on e-business activity in industries producing and using ICT

In summary, results of e-Business W@tch from 2006 broadly confirm a former assess-ment of EITO (cf. Yearbook 2005, p. 24) that “the move towards e-business will continue in the years ahead”. 70 % of firms interviewed by e-Business W@tch in 2006 said that e-business played a significant or some part in the way they operate. Among large firms (with at least 250 employees), more than 80 % said so (with 33 % saying it was a “significant part”).

Enabling�technologies�have�matured

An important factor that supports this sce-nario is the increasing maturity of enabling tech-nologies and services, some of which are only on the verge of broad commercial introduction. If these technological innovations maintain their promise, the potential of e-business could be taken to a new level. In particular, the follow-ing trends and developments could have major effects on e-business activity in the next few years:

– Enterprise applications are increasingly web-enabled. The web can be used to provide internal applications to employees, and as an interface to link the company externally with business partners, suppliers and customers. Web services adoption is expected to become more pervasive1. Applications such as Cus-tomer Relationship Management (CRM) could gain additional momentum from this development.

– Mobile applications provide field workers (including service and sales persons, mana-gers) with real-time access to company data, thus speeding up information f lows and reducing the need to do work in the office.

– Internet Protocol (IP) is increasingly used as a network and communication technology. Voice over IP (VoIP; “Internet telephony”) will gradually replace the traditional fixed lines in telecommunication. Virtual Private Networks (VPNs) are already widely dif-fused.

– Radio Frequency Identification (RFID) based applications have a huge potential, for example to facilitate supply chain logistics, inventory management, and to combat coun-terfeiting. Forrester expects that the broad implementation of RFID systems in logistics from 2007 onwards will substantially change the IT architecture of companies2. Case stud-ies by e-Business W@tch on early adopters also signal a dynamic uptake of RFID solu-tions for supply chain logistics.

– The increasing deployment of Open Source Systems (OSS) promises to reduce costs for e-business software, although there are dif-ferent opinions on this issue and assessments of future opportunities stemming from OSS.

In a portfolio approach, technologies can be mapped according to their deployment on the one hand, and their technological maturity on the other. In such a portfolio, Voice over IP, mobile solutions, systems for ICT security, and document management systems could be the “stars” among ICT applications, i. e. those that possess a high potential for growth as well as already a high level of maturity. RFID is also regarded as of high potential, but lacks maturity yet.

1 ibid. This assessment by EITO is supported by e-Business W@tch.

2 “Forrester: 2007 kommt der Aufschwung.” In: Computerwoche Nr. 51/52, 23 Dec. 2005, p. 24.

92


Together, these technologies could be pow-erful drivers of far-reaching innovation in the world of business. They enable the digital inte-gration of data f lows between companies, citi-zens, and the public sector in yet unknown ways. They could trigger a new e-business innovation life-cycle within the next three to five years. Key aspects in this phase could be cross-border, if not global integration of business processes, due to a far-reaching digitisation of all types of financial and administrative exchanges between businesses.

1.2. A conceptual framework for e-business measurement

As part of this maturing process, electronic business has progressed from a rather specific to a very broad topic over the past ten years. This has implications for empirical studies of e-business. Initially, particularly in the mid-1990s, the policy and research focus was very much on e-commerce, which can be defined as online commercial transactions.

Transactions�and�e-commerce

The term “transactions” refers to exchanges between a company and its suppliers or custom-ers. These can be other companies (“B2B” – Business-to-Business), consumers (“B2C” – Busi-ness-to-Consumers), or governments (“B2G” – Business-to-Government). If transactions are conducted electronically (“e-transactions”), this constitutes e-commerce.

Transactions can be broken down into dif-ferent phases and related business processes, each of which can be relevant for e-commerce. The pre-sale (or pre-purchase) phase includes the presentation of (or request for) information about the offer, and the negotiation about the price. The sale/purchase phase covers the order-ing, invoicing, payment and delivery processes. Finally, the after-sale/purchase phase covers all processes after the product or service has been delivered to the buyer, such as after-sales cus-tomer services (e. g. repair, updates).

Practically each step in a transaction can either be pursued electronically (online) or non-electronically (off line), and all combinations of electronic and non-electronic implementation are possible. It is therefore difficult to decide which components actually have to be conduct-ed online in order to call a transaction (as a whole) “electronic”.

In this context, during 2000 the OECD pro-posed broad and narrow definitions of electronic commerce both of which are still valid and use-ful3: While the narrow definition focuses on “Internet transactions” only, the broad defini-tion defines e-commerce as “the sale or purchase of goods or services, whether between businesses,

Pre-sale/pre-purchase phase Sale/purchase phase After-sale/purchase phase

• Information about offer

• Price comparisons

• Negotations between seller and buyer

• Placing an order

• Invoicing

• Payment

• Delivery

• Customer service

• Guarantee management

• Credit administration

• Handling returns

Table 1 Process components of transactions

3 In 1999, the OECD Work-ing Party on Indicators for the Information Society (WPIIS) established an Expert Group on defining and measuring electronic commerce, in order to compile definitions of electronic commerce which are policy relevant and statistically feasible. By 2000, work of the Group had resulted in definitions for electronic commerce transactions.

93


Part Two · EITO 2007

households, individuals, governments, and other pub-lic or private organisations, conducted over compu-ter-mediated networks. The goods and services are ordered over those networks, but the payment and the ultimate delivery of the goods or service may be con-ducted on- or offline” (OECD, 2001).

The addendum regarding payment and deliv-ery is an important part of the definition, but can be debated. The difficult question is which processes along the different transaction phases constitute e-commerce and which do not (see Figure 1). The OECD definition excludes the pre-sale or purchase phase and focuses on a spe-cific part of the sale/purchase phase, namely the ordering process. e-Business W@tch follows the OECD position on this issue.

�E-business�–��the�focus�on�business�processes�

E-commerce, defined in this way, is a key component of e-business, but not the only one. In recent years, it has been increasingly acknow-ledged among policy and research communities that the focus on e-commerce transactions may be too narrow to capture the full implications of e-business. A wider, business-process-oriented focus has been widely recognised. Ref lecting this development, the OECD WPIIS4 proposed a (broader) definition of “e-business” as “auto-mated business processes (both intra- and inter-firm) over computer-mediated networks” (OECD, 2004). In addition, the OECD proposed that e-busi-ness processes should integrate tasks and extend beyond a stand-alone or individual application.

Definition of key terms for this study

E-transactions: Commercial exchanges between a company and its suppliers or customers which are conducted electronically. Participants can be other companies (“B2B” – Business-to-Business), consumers (“B2C”), or governments (“B2G”). This includes processes during the pre-sale or pre-purchase phase, the sale or purchase phase, and the after-sale/purchase phase.

E-commerce: electronic commerce. The sale or purchase of goods or services, whether between businesses, households, individuals, govern-ments, and other public or private organisations, conducted over computer-mediated networks. (OECD)

E-business: electronic business. Automated business processes (both intra- and inter-firm) over computer-mediated networks. (OECD)

E-interactions: Electronic interactions include the full range of e-transactions, and in addition collaborative business processes (e. g collabo-rative design) which are not directly transaction-focused.

This definition ref lects an understand-ing of e-business that encompasses more than e-commerce transactions. The broad concept of e-business also includes the digitisation of inter-nal business processes, as well as cooperative or collaborative processes between companies which are not necessarily transaction-focused. Collaborative e-design processes between busi-ness partners are a typical example from indus-trial engineering. This definition indicates that the focus and main objective of electronic busi-ness is to be found in business process automa-tion and integration, and the impacts thereof.

4 Working Party on Indicators for the Information Society

94


E-business�and�the�company’s�value�chain

For structuring and mapping business pro-cesses, Michael Porter’s framework of the com-pany value chain and value system between companies (Porter, 1985)5 is still valid and useful in this context, although dating back 20 years to the pre-e-business era.

A value chain logically presents the main functional areas (“value activities”) of a company and differentiates between primary and support activities. However, these are “not a collection of independent activities but a system of interdependent activities”, which are “related by linkages within the value chain” 6. These linkages can lead to comp-etitive advantage through optimisation and coor-dination. In fact, it is exactly here that ICT has a major impact, as it is a key instrument to opti-mise linkages and thus increase the efficiency of processes.

The value system expands this concept by extending the perspective beyond the single company. The firm’s value chain is linked to the value chains of (upstream) suppliers and (downstream) buyers, resulting in a larger set of processes – the value system. E-commerce, i. e. electronic transactions, occurs within this value system.

1.3. The e-Business Scoreboard 2006

The e-Business Scoreboard approach was developed by e-Business W@tch in 2004. It is a compound index that condenses data on ICT adoption and e-business activity, enabling com-parisons across different sectors, countries or size-bands. Conceptually, the e-Business Score-board owes a debt to the Balanced ScoreCard

(BSC) approach, which suggests that an organi-sation should be viewed from four perspectives, and that metrics (and targets) are to be defined for each perspective. Similarly, the e-Business Scoreboard looks at ICT use by enterprises from four (inter-related) perspectives. The Scoreboard is based on 16 component indicators, which rep-resent the metrics for these perspectives.

– Aggregation: The component indicators of the Scoreboard can be aggregated on several levels. Component indicators can be aggre-gated into four main sub-indices that repre-sent major application areas of e-business. Next, the sub-indices can be further aggre-gated into two dimensions and, finally, into the overall “e-business Index”.

– The four main perspectives are: A) access to ICT networks, B) internal integration of business processes, C) supply-side activities, D) marketing and sales processes.

– Normalisation: This takes into account the percentages (diffusion rates) from all sectors (size-bands, …) and shows how a specific sector (size-band, …) differs from the all-sec-tor average. To this end, values of component indicators were normalised based on mean values and standard deviations. The scale in the diamond graphs shows the multiple of a standard deviation for a specific sector. Zero equals the mean value for all ten sec-tors.

5 Porter, Michael E. (1985). Competitive Advantage. New York: Free Press. Page references in quota-tions refer to the Free Press Export Edition 2004.

6 Porter, 1985, p. 48

95



Figure 1 e-Business Scoreboard

Most of the Scoreboards shown are based on component indicators that have been weighted by employment (see Appendix II), which emphasises the situation in larger companies. The Scoreboard for the construction sector is based on indicators expressed as % of f irms (and not by employment). For this industry, with its very high share of micro and small f irms, this is probably a more adequate approach to making comparisons with other sectors.

Max. Average Food

Food and beverages Hospitals

Max. Average Hospitals

Pulp and paper

Max. Average Pulp & paper

1.5

0.0

–1.5

1.5

0.0

–1.5

Max. Average ICT manuf.

ICT manufacturing

1.5

0.0

–1.5

Consumer electronics

Max. Average Electronics

1.5

0.0

–1.5

Shipbuilding and repair

Max. Average Shipbuilding

2.0

0.0

–2.0

Construction

Max. Average Construction

1.5

0.0

–1.5

Tourism

Max. Average Tourism

1.5

0.0

–1.5

Telecommunications

Max. Average Telecom

1.5

0.0

–1.5

A

C

D B

1.5

0.0

–1.5

A

C

D B

A

C

D B

A

C

D B

A

C

D B

A

C

D B

A

C

D B

A

C

D B

A

C

D B

96


2. E-business sector studies

In 2006, e-Business W@tch conducted studies on the use and impact of e-business in ten sec-tors. This chapter summarises the main results of four out of these ten sector studies, includ-ing “ICT using industries” (food and beverages, tourism, the hospital sector) as well as a major producer of ICT services: the telecommunica-tions industry.

2.1. Food and beverages7

2.1.1. Sector profile

Definition�and�characteristics

This sector study by e-Business W@tch focus-es on those sub-sectors of the Food and Bever-age (F&B) industry which deal with the produc-tion of processed food (rather than with the first transformation of agricultural products). This includes most of the business activities classified under NACE Rev. 1.1 Division DA 15. These are, to a large extent, companies from the down-stream part of the agri-food value chain.

The F&B industry is characterised by a com-plex value chain and a heterogeneous nature of the different players, including farmers, input suppliers, manufacturers, packagers, transport-ers, exporters, wholesalers, retailers and final customers. The need for coordination and syn-chronisation of such different entities is hindered by their different business interests, cultural atti-tude and size. Therefore, production tends to be organised in small batch processes, implying a very complex organisation and coordination of different activities. The characteristics of many food products as perishable goods largely affect the way products are managed and delivered along the value chain.

Size�of�the�industry

In 2004, the EU 25 food and beverage indus-try as a whole (i. e. the entire NACE Division DA 15) had a turnover of € 815 billion, trans-forming over 70 % of EU’s agricultural raw mate-rials and employing about 3.9 million people, of whom the majority works in Small and Medium Enterprises (SMEs).

There are about 282,000 companies in this sector in the EU. The structure is very diver-sified, ranging from small enterprises, often family-owned, to major multinationals. About 95.5 % of companies are micro and small enter-prises with up to 49 employees. SMEs (with up to 249 employees) account for about 62 % of the workforce employed in the F&B industry and for about 49 % of the sector’s turnover. Despite its numerous small firms, the industry is domi-nated by a small number of very big players.

2.1.2. E-business activity in 2006

Overall picture

According to the e-Business W@tch Sur-vey 2006, the F&B industry is among the sec-tors with a comparatively low level of ICT and e-business adoption. This overall result, how-ever, hides a varied picture within the sector; moreover, although a direct comparison with earlier survey results from 2003 and 2005 is not possible, some interesting dynamics were found in this analysis.

The F&B industry has a relatively good level of development of internal process integration and supply-chain-related activities. Supply Chain Management (SCM) systems, in particular, show the highest diffusion among the ten sectors ana-lysed, and a remarkable increase over the past years.

7 The study on this sector was conducted by Data-bank (www.databank.it). A more detailed study report is available at www.ebusiness-watch.org.


97



External pressure from distribution is increasingly driving F&B companies towards the adoption of e-business practices. The high diffusion of e-invoicing, inventory management, and linking of ICT systems with those of cus-tomers illustrate this. Medium-sized companies appear quite positive and active in their invest-ment attitude, and are already well advanced in the adoption of solutions such as ERP (Enter-prise Resource Planning), SCM and e-invoic-ing. While this aspect is of particular interest for future developments, it is equally important to note that the cost of software solutions still adversely affects smaller companies more than the larger ones.

Use of ICT solutions for process integration

In the F&B industry, internal process integ-ration is a key step in order to improve integra-tion along the value chain. Apart from the micro enterprises, the F&B industry appears to be sig-

nificantly above average in the adoption of inter-nal process integration solutions such as intra-nets, accounting software and ERP systems.

The peculiarities of the F&B sales system, widely distributed over the sales territory, accounts for the wide adoption of intranet networks in medium and large companies (see Table 2). For small enterprises, an intranet is less rele-vant.

Importance�of�ERP�systems�for�e-business

As far as ERP systems are concerned, the F&B industry is well above the average of the ten sectors studied. ERP systems, in fact, cover some business activities that are critical in the F&B industry, from production planning, batch control and traceability to commercial and back-office functions (pricing, promotions, finance, contract management, etc.). They may include stocks and inventory/warehouse management software, possibly implementing RFID-enabled tracking-and-tracing systems and wireless tech-

Table 2 Use of ICT systems for internal process integration

Weighting: f igures for totals (sector, all sectors) are weighted by employ-ment and should be read as “enterprises comprising … % of employees”. Figures for size-bands are in % of f irms from the size-band.

Intranet Accounting software

ERP system Document management system

Food and beverages (EU 10) 40 75 32 17

Micro (1–9 employees) 11 54 4 6

Small (10–49 employees) 19 71 17 13

Medium (50–249 employees) 46 90 33 13

Large (250+ employees) 72 93 66 37

All ten sectors (EU 10) 42 70 19 19





Base (100 %) Firms using computers

Firms not using an ERP system

Firms using computers


N (for sector, EU 10) 775 603 775 775

98


nologies, and help companies managing chal-lenges presented by multiple selling channels, rapidly changing customer needs, product diver-sity and innovation and global product availabil-ity.

As ERP systems link business processes electronically across different business func-tions, they are helping to improve efficiency in operating those processes. They can, thus, be crucial in the F&B sector, where margins are relatively low when compared to other manu-facturing sectors. In addition, ERP systems can play an important role in supporting the connec-tivity between enterprises required by regulatory aspects such as food hygiene and traceability.

Many smaller companies that do not have an ERP system use accounting software, which can include e-invoicing options, as a simpler substi-tute for ERP functionalities. However, the poten-tial for automating order-related document f lows is not the same.

Deployment�of�e-invoicing

Electronic invoicing (e-invoicing) is a Busi-ness-to-Business transaction in which invoices are issued and paid electronically, replacing traditional paper-based invoicing processes. E-invoicing promises relatively easy-to-achieve cost savings for both parties involved (invoicing entity and receiving entity), because processing invoices in a standardised, electronic format can be accomplished much faster compared to the often cumbersome handling of printed invoices.

Increasingly, e-invoicing is being discovered as an effective way to reduce operating costs and improve treasury management. The shift from costly EDI- (Electronic Data Interchange-)based systems to Internet-based e-invoicing is helping the diffusion of this e-business practice. The presence of large distribution networks (organ-ised distribution) as business customers in the

Base (100 %): companies with Internet access. N (for sector, EU 10) = 722. Weighting: totals (for the sector and for all ten sectors) are weighted by employment and should be read as “enterprises com-prising … % of employment in the sector(s)”. Figures for size-bands are in % of enterprises from the size-band.

Figure 2 Adoption of e-invoicing60

50

40

30

20

10

0All ten sectors

(EU 10)

18 1922

Total Food(EU 10)

20

25 25

Micro (1– 9 employees)

811

14

Small (10 – 49 employees)

12 11

15

Medium (50 – 249 employees)

17

2224

Large (250 + employees)

36

45

54

Send e-invoices to public sector

Send e-invoices to private sector

Receive e-invoices

99



F&B supply chain may explain the comparative-ly wide adoption of e-invoicing in this industry (see Figure 2). More than half of the sector’s large companies (the main suppliers of organised dis-tribution) reported receiving e-invoices.

E-procurement

�Managing�the�supply�chain��of�perishable�goods�

Supply chain integration is one of the most important and all-encompassing aspects of new production methods in the F&B industry; pro-curement makes up a substantial part of this. The peculiarity of the F&B industry is the per-ishable nature of the merchandise. This imposes specific handling times and conditions, as well as the need to monitor the origin of the prod-uct and the substances that go into it along the supply chain: the positive role that ICT can play in effectively tracking the information f lows becomes quite evident in this case.

The F&B industry is generally characterised by a fairly stable demand and is relatively pre-dictable: with the exception of seasonal products, if food demand forecasts are precise enough, the supply chain can be organised to achieve maxi-mum efficiency levels. Moreover, profit margins in this sector are often low; therefore this kind of optimisation is almost a necessity.

E-procurement�activity

Close to 40 % of all firms active in the F&B industry in the EU 10 place orders to suppliers online. This figure is lower than the correspond-ing average for the ten sectors studied this year by e-Business W@tch. However, the employment-weighted data show that this industry is in line with the average, thus ref lecting the polarisation between small and large companies in this sec-tor. Indeed, for large and medium F&B firms, the percentage of companies which reported online purchasing reaches 70 % and 58 % respec-tively (see Table 3).

Table 3 Companies ordering supply goods online


Place orders online

Place up to 25 % of orders online

Place more than 25 % of orders online

Use specific ICT solutions for e-sourcing


Micro (1 – 9 employees) 32 94 6 2

Small (10 – 49 employees) 54 90 10 7

Medium (50 – 249 employees) 58 77 23 16

Large (250 + employees) 70 95 5 41


Micro (1 – 9 employees) 44 73 27 7

Small (10 – 49 employees) 54 80 20 10




Firms placing orders online



N (for sector, EU 10) 775 385 385 775

100


More than 90 % of micro and small com-panies that place orders online said that these orders account for up to 25 % of their total pro-curement. In other sectors, such as ICT manu-facturing, consumer electronics, shipbuilding and tourism, the relative share of e-procurement is somewhat higher.

In the F&B industry, only about 5 % of firms (representing about 14 % of this sector’s employ-ment) reported the use of software solutions or Internet-based services for e-sourcing (see Table 3). This shows that there is a considerable gap between the percentage of companies placing at least some orders online and those that use spe-cial software for doing so. It can be assumed that companies without such software place orders mainly through websites or extranets of suppliers, which do not require any special e-procurement system. The digital back-office integration of procurement-related processes (all the way from ordering to the receipt of goods/services) is prob-ably not in an advanced state in these cases.

E-marketing and sales

Manufacturers of processed agricultural products (with the exception of a few, premium-brand companies operating on international markets) typically do not directly sell to end consumers, but to intermediaries (wholesalers, retailers, chains). This aspect must be taken into consideration when evaluating the survey data, as most transactions involved are of the B2B (Business-to-Business) type.

Moreover, the short- or long-term perish-ability of products traded and the wide variety of items to be considered in F&B e-sales are a significant challenge: in order to achieve an efficient order system, retailers should be able to link different data repositories from differ-ent F&B manufacturers. This requires a great deal of initial, internal systems work for item management and synchronisation, forecasting, replenishment, category management and pro-motion management.

Table 4 Companies receiving orders from customers online


Accept orders from customers online

Receive up to 25 % of orders online

Receive more than 25 % of orders online

Use specific ICT solutions for e-selling


Micro (1– 9 employees) 13 95 5 1

Small (10 – 49 employees) 26 89 11 9




Micro (1– 9 employees) 23 79 21 6

Small (10 – 49 employees) 26 76 24 12




Firms accepting orders online



N (for sector, EU 10) 775 212 212 775

101



Online�orders�from�customers

Taking into account the previous considera-tions, the percentage of firms from the F&B industry in the EU 10 which said that they enable customers to order products online (19 %) seems to be quite high (as in Table 4). The per-centage grows with the size of firm and reaches 40 % for medium and large companies. However, the share of customer orders received online (as a percentage of the total order volume) is quite low. Almost 90 % of those firms said that online orders account for less than 25 % of their total orders, only 13 % reported this share as more than 25 %.

In the F&B industry, only about 4 % of firms (representing about 14 % of sector employment) reported the use of software solutions or Inter-net-based services for their marketing and sales activities. Such solutions should be concentrated among the bigger companies in the sector.

About half of those companies that accept online orders said that these are mainly from other companies (distributors, retailers, whole-salers). However, about a third said that orders are mainly from consumers, which indicates that these manufacturers have a different business model in terms of sales channels (see Figure 3).

The “territoriality” feature, typical of the F&B sector, emerges also in the findings of the e-Business Survey 2006. The figures for F&B slightly differ from the sector average: 38 % of firms said that their customers that order online are mainly regional, and 48 % said they were mainly national (see Figure 4).

Figure 3 Main type of customers that order online (B2B / B2C / B2G)

Base (100 %): companies accepting orders online (without “don’t know”). N (for sector, EU 10) = 209. Weighting: in % of f irms. Questionnaire reference: F8

Figure 4 Main location of customers that order online

Base (100 %): companies accepting orders online (without “don’t know”).N (for sector, EU 10) = 210. Weighting: in % of f irms. Questionnaire reference: F7

Total Food (EU 10)

All ten sectors (EU 10)

Mainly companies (B2B)

Mainly consumers (B2C)

Mixed

Mainly public sector (B2G)

49

100

0

20

40

60

80

18

33

17

1

39

37

6

Food and beverages (EU 10)


Mainly international

Mainly national

Mainly regional

100

0

20

40

60

80

3038

48

14

47

23

102


2.1.3. Current trends in ICT use and e-business

This section highlights some aspects of ICT use and e-business activities in more detail which were found to be particularly relevant in the F&B industries. It does not claim to be a comprehensive overview.

Internal process automation in the F&B industry

Compliance with food safety regulations, together with increased competition and the requirement for cost-efficiency drive the trend towards integration of internal processes in the F&B industry. The integration of production line control, administration, sales and logistics helps companies to manage food safety risks, to increase asset efficiency, and to improve their margins, while achieving continuous product and service innovation, and better corporate accountability.

The introduction of systems for internal process automation is also fostered by the pos-sibility of better exploitation of internal assets, which, in the case of the F&B industry, are often represented by recipes or by particular produc-tion processes.

State-of-the-art�applications

Investments in process automation are tra-ditionally concentrated on production and logis-tics and on their integration with the accounting systems. In a large number of firms, especially SMEs, these processes are still only partially automated or they are “islands” of automation i. e. not fully integrated.

In recent years, companies have increasingly focused their attention on more innovative and comprehensive solutions, capable of supporting the new competitive challenges. Presently, the F&B industry has a relatively good level of devel-opment of internal process integration and sup-ply-chain-related activities. ERP is the main solu-tion currently adopted for integration of internal business processes in the F&B industry.

The most advanced generation of ERP and extended ERP applications may include links across different business functions, allowing the complete integration of purchasing, production, sales, cost management, and accounting. Previ-ous generation applications blur the line between a company’s internal and external processes. ERP systems can actually play an important role for supporting connectivity between enterprises. For manufacturing companies, ERP systems are an important “hub” for much of their e-business activities with other companies.

The development of sector-specific function-alities, addressing specialised business require-ments, is a major factor in the automation and integration of internal processes in the F&B industry. Sector-specific challenges include, for instance, the capability to respond quickly and easily to scale formulas and recipes based on inventory levels and changes in materials and facility availability. To a significant extent, this is still a “push” industry: when raw materials are ready, then the production and supply lines must be ready as well. Moreover, working with perish-able products the information must be accurate, timely, and complete. These particular function-alities may need to be developed, synchronised or otherwise customised in concert with suppli-ers and customers.

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�Product�Lifecycle�Management�(PLM):��a�new�approach�to�product�development

In the F&B industry, the development of new products is critical to remain competitive. Inno-vation, however, is expensive and is often at risk of failure. In response to this challenge, large F&B industries have started to adopt Product Lifecycle Management (PLM).

The PLM approach helps in new product development by focusing more efforts on prod-ucts with a greater potential for success, and thereby reducing the number of failed devel-opment projects. Benefits from PLM solutions include improved innovation management, more efficient intra- and inter-company collaboration, faster time to market, cost reductions, and high-er product quality.

Coupled with RFID technologies, PLM can support product traceability, and if required, recall procedures. Examples of internal process automation and improvement tools based on e-business include: collaboration and/or know-ledge management software which is mostly used by large multi-national companies and cooperatives; and, remote control systems in cooperation with external service suppliers, such as facility management and maintenance firms.

However, the economic and cultural effort required by the implementation of PLM or other advanced technologies may be beyond the possi-bilities of SMEs. The results of the 2006 Survey show that F&B firms have increasingly adopted solutions supporting the automation of internal processes, but cost and complexity of technology are still major hurdles.

Supply Chain Management (SCM)

Supply Chain Management (SCM) systems concern the relationship between a company and its suppliers and customers. SCM provides an overview of the f lows of products/materials, information and finances, as they move in a process that includes suppliers, manufacturers, wholesalers, retailers and eventually consumers. Its main aim is coordination among different organisations: manufacturers work jointly with their customers and suppliers, to integrate activi-ties along the supply chain to effectively supply products to customers.

Supply chain coordination in the F&B indus-try is strictly dependent on ICT and e-business systems. ICT allow system integration through standardised inter-organisational interfaces, generating an efficient and automatic informa-tion f low and spanning the boundaries of sup-ply chain members, increasing their integration. Higher degrees of integration occur when supply chain members automatically coordinate produc-tion with inputs from suppliers of raw materials and orders from the distribution.

�SCM�systems�widely�used��in�large�F&B�firms

According to the e-Business Survey 2006, the implementation of SCM solutions in the F&B sector is on average higher than in the other sec-tors studied this year by the e-Business W@tch. With the exception of ICT manufacturing, no other sector shows such a high degree of integra-tion between firms along the supply chain.

104


e-Business W@tch also asked companies whether their ICT system was linked to that of suppliers. Interestingly, fewer firms report ICT links with suppliers compared to the share of firms with an SCM system (see Figure 5). This is apparently in contradiction to the idea of SCM where some form of linking a company’s ICT with that of its suppliers can be regarded as a pre-requisite. The most plausible explanation might be that SCM systems include modules that allow the exchange of data without requiring a link between different information systems.

Organisational�and�technological�challenges

The successful implementation of SCM and the full exploitation of potential benefits, how-ever, raise organisational as well as technological challenges.

Providing an uninterrupted f low of goods requires accurate demand forecasting, visibility across the supply chain and integrated trans-portation networks. The f low of information requires coordination of working practices, inter-operability and mutual trust among the various players. This is compounded by the fact that the food industry today is still highly fragmented, broker intensive, has seasonal patterns of pro-duction and many goods are highly perishable. Most organisations have a disparate network of trading partners (i. e. service providers, suppliers, contract manufacturers, distributors, and retail-ers).

Figure 5 Supply chain integration: use of SCM and ICT links with suppliers

Base (100 %): companies using computers. N (for sector, EU 10) = 775. Weighting: totals (for the sector and for all ten sectors) are weighted by employment and should be read as “enterprises com-prising … % of employment in the sector(s)”. Figures for size-bands are in % of enterprises from the size-band. Questionnaire reference: D1f, F13a

50

40

30

20

10

0All ten sectors

(EU 10)

Use SCM ICT system linked with suppliers

16

12


50

33

Medium (50 – 249 employees)

19

15

Small (10 – 49 employees)

11

5

Micro (1– 9 employees)

11

1

Total Food andbeverages (EU 10)

21

14

105



Mobile applications

Mobile applications and Wi-Fi systems8, together with RFID applications, are intimately connected with supply chain management and quality assurance issues, and hence mostly adopted by large enterprises – though some applications, such as sales force decentralisation and mobile/home offices, are also relevant for SMEs.

The widespread diffusion of PDAs9, mobile phones, laptops and other portable devices, asso-ciated with Wi-Fi technology, can help even SMEs to gather, store, analyse and share data, with a timely access to accurate accounting, inventory, sales and CRM information. Wireless devices such as printers and scanners /receivers are frequently adopted along the production and distribution of F&B.

Wireless technologies such as bar code scan-ners and printers allow the reduction of errors in picking and warehousing processes to the shipping and distribution phases “on the road”. Another advantage is the reduction of data entry time and errors.

“Wireless�people”

Examples of wireless sales force automation implementations are presented in several case studies and e-Business W@tch reports on the F&B sector. Companies are providing their mobile workforce (sales and transport/distribution) with ICT tools which enable workers in the field to access corporate databases and applications such as customer relationship management software, as well as the ability to update customer records wherever the work occurs. For example, compa-nies equip account managers with palm pilots through which they send the orders to a distribu-tion platform.

Alongside mobile phones, distributed net-work computing has been a significant technol-ogy trend that has put more computing power directly in the hands of “networked individu-als”. This has enabled collaborative distrib-uted work in networked organisations and (cyber)communities, including small businesses.

Although developing along separate paths, mobile communications and the Internet have started to converge. The products of this con-vergence are sophisticated wireless data services, focusing on mobile data access and electronic messaging on mobile devices10.

Mobile business – i. e. the use of the wire-less Internet and other mobile information tech-nologies for organisational communication and coordination, and the management of the firm – is likely to have a strong impact on organisa-tions, as wireless technologies and applications begin to challenge the existing processes, strate-gies, structures, roles of individuals, and even cultures of organisations.

A key factor for the success of projects imply-ing new working procedures is the involvement and motivation of the part of the workforce con-cerned. Acceptance of new technologies and systems depends upon the involvement of the workforce and their perception of the possible benefits.

RFID use in the F&B industry

Over the past years, the EU F&B industry has significantly developed the ability to track the f low of food along the supply chain. In recent years, F&B firms have been increasingly interested in RFID as the most promising tech-nology that can support traceability and quality assurance.

8 “Wi-Fi” is short for Wire-less Fidelity, a popular term for a high-frequency Wireless Local Area Network (W-LAN). Wi-Fi technology is rapidly gaining acceptance as an alternative or comple-mentary infrastructure to a wired LAN.

9 “Personal Digital Assist-ants”, i. e. small and easy-to-carry computing devices.

10 An introduction to digital convergence (drivers and types of convergence, implications) is contained in the sector studies of 2006 on ICT manufactur-ing, consumer electronics and telecommunications as a special section: “Overview: Convergence as a cross-sectoral issue”. The study reports with this section are available at www.ebusiness-watch.org (“resources”).


106


RFID�not�yet�widely�deployed

The results from the e-Business Survey 2006, however, indicate that the diffusion of RFID is still very limited at a general level and among F&B companies. Only 1 % of all firms (account-ing for 3 % of employment) have adopted RFID; among large firms, 5 % say they use RFID. These figures are lower than one could expect, taking into account the high emphasis that sec-tor media and ICT suppliers are setting on RFID usage and potential benefits.

RFID is a technology that incorporates the use of radio frequency to uniquely identify an object or product, or even a person or an animal. An RFID system allows data to be transmitted by a device, or tag, directly applied to an indi-vidual product, pallet, or other type of shipping

container. RFID tags may also be applied to mobile equipment to track its usage and location in a factory or warehouse. The tag transmits a signal, which is read by an RFID reader. The data transmitted by the tag may provide part or product identification or location information, or specifics about the product including price, date of purchase, date of manufacture, supplier or other pertinent data.

RFID�use�for�food�safety

RFID can support the f low of informa-tion along the entire production and distribu-tion chain, from the receipt of raw materials, right up to distribution of the finished product. This provides real-time visibility of information

Base (100 %): companies using computers. N (for sector, EU 10) = 775. Weighting: in % of f irms. Questionnaire reference: A4a

Figure 6 RFID usage

0 2 4 6

Food and beverages (EU 10)

Micro (1–9 employees)

Small (10–49 employees)

Medium (50–249 employees)



0

2

5

1

2

3

107



regarding the product and processing, includ-ing traceability and location of goods. During the delivery phase, RFID may be used to verify the sender’s data and to trace the raw materials. During the transformation phase, RFID may be used for food safety and during the distribution phase for tracing the entire supply chain. Tags can be fitted with sensors, which are able to memorise climatic factors (temperature, pres-sure, humidity) of the environment they are in. Through the use of tags, it will be possible to monitor the state of conservation of a substance, and receive warnings when temperatures go out-side accepted ranges.

Drivers�and�barriers�for�adoption

F&B producers are starting to use RFID under increasing pressure from large-scale retailers. The latter are requiring the use of tags to improve inventory and supply chain manage-ment. They are essentially forcing members of their extended supply chain to adopt standard-ised RFID-related processes across the enter-prise, or be left out. Producers also expected to gain potential benefits from increased sales, due to a reduction in waste and returns, as well as better promotion and inventory management.

Currently, emphasis on RFID is at the pal-let and case level, not at the unit level. At unit level, there are still technological constraints to be solved if the application has to be applied on large scale. In particular, there are issues to work out as for liquid environments and temper-atures. The relatively high cost of the technology and the difficulties in making the switch are also holding back many companies from introducing RFID.

2.1.4. Drivers and inhibitors of e-business

Drivers�of�e-business�adoption

Companies that confirmed that e-business constituted “a part of the way they operate” were asked to indicate important reasons for starting their e-business activity. Four main reasons were suggested, in order to see whether it was more a reaction to pressure from outside (from cus-tomers or suppliers), whether companies saw an opportunity to gain competitive advantage, or if they rather imitated the behaviour of competi-tors.

Replies show that all reasons are perceived as relevant, with “customers’ expectations” and the “opportunity to gain competitive advan-tage” being seen as the most important ones (quoted by firms representing about 60 % of employment). The impact of the retail distribu-tion chains on ICT decisions, which include the main customers of food producers, is confirmed by this picture.

Barriers�to�e-business�adoption

Companies saying that e-business does not play a role in their operations were asked to indi-cate important reasons why they do not prac-tise e-business. Accordingly to their replies, the main reason F&B firms do not adopt e-business is that they feel their size is too small to take benefits. This explanation was given by 83 % of micro companies in this sector but also by a sig-nificant share of small and medium ones. This perception is also mirrored, although on a lower scale, by the perception that technology is too complicated, which however, is more accentu-ated between smaller firms.

108


Figure 7 Barriers to e–business adoption as perceived by companies

Base (100 %): companies saying that e–business does not play a role in their operations.N (for sector, EU 10) = 351.Weighting: totals (for the sector and for all ten sectors) are weighted by employment and should be read as “enterprises comprising … % of employment in the sector(s)”. Figures for size–bands are in % of enterprises from the size–band.

Company too small


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

Technology too expensive

Technology too complicated Systems not compatible

Security concerns Legal issues

Lack of reliable IT providers

0 20 40 60 80 100


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

0 20 40 60 80 100


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

0 20 40 60 80 100


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

0 20 40 60 80 100


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

0 20 40 60 80 100


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

0 20 40 60 80 100


250+ employees

50–249 employees

10–49 employees

1–9 employees

Food (EU 10)

0 20 40 60 80 100

30

38

20

34

31

4

31

31

32

39

26

36

23

23

26

26

11

25

38

45

52

26

62

42

24

22

35

36

28

5

22

21

22

19

15

23

55

83

48

36

18

56

109



2.1.5. Policy implications

At a general level, policies to promote ICT adoption among F&B companies, notably the smaller ones, should aim at improving the devel-opment of infrastructure (including skills and standards) and the legal and regulatory environ-ment, as well as at creating a favourable busi-ness environment. The analysis of findings from the survey, the case studies and desk research conducted for this study points at the following issues which could be relevant for policy-mak-ing:

– Improve e-skills, especially among SMEs. ICT and e-business are changing the way busi-ness is conducted in the F&B industry. There is evidence that many small companies face difficulties in coping with these changes. A lack of e-skills, i. e. a proper understanding of e-business, is one of the reasons11. Measures in this area could aim at promoting entre-preneurial and managerial understanding of e-business applications. Providing more infor-mation about e-business in a way which is adequate for small firms could support their decision-making. The development of skills in change management, for example how to reorganise work processes with support of e-technologies, could be encouraged.

– Facilitate F&B compliance with quality and safety criteria. An important application area for ICT in the F&B industry is to ensure compliance with quality and safety regula-tions. Therefore, firms could be supported by measures such as the provision of relevant information and training in how to use ICT in this field.

– Promote a favourable environment for inno-vation. F&B firms need to continuously innovate. E-business policies aiming at a favourable environment for innovation could include the promotion of value chain coop-

eration, the sharing of good practices among F&B firms and the participation of SMEs in business networks.

– Standardisation. Policy measures in the area of standardisation should focus both at the sector and at the cross-sector level. They could include supportive actions to stimulate increased participation of SMEs in standardi-sation initiatives.

2.2. Tourism12



Tourism is most commonly understood as the provision of services for people travelling to and staying outside their usual environment for less than one consecutive year for leisure or for business purposes. The tourism industry as defined for the e-Business W@tch survey of enterprises covers the following business activi-ties: hotels and restaurants (NACE Rev. 1.1 H 55.1–55.4), activities of travel agencies and tour operators, tourist assistance activities (I 63.3) as well as recreational, cultural and sporting activi-ties (O 92.33, 92.52 and 92.53).

In this sector study, which is based on the e-Business Survey 2006, some indicators are bro-ken down into the following three sub-sectors: (1) accommodation, (2) hotel and restaurant sec-tor and (3) travel agencies and tour operators. Results for the whole tourism industry also con-tain data about “recreational, cultural and sport-ing activities”. Yet, this sub-sector is not present-ed separately in tables because case numbers for this single sub-sector are too low to provide rep-resentative results. In the results for the whole tourism industry, however, all four sub-sectors (1. accommodation, 2. hotel and restaurant sector, 3. travel agencies and tour operators, 4. recreational, cultural and sporting activities) are included.

11 See e-Business W@tch Sector Study on the F&B Industry, July 2005, page 27. Available at www.ebusiness-watch.org (“resources”) and case study La Bella Easo in Section 3.3 of this report.

12 The study on this sec-tor was conducted by Salzburg Research (www.salzburgresearch.at), which operates a compe-tence centre for e-tourism. A more detailed study report is available at www.ebusiness-watch.org.


http://www.salzburgresearch.at


110


Tourism sub-sectors are extremely heteroge-neous, e. g. labour productivity differs consider-ably between different sub-sectors: In the hotels and restaurants sector it is rather low (ref lected by fairly low salaries), while, for example, in the travel agencies and tour operators sector it is much higher.


Tourism as a whole is one of the fastest growing industries in Europe and worldwide. In recent years, growth rates in tourism have been higher than those of the overall world economy. This trend is unlikely to slow down in the near future. From a global perspective, the European Union is still the most tourism-intensive region worldwide. This assessment can be backed by numerous key figures, like contribution to regional GDP, global market share or employ-ment effects. In the EU nearly 1.5 million enter-prises directly related to tourism employ about eight million persons (cf. Eurostat 2006) and generate more than € 419 billion of production value (2001).

The sector is dominated by micro firms and SMEs (companies with 1 to 249 employees). In fact, about 92 % of tourism enterprises are micro-enterprises with 1 to 9 employees. Only 0.1 % of enterprises in tourism are big companies with more than 250 employees. Micro (1–9 employees) and small enterprises (10–49 employees) together constitute 99 % of companies in the tourism sec-tor. This results in a labour market where SMEs contribute about 79 % of employment.


Overall picture

According to the e-Business W@tch Survey 2006, tourism is in the vanguard of ICT adop-tion and e-business in the area of e-marketing and online sales. In this area of customer-facing e-business activities “e-tourism has taken off ”.

Yet, in a ranking of the ten sectors studied in 2006, the tourism industry scores only in the middle range regarding the overall use of ICT and e-business. Especially regarding the deploy-ment of ICT infrastructure and the adoption of e-integrated business processes, tourism compa-nies are still lagging behind their counterparts in other industries. This finding is supported by several indicators: For example, the overall Internet connectivity is still somewhat below the average of the ten sectors surveyed. The level of usage of ERP systems is also low and e-procure-ment is significantly less developed than in other sectors. Overall, customer expectations and mar-ket competition are the main drivers of e-busi-ness in the tourism sector, while the small size of most companies and the considerable costs associated with acquiring technologies consti-tute the main barriers for a stronger uptake of e-business.

Considering ICT adoption and size of com-panies, the most outstanding result is that small tourism companies are more active users of e-business compared to their counterparts from other industries. The gap between big and small companies in using ICT and e-business appli-cations may be relatively smaller than in other industries. Furthermore, results broken down by different sub-sectors of tourism show that trav-el agencies and tour operators seem to be the strongest adopters of ICT and e-business, fol-lowed by the accommodation sector and – with much lower adoption rates – by the hotel and restaurant sector.

Use of ICT solutions for process integration

The use of ICT and e-business to support and optimise intra-firm processes has become increasingly important. By digitising previously paper-based processes, information and docu-ments related to incoming or outgoing orders or bookings can be seamlessly processed along

111



the company’s value chain; reservations can be linked with capacity management, and the under-lying software systems support controlling and management by enabling full transparency of all business processes. Furthermore, collaborative processes within and between companies are supported, such as information sharing among employees (for example by use of an intranet), planning and demand forecasting, organising and archiving documents, and human resources management. In tourism, similar to other eco-nomic sectors, ICT solutions for these purposes are predominantly used by large companies and, to a lesser degree, by medium-sized firms.

Companies representing 46 % of employment in the tourism sector use an intranet, which can be a useful platform for the secure exchange of information within a company and, possibly, the implementation of internal training programmes, but also for the distribution of planning data among employees. This result is similar to the average of the ten sectors (see Table 5). Yet, there are significant variations between different sub-sectors of the tourism industry: While only 9 % of companies in the hotel and restaurant sector reported using an intranet, 20 % in the accommodation sector and about 48 % of travel agencies and tour operators did so.


Weighting: f igures for totals (sector, all sectors) are weighted by employ-ment and should be read as “enterprises comprising … % of employees”. Figures for size-bands and tourism sub-sectors are in % of f irms from the size-band or sub-sector, respectively.

Intranet Accounting software

ERP system Document management system

Tourism (EU 10) 46 67 15 13





Tourism sub-sectors:

Accommodation sector 20 40 13 15

Hotel and restaurant sector 9 37 3 1

Travel agencies and tour operators 48 78 4 13










N (for sector, EU 10) 725 622 725 725

112


�Adoption�of�ERP�systems,�special��accounting�software�and�systems�for��document�management

A prime example of ERP in tourism are capacity management systems in the hospitality sector. Ideally, these systems provide the back-office functionality behind the customer front end, e. g if a guest calls a hotel by telephone, the receptionist may make the desired reserva-tion of a room directly in the hotel’s capacity management software. In addition, ERP systems can play an important role for supporting the connectivity between enterprises. For compa-nies in the accommodation sector, ERP systems may provide important interfaces in the coop-eration with intermediaries, e. g tour operators. This assumption is supported by data from the e-Business W@tch Survey, which shows that ERP systems are much more used by companies from the accommodation sector (13 %) compared to other tourism sub-sectors.

In the 2006 survey, e-Business W@tch asked those companies that do not use an ERP system whether they used special accounting software (other than just spreadsheet calculation pro-grammes, such as MS Excel) instead. In smaller companies, accounting software typically sub-stitutes to some extent the functionality which ERP solutions have in larger firms, although on a much simpler level and with a lower potential for automating order-related document f lows. In tourism, the usage of accounting software increases significantly with company size: About 45 % of micro enterprises use special accounting software, 63 % of small, 79 % of medium and 91 % of large companies. Overall, about twice as many travel agencies and tour operators use accounting software as companies from the accommodation or hotel and restaurant sector sector. This cor-responds with the assessment that travel agencies and tour operators are the vanguard in the appli-cation of enterprise resource planning and deci-sion-making solutions in the tourism industry.

Special software systems for document man-agement are rarely used in the tourism industry, even less than in most of the other sectors. These software systems are typically used to archive and manage documents of any type in digital format; this is highly relevant, for example, in the insurance industry (management of insur-ance policies), but less important in a service sector like tourism. Within the tourism indus-try, document management systems are mostly relevant for the accommodation providers (15 % of these companies use document management systems) as well as travel agencies and tour oper-ators (13 %), while they are nearly irrelevant for the hotel and restaurant sub-sector. In this con-text, a good example for an application for the accommodation sector is the electronic registra-tion of guests at the local municipality in coun-tries which require such a registration of tour-ists staying overnight (in Germany and Austria the so-called “Elektronische Gästemeldung”). Many suppliers of ERP systems for the hospital-ity industry provide the functionality of such a fully electronic document management system – within an individual tourism company as well as for the transaction of these guest registration documents to the municipality. In this way, ERP systems may be directly connected to applica-tions of e-government for the tourism industry.

E-procurement

�Management�of�procurement�in�a�complex�and�fragmented�value�chain

Efficient management of procurement is a fundamental activity along a sector value chain which is as complex and fragmented as the tour-ism industry. Due to a relatively large number of transactions, even slight improvements in this domain can result in significant overall cost savings. Online procurement can be carried out without having to integrate one’s system with

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suppliers, for instance by making bookings at a supplier’s or partner’s website. It is often the first step towards a more comprehensive and integrat-ed use of ICT in business processes.

Similarly as in other service sectors, the characteristics and the quality control of these services are of utmost importance. Unlike oth-er sectors in which goods or services are more standardised (e. g. in the telecommunications industry), this can be a barrier to the full deploy-ment of e-procurement schemes unless com-monly agreed standards for product or service quality have been introduced.

E-procurement�activity

Companies representing 60 % of employment in the tourism industry in the EU 10 countries said that they place orders to suppliers online, compared to a respective cross-sectoral aver-age of 57 %. Frequency of online procurement increases with company size class – from 38 % of micro enterprises up to 80 % of large compa-nies (see Table 6). Significant differences can be observed between the three tourism sub-sectors covered in this study: 60 % of travel agencies and tour operators, less than half of accommodation companies and about a quarter of enterprises in the hotel and restaurant sector reported practis-ing e-procurement.

Place orders online

Place 1–25 % of their orders online

Place more than 25 % of orders online

Use specific ICT solutions for e-sourcing

Tourism (EU 10) 60 77 23 20


















N (for sector, EU 10) 725 418 418 725

Table 6 Companies ordering supply goods online


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About three quarters of those tourism com-panies which reported ordering online said that these orders account for up to 25 % of their total procurement. In other sectors, the relative share of e-procurement is similar to the tourism results.

In the accommodation and the hotel and res-taurant sector sub-sectors the vast majority of e-procurers seem to handle up to 25 % of their orders online, while only a minority orders more than 25 % online. In contrast, in the sub-sector of travel agencies and tour operators this rela-tion between “modest” and “intensive” users of e-procurement appears quite balanced.

Overall, the 2006 e-Business Survey results indicate that travel agencies and tour operators are quite “heavy” users of e-procurement com-pared to the hotel and restaurant sector and the accommodation sub-sector, as well as in relation to the average of other economic sectors studied this year by e-Business W@tch.


ICT, and in particular the Internet, can be used in various ways to support marketing activi-ties, including the communication with custom-ers, offering products or services for sale or devel-oping new marketing strategies. In the tourism industry, a variety of services and products are

Accept orders from customers online

Receive 1–25 % of orders online

Receive more than 25 % of orders online

Use specific ICT solutions for e-selling

Tourism (EU 10) 49 68 32 28


















N (for sector, EU 10) 725 339 339 725

Table 7 Companies receiving orders/reservations from customers online


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sold via intermediaries, despite the fact that the Internet enables service providers to sell directly to end consumers. As many tourism companies recognise the potential of ICT for marketing and sales, the move towards web-based sales activi-ties in tourism is much more advanced than in other economic sectors. Interestingly, although the tourism sector is one of the vanguards in the application of e-commerce, this does not hold true for all related applications. For example, the diffusion of ICT systems linked with customers is somewhat lower than in other sectors.

Online�orders/reservations�from�customers

Companies representing 49 % of employment in the tourism industry in the EU 10 said that they allow customers to order goods or book services online; this figure is significantly higher than the cross-sectoral average of 35 %. However, this average figure conceals some striking dif-ferences between tourism sub-sectors: While online orders and reservations from customers, unsurprisingly, play only a minor role in the hotel and restaurant sector, they are extremely important for travel agencies and tour opera-tors (where 40 % of companies accept online orders or reservations), and even more so for the accommodation sector where a sizeable 62 % of accommodation providers said that they accept online reservations from customers (see Table 7). This confirms earlier findings.

It must be noted that in tourism there is a general debate about how to define “online bookings”. For instance, some studies consider every reservation an online booking which was initiated via the Internet (e. g. if a customer came across a hotel website on the Internet, sent a request for booking a room manually by e-mail and the hotel replied manually by e-mail and made the reservation manually as well). How-ever, other studies define “online bookings” as fully automated: e. g. if a customer comes across

a hotel website on the Internet (maybe the individual site of the hotel or a platform of an online intermediary) with direct online booking functionality, where he can instantly check avail-ability of rooms and make the booking, includ-ing the confirmation of the reservation within seconds – meaning that the whole workf low on the supply side is fully automated. The question-ing in the 2006 Survey within the framework of e-Business W@tch may be considered much clos-er to the second definition of “online booking”.

Volume�of�online�orders/reservations

Furthermore, findings have to be put into per-spective by the relative share of customer orders received online (as percentage of the total order volume)13. In the tourism industry, a vast major-ity of about 68 % of those companies that enable customers to order online (figure weighted by employment) say that online orders and reserva-tions account for up to 25 % of their total orders received (see Figure 8). In comparison, about 32 % of companies (weighted by employment) receive more than a quarter of their orders online. These average figures are comparable to results of oth-er sectors. However, there are significant differ-ences with different sub-sectors of the tourism industry: Only 17 % of companies in the hotel and restaurant sector receive more than a quar-ter of their orders online, compared to respect-able 34 % in the accommodation sector. Overall, accommodation providers seem to be the strong-est adopters of online bookings. If a company from the accommodation sector accepts orders from customers online, it tends to create consid-erable volumes of e-transactions. For instance, there are only 16 % of accommodation providers which generate less than 5 % of their orders online; in comparison 34 % of accommodation providers generate more than 25 % of their book-ings online.

13 Companies are asked to estimate how large a share of their total orders from customers is conducted online.

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Furthermore, e-Business W@tch asked compa-nies whether they “support[ed] marketing and sales processes by specific ICT solutions”. The rationale for this question is to further test to what extent their e-commerce activities were digitally inte-grated processes, or whether they used rather “simple” forms of e-commerce, such as receiving orders by e-mail without a system that integrates related information and document f lows.

In the tourism industry, companies rep-resenting about 28 % of sector employment reported the use of specific software solutions or Internet-based services for their marketing and sales activities (see Figure 8). This shows that there is a considerable gap between the share of companies which receive orders and reservations online (companies representing 49 % of employ-ment) and those that use special software for doing so (28 %).

�Marketing�and�sales�processes�supported�by�specific�ICT�solutions

Those companies which use specific sales systems tend to use them mainly for publish-ing offers to customers (92 %) and for enabling customers to place orders (81 %; see Figure 8). Answering calls for tenders is less common (about 55 %), and only 39 % of companies with such systems also enable customers to actually pay for the goods or services online which they have ordered. The latter incidence shows how important it is to make a difference between the various phases in e-commerce transactions when analysing this topic. Enabling customers to place an online order in many cases does not mean that they can pay online. In these cases, payment is done in traditional ways, e. g. per-sonally on the spot after having consumed the previously booked service.

Figure 8 Marketing and sales processes supported by specific ICT solutions

Base (100 %): companies using specif ic ICT solutions for marketing/sales. N (for sector, EU 10) = 133. Weighting: in % of f irms.

100

90

80

70

60

50

40

30

20

10

0

Tourism (EU 10) All ten sectors (EU 10)

92

78

Publish offers to customers

Answer calls for tenders

Launch sales auctions

55

15

81

3934

66

19

60

Receive orders from customers

Enable customers to pay online

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�Location�and�type�of�customers��placing�online�orders

Most tourism companies have stated that they receive online orders mainly from custom-ers in their own country, while not necessarily from their own region. Compared to other eco-nomic sectors, the geographic reach of e-com-merce activities in tourism seems to be much broader: Significantly more tourism companies which accept orders or reservations online say that their client base is mainly international (29 % in tourism compared to 23 % across all ten sectors) or national (52 % in tourism compared to 47 % across all ten sectors). Accordingly, only 20 % of these companies have an online custom-er base which is mainly regional (compared to 30 % across all ten sectors).

The geographic distribution of customers that make orders or reservations online differs enormously between different tourism sub-sectors. International customers are extremely important for the accommodation sector while regional customers play a major role for travel agencies and tour operators. Obviously, this is due to the fact that accommodation providers serve an incoming market, while travel agencies and tour operators satisfy the demands of outgo-ing tourists.

Figure 9 Main location of customers that order online

Base (100 %): companies accepting orders online (without “don’t know”). N (for sector, EU 10) = 338. Weighting: in % of f irms.* May not add up due to rounding.

0

Total Tourism (EU 10)*

Accommodation sector

Hotel and restaurant sector

Travel agencies and tour operators


20 40 60 80 100

6

28

53

30

20 52 29

Mainly regional Mainly national Mainly international

50 44

61 11

45 2

47 23

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A large part of the e-commerce activity in tourism is either focused on B2C (in contrast to other economic sectors) or is mixed. 50 % out of those companies which reported accept-ing online orders or reservations said that these are mainly from consumers. At the same time, about 11 % said that bookings are mainly from other companies, which indicates that the Inter-net is a very important sales channel which may allow companies to bypass intermediaries.


This section highlights some aspects of ICT adoption and e-business activities in more detail which were found to be particularly relevant in the tourism industry. It does not claim to be a comprehensive overview.

Dis-intermediation and re-intermediation

“Dis-intermediation” and “re-intermedia-tion” are terms commonly used to describe the changing roles of intermediaries in the tourism value chain as a result of the increasing use of advanced IT solutions and e-business processes. Dis-intermediation is usually associated with the substantially reduced role of traditional interme-diaries (travel agencies and tour operators) in the tourism value chain – a development which is particularly triggered by the introduction of elec-tronic means that enable consumers to transact directly with suppliers, e. g. to book a hotel room directly online via the individual hotel’s website. Re-intermediation, on the other hand, describes a development converse to dis-intermediation, and refers to a process where traditional or new intermediaries use electronic means to provide added value tourism products and services to customers.

In practice, these are two conf licting but par-allel trends which have a profound impact on the role of intermediaries in the tourism market.

Dis-intermediation

ICT enables tourism service providers to interact directly with consumers, which puts enormous pressure on traditional intermediaries (i. e. travel agencies and tour operators). In fact, there appear to be strong economic incentives for both producers and consumers to omit inter-mediaries from the tourism value chain: inter-mediaries are generally associated with adding significant costs to tourism products, thus sup-pressing profit margins of producers of tourism products on the hand, while at the same time creating higher prices for consumers.

Figure 10 Main type of customers that order online (B2B/B2C/B2G)

Base (100 %): companies accepting orders online (without “don’t know”). N (for sector, EU 10) = 351. Weighting: in % of f irms.

Total Tourism (EU 10)


Mainly companies (B2B)

Mainly consumers (B2C)

Mixed

Mainly public sector (B2G)

11

100

0

20

40

60

80

18

50

8

31

39

37

6

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The extent to which intermediaries are bypassed differs considerably between various sub-sectors: while, for example, the accommo-dation sector is only partially affected by dis-intermediation, the aviation industry tends to be much more affected by dis-intermediation – mainly by airlines selling tickets directly to con-sumers over the Internet.

Re-intermediation

If, however, as the “re-intermediation” argu-ment goes, intermediaries manage to provide value-added products and services, intermedia-ries may well continue to play a significant role in tourism value chain. Instead of disappearing intermediaries may in fact gain considerable sig-nificance in the market. Travel agencies, indeed, are fighting back, mostly by offering value-added services, such as assembling complex itineraries or offering personal advice. Similarly, tour opera-tors have been trying to strengthen their position in the market by developing user-friendly com-puter systems and interfaces, cleverly packaging tourism products and by using the new media to promote their products14 more efficiently.

In this way, ICT solutions may also provide new opportunities for traditional players and newly emerging online intermediaries. Many new entrants in the market, which operate exclu-sively online, successfully provide intermediary services, while some brick-and-mortar interme-diaries have managed to secure their position in the market by offering value-added online services.

Ongoing�market�consolidation

There is an ongoing trend of market consoli-dation among intermediaries, driven by organic growth, mergers, acquisitions and strategic alli-ances. The importance of strategic alliances, e. g. is perfectly illustrated by Expedia Inc., the world’s leading online travel company. Expedia has established partnerships with, among many others, the hotel chains Hyatt Hotels & Resorts, Kimpton Hotels or Hilton International, with BedandBreakfast.com – the leading online bed and breakfast Internet directory and reservation network – or with MSN, Microsoft Corp.’s net-work of Internet services.

This development of acquisitions, mergers and strategic alliances – despite an increase in competitiveness on company level – might lead to reduced competition in the tourism market in the long run.

Dynamic packaging

Dynamic packaging is the travel industry jargon for a user-centred, cheaper and more f lexible way of assembling and booking a per-sonalised holiday, using the web and associated application of technology. The phrase is rarely seen in the public literature on a travel website. Instead marketers have adopted more straight-forward descriptions of the technology: Book Together and Save, Build Your Own, or Flight + Hotel, etc. From the end customer/consumer view, dynamic packaging is an online real-time service which mimics the experience of visiting a travel agent and negotiating a deal exactly as the consumer wishes. From the travel service provider view, dynamic packaging automatically combines offerings from more than one data

14 For more details about this issue see the section on “dynamic packaging” below.

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source on demand and according to customer preferences. Using pre-determined packaging rules, which are set and controlled by the service provider, and often hiding price transparency on the individual components, a combined price is determined for the chosen package. The booking can then be confirmed in a single user purchas-ing transaction. Depending on the contracts and “hidden” discounts in place with the inventory providers (such as global distribution systems, insurance, or travel suppliers such as airlines, hotels, car rental companies, tours, activities) an attractive price and assurance of a complete trav-el service can be offered for the entire package.

Dynamic packaging has been heavily dis-cussed in the tourism sector as a new “miracle cure” which offers both the supply and demand side substantial advantages. Dynamic packaging can be considered as a key issue in e-tourism and maybe even as a next logical step in e-tour-ism development, empowering the customer not only to search and book single components, but also to assemble and book whole travel arrange-ments in real-time by means of web-based tech-nology (configurators).

As such, dynamic packaging favours the process of dis-intermediation of traditional trav-el agencies by partially outsourcing their assem-bling-activities directly to customers. On the other hand, dynamic packaging also enables re-intermediation, as there are new online interme-diaries such as Expedia or Orbitz that dominate the field of dynamic packaging.

�Drivers,�barriers�and�overall�assessment��of�dynamic�packaging

Drivers of dynamic packaging are over-capac-ities of service providers, the possibility of cost-competitive customisation of travel components, the avoidance of direct price competition and the prospect to re-establish the tour operators’ brand. At the customer side, dynamic packaging perfectly meets the current trend towards indi-vidualisation of tourism demand.

The main barrier for dynamic packaging is its complexity in three dimensions – the technolog-ical dimension (e. g. requirements for distributed technology, seamless internal processes and the integration of heterogeneous data), the organi-sational dimension (e. g. the harmonisation of supply-side activities and the intensification of collaboration and communication between sin-gle service providers) and the legal dimension (i. e. mainly questions of service guarantee and reliability).

Dynamic packaging will not fully substitute pre-packaged deals. Instead, it will complement the traditional pre-packaged offerings of travel agencies that still provide clear customer ben-efits such as convenience, trust, counselling and support to conveniently find the best offer. Yet, dynamic packaging might force pre-packaged arrangements to offer even lower charges.

So far, dynamic packaging is still a domain of large enterprises, as tour operators and travel agencies with a large network of service provi-ders are best positioned to implement dynamic packaging. Furthermore, most sales of dynamic packages in Europe are from companies in the UK.

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ICT-related developments in the aviation industry

The aviation industry is one of the sub-sec-tors of tourism most affected by the develop-ment of ICT and the Internet. In this context, no-frills airlines are the most striking feature of this market as they rely heavily on e-business solutions.

E-ticketing

The avoidance of classical paper-based tick-ets is one of the core elements of the low-cost business model. Yet, e-ticketing is not limited to no-frills airlines. The adoption of e-ticketing is also increasingly pursued by network carri-ers. The International Air Transport Association (IATA) intends to achieve a 100 % penetration of e-ticketing among its members worldwide by the end of 2007.

�Customer�self-service�and�bar-coded��boarding�passes

Another measure for cost reduction and the acceleration of passenger f lows at airports is to introduce customer self-service check-in solu-tions. This may be done on the spot by self-serv-ice kiosks or in the form of web-based check-ins, which may even allow users to check in from home or their office.

Bar-coded boarding passes offer a natural link with e-ticketing and self-service check-in. Most recently, it is not only possible to print boarding passes at the passenger’s home, but also to place bar codes on the passenger’s cell phone which makes a paper document completely obsolete.


Drivers�of�e-business�adoption

In tourism, customers’ expectations and the opportunity to gain a competitive advantage are clearly seen as the most important reasons to do e-business. Suppliers were not considered as the main driving force, as was the case in most of the other industries (mainly in the manufactur-ing sectors), which indicates that their inf luence in this regard is limited. Rather, pressure seems to be coming from customers. At the same time, the fulfilment of customer expectations also per-fectly corresponds with efforts of tourism service providers to increasingly bypass intermediaries.


Overall, the perceived barriers to e-business adoption in tourism seem to be very similar to the ones of the other economic sectors. The most prominent barrier seems to be that com-panies consider themselves to be too small to benefit from any e-business activities (see Figure 11). Unsurprisingly, especially micro enterprises expressed this argument.

The perception that e-business technology is too expensive is stated as the second most important argument (by enterprises constituting about 42 % of employment in the sector). About one quarter of companies (weighted by employ-ment) state that e-business technology is too complicated, raise security concerns or perceive important legal issues to be unsolved.

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0

55All ten sectors

50–249 employees

10–49 employees

1–9 employees 78

48

43

Tourism 57

20 40 60 80 100

Company too small

Base (100 %): companies saying that e-business does not play a role in their operations.N (for sector, EU 10) = 228.(Note: data for large f irms only indicative due to the very low number of observations)Weighting: totals (for the sector and for all ten sectors) are weighted by employment and should be read as “enterprises comprising … % of employment in the sector(s)”. Figures for size-bands are in % of enterprises from the size-band.

Figure 11 Barriers to e-business adoption as perceived by companies

250+ employees 0

0

30All ten sectors

50–249 employees

10–49 employees

1–9 employees 34

19

30

Tourism 26

20 40 60 80 100

Technology too complicated

250+ employees 0

0

38All ten sectors

50–249 employees

10–49 employees

1–9 employees 45

20

37

Tourism 42

20 40 60 80 100


250+ employees 53

0

24All ten sectors

50–249 employees

10–49 employees

1–9 employees 25

18

30

Tourism 19

20 40 60 80 100

Systems not compatible

250+ employees 0

0

31All ten sectors

50–249 employees

10–49 employees

1–9 employees 29

32

30

Tourism 26

20 40 60 80 100

Security concerns

250+ employees 32

0

22All ten sectors

50–249 employees

10–49 employees

1–9 employees 31

13

28

Tourism 25

20 40 60 80 100

Legal issues

250+ employees 32

0

23All ten sectors

50–249 employees

10–49 employees

1–9 employees 24

17

54

Tourism 21

20 40 60 80 100


250+ employees 0

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ICT have an inf luence on the further consol-idation of intermediaries, and in particular the market concentration of online intermediaries. This could, in the long term, lead to the forma-tion of strong oligopolies with negative effects on competition. In order to counteract such ICT-induced market failure, it is recommended that policy should closely monitor the ongoing mar-ket concentration of tourism intermediaries and intervene, if necessary.

While there are no specific EU programmes to promote e-business and ICT adoption spe-cifically in tourism, the EU’s recent strategy document “A renewed EU Tourism Policy: Towards a stronger partnership for European Tourism” (2006) refers to several existing instruments that can be utilised. To foster the establishment of business networks, develop infrastructure, promote ICT and encourage innovation in SMEs, for instance, the document refers to the European Regional Development Fund programmes (ERDF), while the EU’s proposed Competitiveness and Inno-vation Framework Programme and the 7th EU Framework Programme for Research, Techno-logical Development and Innovation are cited as instruments to encourage R&D activities for tourism companies.

In summary, the study concludes that policy should consider the following objectives and measures in the tourism industry:

– Initiatives to promote networking and coop-eration: It is important to encourage (in par-ticular by industry federations and business support networks) SMEs to form networks with other players and to share resources in order to satisfy the needs of diverse and ever faster changing customer requirements.

– Encouraging the adoption of e-business in micro and small companies, recognising the dominance of micro and small enterprises in this sector. Access to finance for ICT invest-ments poses a particular problem for many tourism companies, especially micro compa-nies.

– Promoting ICT infrastructure and e-inte-grated business processes: the tourism sec-tor is strong in the areas of marketing and sales; however, many companies have not yet integrated these business processes.

– Encouraging innovation and research and development in e-tourism.

2.3. Telecommunications15



The telecommunications industry as defined for the e-Business W@tch Survey covers business activities subsumed as “Telecommunications” under NACE Rev. 1.1 DL 64.2.16 The classifi-cation of telecommunication services by NACE Rev.1.1 as sub-sector of “Post and telecommu-nications” (NACE 64) and without any further subdivision ref lects the heritage of many compa-nies in this sector as state monopolies providing (fixed-line) telephony and fax services.

However, the landscape of telecommunication services is much more diverse today with a large range of output and heterogeneous ecosystems. The proposed NACE Rev. 2 already incorporates this complexity by defining a distinct division for telecommunications and further differentiat-ing wired, wireless, satellite and other telecom-munication activities.17 The qualitative analysis in this report therefore follows this approach.

15 The study on this sector was conducted by Berlecon Research (www.berlecon.de). A more detailed study report is available at www.ebusiness-watch.org.

16 NACE Rev. 1.1 is a 4-digit classif ication of business activities. It is a revision of the “General Industrial Classif ication of Economic Activities within the European Communities”, known by the acronym NACE and originally published by Eurostat in 1970.

17 NACE Rev. 2, Draft, April 12, 2006.


http://www.berlecon.de

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The supplier landscape is highly fragmented with regard to the heterogeneous platforms used for data transmission and the different types of content transferred. One can roughly distinguish suppliers with respect to their business approach into network operators and resellers/service providers. With respect to the type of network operated, the industry distinguishes between different groups, including fixed-line operators, Internet carriers, mobile/wireless network opera-tors and TV cable companies.

Telecommunication services only unveil their full value in combination with input from other sectors. Thus, there are strong links between the telco industry and related sectors, including network infrastructure manufacturing, device manufacturing, IT services and the content industry.


The total sector directly employs about 740,000 people in the EU 25 and has a produc-tion value of about € 150 billion.18

Large companies have a dominant position in the telecommunications sector: Although only a marginal share (2 %) of all telco companies in the EU 15 employed more than 250 people in the year 2000, these large companies accounted for an overwhelming share of value added and employment in this sector. This structure is pri-marily due to the fact that the operation of net-works is highly capital-intensive and subject to economies of scale.

SMEs’ activities are only of small importance in terms of employment and value added. Never-theless, small telco companies have contributed to the general trend of increasing competition and declining prices on the telecommunication market. Other major drivers of this trend include

market liberalisation and regulation, conver-gence of platforms and technologies, market saturation in conventional telco segments and low Return On Investment (ROI) in third-gen-eration networks.


Overall picture

Results from the e-Business W@tch Survey reveal that telco companies have a forerunner position as intensive users of ICT and e-business in almost all application areas. ICT and e-busi-ness technologies form the basis for the provi-sion of services, the sectors’ output and are also a requirement for process support. Therefore, the telco industry has a dual role as user and supplier of ICT and e-business technologies.

According to the companies surveyed by e-Business W@tch, customers’ expectations and fierce market competition are the main drivers of e-business uptake in the telco sector. Telco companies of all sizes make wide use of e-busi-ness tools in almost all application areas. The wide diffusion of e-business technologies also among smaller enterprises distinguishes the sec-tor from most other industries.

ICT infrastructure

Modern ICT infrastructure is essential for the successful supply of telco services. Telco companies not only have an important role as suppliers of ICT infrastructure and services; they also require an efficient network infrastructure as well as powerful and secure Internet connec-tions for the provision of their services and the use of advanced e-business applications.

18 Source: Eurostat, Struc-tural Business Statistics (Industry, Construction, Trade and Services), Annual enterprise statistics (latest f igures available, i. e. for 2003). Downloaded from the Eurostat website in March 2006.

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The high relevance of the Internet for telcos’ work processes is indicated by the large share of employees with Internet access: About 90 % of employees in the telco industry – more than twice as much as on average in all ten sectors studied in 2006 – have access to the Internet. In fact, the Internet has already become the main channel for communication and the primary way to store and access information.

As a result, there is also a greater need for accessing the company network from remote locations (e. g. by managers or field services), and for connecting PCs via a Local Area Network (LAN). Additionally, Wireless LANs (WLANs) installed in telco companies allow for f lexible (wireless) access to the Internet with mobile devices within a company location and, thus, further facilitate the collaboration of employ-ees. Indeed, deployment ratios for remote access solutions, LANs and WLANs as well as for Vir-tual Private Networks (VPNs) to secure remote access connections are significantly above the all-sectors average (see Table 8).

Companies with Internet access

Companies with broadband Internet

access

Average share of employees with

Internet access**

Remote access to company network

Weighting: % of firms % of firms % of firms % of firms

Telecoms (EU 10) 99 85 90 46


Small (10–49 employees) 100 87 87 70


Large (250 + employees) 100* 79* 74* 93*








Firms with Internet access


N (for sector, EU 10) 829 829 817 829

Table 8 Internet access and remote access to company network

* Data only indicative due to low number of obser-vations (N ~ 25–50).

** Please read: “The average share of employees with Internet access in a telco company is 90 %”.

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ICT skills, outsourcing and investments

�Demand�for�ICT�skills�and��skills�development

Due to telco companies’ forerunner position as users of ICT and e-business technologies, demand for ICT skills and efforts for their devel-opment are more pronounced than in the other sectors covered by the 2006 e-Business W@tch Survey.

About one third of telco enterprises employ ICT practitioners – more than twice as many as on average in all sectors surveyed. Moreover, about 20 % of telco companies said that they pro-vide regular ICT training to their employees (see Table 9). ICT skills are not only needed to sup-port internal e-business applications, but also to support technical platforms for service provision and to provide value-added IT services related to the core offerings.

Since a large share of employees (90 %, see above) has access to the Internet, telco compa-nies are in a viable position to use Internet-based technologies for skills development. According-ly, about 30 % of telco companies reported using e-learning applications, i. e. offering training sup-port with electronic learning materials – more than twice as many as on average in all sectors covered.

Outsourcing�of�ICT�services

It is reasonable to assume that telco compa-nies make heavy use of IT outsourcing services: They are intensive users of ICT and e-business technologies, while not all applications are busi-ness critical. By outsourcing non-core IT services (e. g. the maintenance of desktops or call centre infrastructure to specialised third parties) telco companies could focus on their core competen-cies more efficiently and realise cost savings.

Companies employing ICT practitioners Regular ICT training of employees

Weighting: % of firms % of firms

Telecoms (EU 10) 33 21

Micro (1–9 employees) 30 17

Small (10–49 employees) 48 36

Medium (50–249 employees) 63 55

Large (250 + employees) 83* 65*

All ten sectors (EU 10) 14 13

Micro (1–9 employees) 12 9

Small (10–49 employees) 15 16

Medium (50–249 employees) 29 28

Large (250 + employees) 59 41

Base (100 %) Firms using computers Firms using computers

N (for sector, EU 10) 829 829

Table 9 Demand for ICT skills and skills development

* Data only indicative due to low number of observations (N ~ 25–50).

127



Against this backdrop, the share of telco companies that reported to have outsourced ICT services in 2005 (15 %) seems rather low at first glance (see Table 10). However, this find-ing should be carefully interpreted, because it only indicates new outsourcing activities in 2005 and not the general attitude of telco companies towards outsourcing. Typical outsourcing con-tracts last between three and six years. Thus, it is likely that many telco companies have out-sourced ICT services already before 2005.

In fact, Figure 12 indicates that the overall trend seems to be an increase of service out-sourcing in the telco sector. More than 40 % of companies from the telco sector state that the outsourcing of IT services has increased in 2005, while only very few companies said that out-sourcing had decreased.

Have outsourced ICT services in 2005

Share of ICT budget as % of total costs

Have made ICT investments in 2005

Weighting: % of firms % of firms % of firms

Telecoms (EU 10) 15 21 70

Micro (1–9 employees) 13 21 67

Small (10–49 employees) 21 21 89

Medium (50–249 employees) 25 9* 90

Large (250 + employees) 41* (**) 93*

All ten sectors (EU 10) 14 5 50



Medium (50–249 employees) 21 6 78

Large (250 + employees) 31 6 86

Base (100 %) Firms using computers All firms (excl. “don’t know”) Firms using computers

N (for sector, EU 10) 829 493 829

Table 10 Outsourcing and spending on ICT


** Values not displayed because number of obser-vations (N) is < 25.

Telecommunication (EU 10)


Outsourcing has decreased

Outsourcing has increased

–7

50

45

40

35

30

25

20

15

10

5

0

–5

–10

–3

42

26

Base (100 %): companies that have outsourced ICT services. N (for sector, EU 10) = 152.Weighting: in % of f irms. Questionnaire reference: C2

Figure 12 Outsourcing trend: percentage of companies that have increased/decreased their outsourcing activities in 2005

128


ICT�investments

ICT investments in the telco sector are sig-nificantly higher than in other sectors covered by the 2006 Survey. On average, every fifth Euro of total expenditures has been spent on ICT and e-business technologies, according to the survey results (see Table 10). This is due to the fact that ICT is not only used to support inter-nal workf low and the collaboration with busi-ness partners. It is also a requirement for service provision. Investment goods in this sector, for example, include base stations for the rollout of wireless services as well as platforms for manag-ing and billing telco services.

The trend towards convergence in the telco sector is another main driver of ICT expendi-ture today and in the future. Telco companies are challenged to install and integrate new plat-forms to provide services such as VoIP or IPTV.

Accordingly, more than two thirds of telco com-panies reported that they already invested in ICT in 2005. Among medium-sized and large enterprises this share is even higher: nine out of ten companies said that they invested in ICT.

This trend is likely to continue: A consider-able share of telco companies (particularly large enterprises) reported that they expect an increase of the ICT budget in the future (see Figure 13).

Internal and external e-integration of processes

The use of ICT and e-business to support and optimise intra-firm processes and collabora-tion with business partners has become increas-ingly important in the telco industry. Lean and f lexible processes are a precondition for telco companies to deal with increased cost pressure as well as to adjust business models in a rapidly changing market environment. The necessity to streamline business processes affects both inter-

Base (100 %): companies using computers (excl. “don’t know”). N (for sector, EU 10) = 781.Weighting: in % of firms. Questionnaire reference: C2.

* Data only indicative due to low number of observa-tions (N ~ 25–50).

Figure 13 ICT budget trend: percentage of companies that plan to increase/decrease their ICT budgets in 2006 /07

–20 0 20 35 50

Will decrease ICT budget

Will increase ICT budget

–15 –10 –5 5 10 15 25 30 40 45 55 60 65

21


Large (250 + employees)*

Small (10–49 employees) 35–6

33–4

62

36–12

–3

34–4

All ten sectors (EU 10) –5


Total telco (EU 10)

129



nal workf lows as well as the collaboration with business partners, e. g. device manufacturers or content providers.

�Use�of�software�systems�for�internal��process�integration

In the telco industry, about 40 % of compa-nies reported having an intranet, which can be used as a platform for the secure exchange of information within a company. This high diffu-sion of intranets, which is almost twice as high as the all-sectors average, once more underlines the importance of Internet-based applications to support daily work routines in this sector.

More than half of large enterprises and almost one third of medium-sized enterprises in the telco sector reported using ERP systems (see Table 11). Although problems solved by Enter-

prise Resource Planning (ERP) systems are typically of higher relevance in manufacturing industries than in service sectors like telecom-munications.

In the 2006 Survey, e-Business W@tch asked those companies that do not use an ERP sys-tem whether they have dedicated accounting software (other than just spreadsheet calculation programmes, such as MS Excel). In smaller com-panies, accounting software typically substitutes to some extent for the functionality of ERP soft-ware used in larger firms. However, this is valid on a far simpler level and with a lower potential for automating order-related document f lows. Overall, a large majority of companies, particu-larly among medium-sized and large companies, reported using some kind of accounting soft-ware (either ERP system or dedicated account-ing software).

Intranet Accounting software ERP system

Weighting: % of firms % of firms % of firms

Telecoms (EU 10) 41 61 11




Large (250 + employees) 91* 96* 53*









N (for sector, EU 10) 829 637 829

Questionnaire reference D1a D1e D1d



130


�Use�of�ICT�for�cooperative�and��collaborative�business�processes

The increasing complexity of output requires internal and external collaboration. Accordingly, the deployment of tools for online cooperation and collaboration in the telco value chain is clear-ly above the average of all sectors covered for all tasks listed in Table 12. More than one third of telco companies, for instance, said that they use online tools for sharing documents. This high share underlines that there are e-business tools suitable to support this task in the telco industry and probably less complex alternatives to docu-ment management systems.

About 20 % of telco companies reported using online tools for collaborative design (“e-design”) with other companies – almost three times as many as in all ten sectors studied. However, it is difficult to draw a clear line as to which software

applications and which practices are included or not. For telco companies, for example, there might be some need to discuss the design of telco equipment with partners from the respec-tive industries.

Another example is collaborative forecasting of demand. There are quite sophisticated tools for calculating demand, determining the amount and time of production and thus the demand for various inputs (supply goods), storage capacity and other services. Figures for the adoption of related systems in the telco industry are similar to those for collaborative design. Deployment ratios are again well above the average of other industries.

Share documents in collaborative

work space

Manage capacity/ inventory online

Collaborative design processes

Collaborative forecasting of demand

Weighting: % of firms % of firms % of firms % of firms

Telecoms (EU 10) 36 19 19 23




Large (250+ employees) 46* 28* 21* 26*






Base (100 %) Firms with Internet access

N (for sector, EU 10) 824 824 824 824

Table 12 Online cooperation and collaboration within the value system


131




ICT�support�of�customer-facing�activities

Telco companies make intensive use of e-business technologies to support customer-fac-ing activities. Results of the e-Business W@tch Survey 2006 show that deployment ratios for basic customer-facing e-business applications such as company websites or tools supporting ordering and e-invoicing are significantly higher in the telco sector than across all sectors studied (see Table 13).

About 40 % of all firms active in the telco industry in the EU 10 stated that they allow cus-tomers to order goods or book services online from the website or through other computer-mediated networks. This figure is clearly above the all-sectors average. There are many smaller telco companies, e. g. in the reseller market, that have based their business model completely on the Internet, including the ordering process.

�Use�of�specific�ICT�solutions�for��marketing�and�sales�support

Also the share of telco companies using spe-cific ICT solutions for marketing and sales sup-port is clearly above the average of all sectors covered by the 2006 e-Business W@tch Survey. About one out of five telco companies reported using specific software solutions or Internet-based services for its marketing and sales activi-ties (see Table 13). As in other sectors, the diffu-sion of these solutions increases with company size. Nevertheless, the considerable share of small companies supporting marketing and sales activities by specific ICT solutions distinguishes the telco industry from most other sectors stud-ied in 2006 by the e-Business W@tch.

Total telco (EU 10)

Micro Small Medium Large All sectors (EU 10)

Basic customer-facing e-business tools

Website 77 75 90 96 100* 55

Accepting orders online 40 40 37 35 63* 25

Sending e-invoices 30 29 43 32 36* 13

Core applications to support marketing and sales processes

CRM systems 24 21 36 55 74* 18

Specific ICT solutions for marketing and sales 21 19 28 35 62* 9

Integration of customers 8 7 11 16 6* 5

Table 13 ICT support of customer facing activities (summary of survey results)

Weighting: in % of f irms.

* Data only indicative due to low number of observa-tions (N ~ 25–50).

132


Those companies that have dedicated sales systems in place, tend to use them mainly for enabling customers to place orders (79 %), publishing offers to customers (72 %) and for answering calls for tenders (67 %) (see Figure 14). Enabling customers to pay for the services ordered online is less common (37 %). The latter incidence shows how important it is to differen-tiate between the various phases of e-commerce transactions when analysing this topic. Enabling customers to place an online order is in many cases still separate from the payment of this order. In that case, payments are often processed in traditional ways, e. g. via bank transfer upon receipt of an invoice for the respective order.

�Use�of�CRM�systems�and�integration��of�ICT�systems

CRM systems are widespread in the telco industry, where many companies are operating on a mass market and the quality of customer service is a major competitive factor. Almost one quarter of telco companies said that they have installed a CRM system – a share that is more than double the average in all ten sectors. CRM software suites are quite expensive and require a lot of organisational effort to be effectively implemented in a company. This should be the main reason why the diffusion of CRM systems increases with firm size (see Figure 15).

Figure 14 Marketing and sales processes supported by specific ICT solutions

Base (100 %): companies using specif ic ICT solutions for marketing / sales. N (for sector, EU 10) = 217.Weighting: in % of f irms. Questionnaire reference: F11

100

90

80

70

60

50

40

30

20

10

0

Telecommunications (EU 10) All ten sectors (EU 10)

7278

Publish offers to customers

Answer calls for tenders

Launch sales auctions

67

21

79

3734

66

19

60

Receive orders from customers

Enable customers to pay online

133



However, it should also be taken into account that still – despite its complexity – every fifth micro company, every third small, and every second medium-sized company in this sector reported using a CRM system. Some function-alities of CRM systems may also be realised by rather simple e-business applications. Therefore, the (at first glance) seemingly low usage num-bers related to the use of CRM systems, par-ticularly among small enterprises in this sector, should not be overvalued.


E-business�drivers

As in most service sectors, companies from the telecommunications industry stated that customers’ expectations and the opportunity to gain competitive advantage were the most important reasons for doing e-business. Suppli-ers are not a key driving force; rather, pressure is coming from customers. Due to the increasing availability of Internet access among consumers, demand for customer-related services provided via the Internet increases.

Figure 15 Use of CRM and integration of ICT systems with customers

Base (100 %): companies using computers. N (for sector, EU 10) = 829.Weighting: in % of f irms. Questionnaire reference: F2, F13b.


75

60

45

30

15

0Total telco (EU 10)


Small (10–49 employees)

Large (250 + employees)*



105

74

6

55

16

36

11

2421

78

ICT system linked with customers

Use CRM

134



Taking into account that the largest part of “e-business-sceptical” telco companies are micro enterprises, it is not surprising that barriers like “company too small” and “technology too expen-sive” were reported as major inhibitors of doing e-business in this sector (see Figure 16). While these reasons also prevail in most other sectors (usually among SMEs), security concerns seem to be particularly widespread in the telco indus-try indicating pronounced awareness of security issues and, in general, closer affinity with ICT in this sector.


The study concludes that there is no need for promoting ICT adoption in the telecommu-nications industry. The sector was found to be a forerunner in almost all e-business application areas, with adoption ratios strongly above those in other sectors surveyed. The experiences of the telco sector can rather be taken as a role model for e-business adoption in other industries.

Market failures due to ICT usage have not been detected, either. On the contrary, the tel-co industry may rather serve as a role model for the successful combination of liberalisation efforts and the use of opportunities derived from e-business technologies. The combination

Figure 16 Barriers to e-business adoption as perceived by companies

Base (100 %): companies saying that e-business does not play a role in their operations. N (for sector, EU 10) = 157. Weighting: in % of f irms.

0

Lack of reliable IT suppliers

Company too small



Security concerns

Legal issues

10 20 30 40 50 60 70

5668

4040

3535

1826

46

33

3122

21

33

Telecommunications

All ten sectors


135



of market liberalisation and increasing impor-tance of e-business was a main driver of com-petition in this sector. Decreasing price levels and an increasing variety and quality of telco services (that may also accelerate the diffusion of e-business technologies in other sectors) are consequences of this development.

2.4. The hospital sector19



Hospital activities are a sub-section of human health activities which comprise medical, surgi-cal and other related on-site care activities. In this report only acute care hospitals are consid-ered. The reason is that health processes, busi-ness activity and ICT use in acute care hospitals is quite different from other types of hospitals and for this report more relevant. The notion “acute” refers to the fact that the hospitals are predominantly serving patients in immediate need of health care, as opposed to long-term care.

Many health services in hospitals can only be provided using specialised facilities and equip-ment that form an integral part of the produc-tion process. On the input side, hospitals need a large variety of inputs from suppliers in order to provide their services. On the output side, hos-pitals are integrated in a network of health serv-ice providers with particular roles. Furthermore, hospitals deal with non-medical organisations for purposes of administration, reimbursement, and information.


Hospitals are a large service sector both in terms of employment and value added. Howev-er, there are no solid European-wide data about the number of hospitals, number of hospitals by type, number of hospitals by size class, number of employees in hospitals and GDP produced by hospitals.

According to data from national statistical sources provided by the company that conducted the e-Business W@tch Survey 2006, the number of hospitals in the EU in 2005 was about 13,000. Hospitals vary widely in size. In contrast to many other sectors of the economy, the majority of hospitals is large or medium-sized in terms of number of employees. In 2005, 32 % of hos-pitals in EU Member States had more than 250 employees, 30 % had 50–250 employees, 20 % had 10–49 employees, and a minority of 18 % had 1–9 employees. The majority of hospitals is pub-licly owned or publicly financed, with a grow-ing minority of private hospitals. There is also a minority of private non-profit hospitals.


Overall picture

The e-Business Survey 2006 shows that the hospital activities sector is one of the sectors with the highest ICT and e-business use. For example, as regards ICT networks, hospitals were found to be above the all-sectors average in Internet access, broadband access and remote access to the hospital’s computer network. Hospitals also reported higher levels for internal and external e-collaboration as well as e-procurement. This is however partly due to the fact that hospitals tend

19 The study on this sector was conducted by empirica. A more detailed study report is available at www.ebusiness-watch.org.


136


to be larger organisations with more than 250 employees. In any case, hospitals were found to be well behind other sectors in e-business solu-tions facing patients, notably online booking of services and e-marketing. This indicates oppor-tunities for improvement in this respect.

According to the survey results, small hospi-tals generally lag behind medium-sized and large ones in ICT and e-business use. This applies, for example, for Internet, broadband and remote network access as well as for internal and exter-nal e-collaboration. However, small hospitals reported higher shares of employees that have Internet access and Internet telephony use as well as for online service booking.

Standards and interoperability

Currently there is a large number of ICT standards for the health sector in use. Commit-ment to European and international standards is generally weak, and there is a tendency for Member States to create national ICT standards for the health sector. Only 26 % of the hospitals of the e-Business Survey 2006 said they use the health-specific HL7 standard.

Base (100 %): hospitals that say that interoperability is critical for their e-business. N (for sector, EU 10) = 306.Weighting: % of employment. Questionnaire reference: G6

Figure 17 Problems due to a lack of interoperability: hospitals experiencing difficulties in …

40

30

20

10

0Cataloguing

13

20

Payments

34

25

Invoicing

37

25

Regulatory aspects

1816

Logistics

23 23

30

24

Technical aspects

Procurement

18

25


Hospitals (EU 10)

137



The hospitals were asked whether they exper-ience problems due to a lack of interoperability with regard to seven items: procurement, logis-tics, invoicing, payments, cataloguing, technical aspects, and regulatory aspects. In four of the seven categories, the share of hospitals report-ing difficulties due to a lack of interoperability was larger than the all-sectors average: invoicing (37 % in hospitals versus 25 % in all ten sectors), payments (34 % versus 25 %), technical aspects (30 % versus 24 %) and regulatory aspects (18 % versus 16 %).

Data security

Hospitals face a dilemma: on the one hand patient data need to be readily available; on the other hand, information needs to be protected from unauthorised use and against loss or modi-fication. Hospitals were found to respond to this

challenge: The reported levels of use of secure server technology and digital signature or pub-lic key infrastructure in the hospital sector were twice as high as in all sectors. The level of use of a firewall was also reported to be much higher in the other sectors studied by e-Business W@tch in 2006. According to the e-Business Survey 2006, the use of secure server technology and digital signature or public key infrastructure grows with hospital size: It is largest in large hospitals and smallest in small hospitals, while medium-sized hospitals have the highest level of firewall use.

Secure server technology

Digital signature or public key infrastructure

Firewall

Hospitals (EU 10) 63 40 92

Micro/small (1–49 employees) 23 12 80








Base (100 %) Hospitals using computers Hospitals using computers Hospitals using computers

N (for sector, EU 10) 539 539 539


Table 14 ICT security measures used by enterprises

138


Online procurement and online booking

Online�procurement

Hospitals need to procure a large variety of goods and services in order to provide their serv-ices. These inputs include food and beverages, garments and bed textiles, stationery products, drugs, and medical technologies and many more products and services. Thus, procurement and supply chain management play an important role in hospital activities.

According to the e-Business Survey 2006 results, 67 % of hospitals (same figure in terms of employment-weighted data) said they place orders online. Of these, 73 % (71 % weighted by employment) said they place more than 5 % of their orders online and 27 % (29 % weighted by employment) said they place more than 25 % of their orders online. 12 % (19 % weighted by employment) stated they use specific ICT solu-tions for e-sourcing. In comparison with the oth-

Place orders online

Place/receive more than 5 % of orders

online

Place/receive more than 25 % of orders

online

Use specif ic ICT solutions for

e-sourcing

Hospitals (EU 10) 67 71 29 19

Micro/small (1–49 employees) 55 73 27 7








Base (100 %) Hospitals using computers

Hospitals placing orders online

Hospitals placing orders online

Hospitals using computers

N (for sector, EU 10) 539 300 300 539

Table 15 Hospitals ordering supply goods online


er sectors studied this year by e-Business W@tch, the reported share of placing orders online was very high in hospitals activities (67 % versus 48 % in all sectors). This underlines the importance of e-procurement for hospitals. However, when comparing only large organisations, e-procure-ment figures for hospitals are similar to the other sectors.

Online�booking

Electronic sales do not appear to be well suit-ed to hospitals because hospitals do not market and sell their services like firms in other sec-tors. Patients are usually referred to hospitals by primary care clinicians or, particularly in case of emergency, they choose or are allotted to the hospital that is closest to their location. However, while hospitals do not directly sell their services, there is an opportunity for online booking for services.

139



10 % of the hospitals surveyed this year (rep-resenting 7 % of this sector’s employment) said they accept bookings from patients online. Of these hospitals, 83 % (93 % weighted by employ-ment) reported receiving between 1 and 25 % of their bookings online, and a further 17 % (7 % weighted by employment) said they receive more than 25 % of the bookings online. 8 % of the hos-pitals using computers said they use specific ICT solutions for online booking.

Compared to firms in other sectors included in the e-Business Survey 2006, the reported level of online booking in hospitals was much lower (10 % versus 25 % in all other sectors). There appears to be a deficit in customer-facing, i. e. patient- and citizen-facing, online solutions in hospitals. The reported use of specific ICT solu-tions for e-sales was about the same level with regard to the percentage of firms but it is much lower with regard to the employment-weighted figures (8 % versus 18 % in all sectors).

The share of hospitals that accept online bookings from patients was larger among micro and small hospitals (19 %), while medium-sized (5 %) and large hospitals (6 %) followed well behind. It may be that small hospitals benefit from their organisational f lexibility when intro-ducing online booking opportunities.


Implementation and integration of separate information systems

Overview

Hospital Information Systems (HIS) are the core means of e-business in hospitals. There are numerous different systems hospitals can put in place which can be subdivided into systems for patient and financial administration, medi-cal records, order communication, departmental systems, clinical infrastructure, knowledge sup-port, procurement-related systems and market-

Accept bookings from patients

online

Receive 1–25 % of their bookings

online

Receive more than 25 % of their

bookings online

Use specif ic ICT solutions for

e-selling

Hospitals (EU 10) 7 93 7 8

Micro/small (1–49 employees) 19 – – 10

Medium (50–249 employees) 5 – – 7

Large (250+ employees) 6 – – 8






Base (100 %) Hospitals using computers

Hospitals accepting orders online

Hospitals accepting orders online

Hospitals using computers

N (for sector, EU 10) 539 39 39 539

Table 16 Hospitals receiving bookings from patients online


140


ing-related systems. Two types of systems are of particular importance: firstly, e-prescribing and medication management systems as pre-scriptions are a core means of treatment, and, secondly, imaging systems because imaging is a core means of diagnosis. Integration of separate systems is a further important issue.

HIS�benefits�and�implementation�

HIS can help to cope with the huge amount of data a hospital has to deal with, they can enhance communication among professionals and bring useful knowledge to them, and they can make processes more efficient.

Almost all European hospitals have at least an electronic system for patient data and financial administration. According to e-Business W@tch, 83 % of all hospitals and hospitals representing 90 % of employees have a patient administration system. However, advanced clinical support sys-tems are not yet widely available.

E-prescribing�and�medication�management�

When supporting medical decisions, e-pre-scribing and electronic medication management systems can reduce medical errors and, ultimate-ly, save lives. The e-Business Survey 2006 found that in 12 % of the hospitals (21 % weighted by employment) prescriptions are transferred elec-tronically and 19 % (29 % weighted by employ-ment) have a Computerised Physician Order Entry (CPOE) system. CPOE is a term intro-

Patient administration system

Radiology Information Systems (RIS)

Picture Archiving Systems (PACS) and medical image transmission




Large (250+ employees) 92 50 34


N (for sector, EU 10) 539 539 539

Pharmacy management system

Electronic transmission of prescriptions

Computerised Physician Order Entry

(CPOE)




Large (250+ employees) 72 24 31


N (for sector, EU 10) 539 539 539

Table 17 Use of departmental information systems

Weighting: f igures are weighted by employment and should be read as “enterprises comprising … % of employees”.

141



duced in the US and may not yet be common in Europe. Some interviewees in the e-Business Survey 2006 probably considered rather sim-ple medication documentation in computers as e-prescribing or CPOE. This may explain why the figures for CPOE use found in the e-Business Survey 2006 are exceptionally high. It is esti-mated that around 2 % of the larger European hospitals use an intelligent CPOE. This low fig-ure makes the introduction of systems for CPOE a political and economic issue. However, CPOE systems may not be appropriate in medical units with frequent need of emergency medication because CPOE may delay therapy and diagnos-tic testing.

Radiology�Information�Systems�(RIS)

Electronic imaging offers improved visualis-ing, archiving and communication methods. It can thus improve diagnosis and quality of care as well as reduce administration costs. However, the survey found that only around a quarter of the hospitals apply such systems. Radiology Information Systems (RIS) are in use in 27 % of the hospitals (hospitals representing 45 % of employment) and 25 % of the hospitals (32 % weighted by employment) are equipped with a Picture Archiving System (PACS). Since RIS have been available since around 1995 and PACS are a more recent product, sold since around 2001, the figures for PACS appear to be quite high. 42 % (67 % weighted by employment) have a pharmacy management system.

HIS�integration�

As hospital services may require the interac-tion of different departments, separate HIS need to be integrated to open up all potential ben-efits. However, often this is not the case inside the same hospital. Findings suggest that there

are three principal reasons: firstly, a lack of ICT planning which may be caused by a complex hospital organisation; secondly, difficulties with ICT suppliers, and, thirdly, a lack of commonly used industry standards:

– Lack of ICT planning. There are numerous possible reasons why ICT planning in hos-pitals may be suboptimal. First of all, large hospitals are complex entities with numerous departments and professions. In the e-Busi-ness Survey 2006, 58 % of the hospitals said they expect important impacts of ICT on management in the future. This assessment may also be related to the need for a stronger hospital-wide management in the course of HIS implementation integration. Further-more, hospital management may assign ICT issues a relatively low priority, there may be a lack of in-house ICT skills or a weak ICT department, or the ICT department may be reluctant to outsource services.20

– Difficulties with ICT suppliers. Hospitals may face various difficulties with informa-tion system suppliers. First, the market for hospital ICT is quite fragmented and local-ised. Small and local ICT suppliers usually offer confined solutions that cannot neces-sarily be integrated with other systems in the same hospital. Even if hospitals buy from large suppliers, these may not necessarily spend enough effort on properly integrating competitors’ systems. If hospitals seek tailor-made solutions, the suppliers may rather seek to sell their standard systems. The fact that a “lack of reliable IT providers” appeared to be a more important barrier in hospitals (34 %) than in other sectors (20 %) in the e-Business Survey 2006 may ref lect all these shortcom-ings.

20 This argument is supported by f indings from the e-Business Survey 2006 about IT outsourcing in large f irms which was reported to be lower in hospitals than in the all-sectors average.

142


– Lack of standards and interoperability. The integration of separate HIS may be hampered by a lack of standards applied by industry and requested by users. Even when a hospital is built from scratch, standardisation issues will arise. When hospitals introduce HIS for various departments and functions and legacy systems are still in place, interoper-ability problems will surely arise. This issue may particularly apply to large hospitals with many departments and systems operating with different standards, and it is a special issue when several hospitals are merged. For small hospitals the challenge may rather be to invest in an expensive tailor-made integra-tion application.

Impacts of ICT use in hospitals on the wider health system

ICT investment in hospitals impacts not only on the hospitals themselves but also on the wider health care system. Two related issues are discussed by the e-Business W@tch. Firstly, the continuity of care across hospital borders. Sec-ondly, the question whether the role of hospitals is changing with regard to relationships towards patients and the division of labour with different hospitals and other health care providers.

ICT�supporting�continuity�of�care

Since health care is increasingly specialised and tasks are distributed across a large number of professionals, there is a need for ensuring continuity of care across departmental and extra-mural interfaces. Continuity of care may be hampered because data availability may be delayed, data may be insufficient or data may be

neglected. ICT can support structured commu-nication among clinicians to achieve appropriate health care provision. Electronic patient records and web services are two means of improving continuity of care which are currently on the agenda of many European hospitals.

As regards Electronic Patient Records (EPRs), roughly 50 % of the hospitals in West-ern European countries claim to have EPR sys-tems.21 However, there is hardly any evidence of implementation of comprehensive records that can be used beyond the walls of the organisa-tion. The reasons for this underdevelopment are manifold:22 health professionals’ professional backgrounds do not necessarily support the idea of the sharing of patient information; common standards are not yet agreed; legal requirements are complex; industry is facing high costs for development and customisation of EPR systems due to different legal requirements, languages and work processes in each country and hospi-tal; health care managers and authorities often lack vision and leadership; and EPRs are not necessarily accepted by the health professionals supposed to use them.

As regards web services, their impact and inf luence on health information system applica-tion development and deployment is yet limited. In spite of their potential benefits, web-services-based Health Information Systems are far and few. The level of adoption may partly be due to unique problems and challenges in develop-ing and deploying real-life applications based on web services in the health care domain.

21 Findings from the Health Information Network Europe (HINE) 2004.

22 See Iakovidis (1998), pp. 109–113. In: Iakovidis, Ilias: Towards personal health record: current situation, obstacles and trends in implementation of electronic healthcare record in Europe. In: International Journal of Medical Informatics, Vol. 52, pp. 105–115.

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Changing�role�of�hospitals

The role of acute care hospitals is to provide in-house, comprehensive, specific and round-the-clock care. Some hospitals also have the role of professional and student education and academic research. In the course of increasing investment in ICT, the role of hospitals may change. The analysis suggests that ICT impacts mainly on the relationship towards patients and the need for in-patient care. Most importantly, electronic communication between hospitals and general practitioners or the patients them-selves may make a patient’s visit at the hospital unnecessary. The hospitals’ boundaries poten-tially become more permeable; the role of hos-pitals may slowly shift from an in-house care provider to an outbound communicator.


E-business�drivers

In the e-Business Survey 2006, hospitals were asked whether certain reasons were important for starting to use e-business. Expectations from health insurance funds appear to have been the most important driver among the items asked; 70 % of the hospitals stated this. For 55 % of the hospitals, “gaining competitive advantage” was a driver and for 40 % the fact that “competitors do it”. This confirms that there is considerable com-petition among hospitals. Suppliers’ expectations were stated as a driver by 37 % of the hospitals.

Figure 18 Drivers of e-business adoption: hospitals saying that … was an important reason for starting e-business

Base (100 %): hospitals say-ing that e-business is a part of their operations. N (for sector, EU 10) = 372.Weighting of data for sector and all sectors: % of employment. For size classes: % of enterprises. Questionnaire reference: H2

100

90

80

70

60

50

40

30

20

10

0Total hospitals

(EU 10)Small

(1–49 employees)Medium

(50–249 employees)

7067



70

55

4037

4337

34

18

76

4539

24

71

57

41 40

59

41

Competitors do it Health insurance funds expectations

Supplier expectations Gaining competitive advantage

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In the other sectors studied this year by the e-Business W@tch, f irms were not asked about “insurance funds expectations” but “customer expec-tations”. The all-sectors average and the level of agreement to this question in hospitals was the same (70 % each). Gaining competitive advantage (67 % versus 55 % in hospitals) and the fact that competitors do it (59 % versus 40 % in hospitals) emerged as the prevailing drivers in all sectors.

Expectations of health insurance funds were reported to be a much more important driver of e-business for large (71 %) and medium-sized hos-pitals (76 %) than for small ones (43 %). Gaining competitive advantage was reported to be most important for large hospitals (57 %), followed by medium-sized (45 %) and small (37 %) ones. The same sequence applied to “supplier expectations”. The differences between size-classes were not so distinct with regard to “competitors do it”.

E-business�inhibitors

In the e-Business Survey 2006, the hospitals were asked whether certain barriers to e-business adoption apply to them. Security concerns were the most important barrier, reported by hospitals representing 59 % of employment in the sector. “Technology is too expensive” was mentioned by an almost equally high share of hospitals (57 %). The other pre-formulated barriers followed well behind: 37 % for “hospital is too small” and “legal issues”, 34 % for “lack of reliable ICT providers”, 30 % for “systems not compatible”. The item that was regarded as the smallest barrier was “technol-ogy is too complicated” (21 %).

Security concerns (59 % versus 31 % in all sectors studied this year by e-Business W@tch), expensive technology (57 % versus 38 % in all sectors) as well as legal issues (37 % versus 22 % in all sectors) appear to be much more impor-tant barriers than in the other sectors included in the e-Business Survey 2006. A lack of reliable ICT providers (34 % versus 23 % in all sectors) and incompatibility of systems (30 % versus 24 % in all sectors) were more important barriers in the hospital sector, too. This means that in most pre-formulated items – five out of seven –, the share of hospitals reporting a barrier was larger than in the other sectors. Only for “hospital is too small” (37 % versus 55 % in all sectors) and “technology is too complicated” (21 % versus 30 % in all sectors), was the share of hospitals reporting to perceive a barrier smaller.

The assessments of barriers to e-business adoption differed to some extent between the size classes. For small hospitals, the most impor-tant barrier reported was that the “hospital is too small” (76 %); a reason that is also of particu-lar relevance for medium-sized hospitals (65 %). Even 28 % of the interviewees in large hospitals said that their hospital is too small. Expensive technology was reported to be more important by large (60 %) and small (61 %) hospitals than by medium-sized ones (45 %). It may be that small hospitals face particular challenges in accessing investment funds, while large hospitals face sub-stantial investment costs because they require comprehensive and complex systems.

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Figure 19 Barriers to e-business adoption as perceived by hospitals

0

55All ten sectors

250 + employees

50–249 employees

1–49 employees 76

65

28

Hospitals (EU 10) 37

20 40 60 80 100

Base (100 %): Hospitals saying that e-business does not play a role in their operations.N (for sector, EU 10) = 157.Weighting of data for sector and all sectors: % of employment. For size classes: % of enterprises.Questionnaire reference: H3

Hospital too small

0

38All ten sectors

250 + employees

50–249 employees

1–49 employees 61

45

60


20 40 60 80 100



0

30All ten sectors

250 + employees

50–249 employees

1–49 employees 29

15

22


20 40 60 80 100


0

24All ten sectors

250 + employees

50–249 employees

1–49 employees 24

27

29


20 40 60 80 100

Security concerns

0

31All ten sectors

250 + employees

50–249 employees

1–49 employees 46

67

60


20 40 60 80 100

Legal issues

0

22All ten sectors

250 + employees

50–249 employees

1–49 employees 38

47

37


20 40 60 80 100


0

23All ten sectors

250 + employees

50–249 employees

1–49 employees 17

32

36


20 40 60 80 100

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The following policy implications are direct-ed primarily to e-business and health policy makers. Health policy makers may have direct or indirect inf luence on investment decisions in hospitals, and public hospitals in particular. Therefore some of the implications directly affect hospital management.

– Fostering interoperability. In order to facili-tate the integration of separate information systems in hospitals, health policy makers should increase awareness about interoper-ability issues in e-health. They should active-ly promote and facilitate interoperability by appropriate investments in the work of stand-ardisation organisations and their standardi-sation efforts. Voluntary use of standards by hospitals and other health service providers could contribute significantly to interoper-ability.

– Enhancing ICT investment. Improvements in ICT applications in hospitals can come about only if the hospitals invest adequately in these technologies. Hospitals should care-fully plan ICT spending within the near future and also develop a long-term strategic ICT plan. They should not necessarily expect quick returns of ICT investment. Many hos-pitals lack the investment capabilities as well as human resources for a “great thrust” towards implementation of comprehensive ICT applications. A step-by-step investment approach however appears to be appropriate.

– Improving education and training in health ICT. Effective use of ICT in hospitals requires adequate education of the users, e. g. physicians, nurses, and pharmacists as well as administrative staff. In particu-lar, there appears to be a need for training of hospital Chief Information Officers and Chief Executive Officers, as the e-Business Survey 2006 found that ICT is expected to impact on hospital management heavily in the future. Thus, policy makers should strive to provide adequate education and training opportunities for hospital managers.

– Ensuring data security. Hospitals need to be aware that security issues cannot be solved by purely technical means but that a broad approach needs to be applied, including a security policy and provisions such as secu-rity training.

– Monitoring role changes. Health policy mak-ers should thoroughly monitor the chang-ing role of hospitals in order to encourage developments that are wanted and to react to unwanted developments if need be. Rele-vant indicators to be monitored include, e. g., shifts in size classes, in different locations, and public or private ownership. The rela-tionships of hospitals towards patients, other hospitals, and primary health service provid-ers should also be monitored.

– Inform the public about ICT in hospitals. Research for this report has not revealed any signs that patients and citizens are requiring more ICT use in hospitals. Thus, a poten-tially important driver of ICT use in hospital appears to be missing. Therefore, patients and citizens in Europe should be better informed about the benefits of ICT use in hospitals. Such information could be provided by pub-lic authorities in the field of health and ICT on European, national and regional levels.

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3. Conclusions and outlook

3.1. ICT impact on firms

The four sector studies confirm that e-busi-ness plays an important role in all sectors stud-ied, albeit in different ways. In manufacturing industries, the focus of ICT use is quite different from that in service industries such as telecom-munications, tourism or the hospital sector. The e-Business Survey 2006 included a series of questions to see where companies experience the main impact of ICT on their business. The main results are presented in this section.

�How�companies�perceive�the�overall��impact�of�ICT�on�their�operations

e-Business W@tch asked interviewees for a concluding assessment whether e-business constituted a “significant part or some part of the way they operate, or none at all”. In total in the ten sectors surveyed in 2006, companies

representing about 70 % of employment in these industries feel that e-business constitutes at least some part of their operations. 23 % said that it was a significant part (see Figure 20).

As can be expected, the perceived relevance of e-business increases slightly with firm size. While about 65 % of SMEs observed at least some impact on their company operations, more than 80 % of large firms did so. There are also some noticeable differences by industry; how-ever, these are to some extent side-effects of industry structure. For example, the relatively low percentage of companies in the footwear and construction industry have to do with the prevalence of small craft firms in these sectors. On the other hand, the companies’ assessment clearly documents the importance of e-business for ICT-related industries, in particular for the telecommunications industry (see section 2.2.), and for tourism.

“Significant part of how we operate” “Some part of how we operate”

Food and beverages

Footwear

Pulp and paper

ICT manufacturing

Consumer electronics

Shipbuilding

Construction

Tourism

Telecoms

Hospitals

Micro (0–9)

Small (10–49)

Medium (50–249)

Large (250+)

0 20 40 60 80 100

15 52

23 47

33 4818 5019 46

12 40

36 4437 51

27 4914 42

18 4517 55

32 4517 50

14 37

Total

Figure 20 Perceived overall importance of e-business for company operations

Base (100 %): companies using computers, ten sectors, EU 10. N = 7,237. Weighting: total and sector totals are weighted by employment and should be read as “enterprises representing … % of employees in the respective sector(s)”; data for size-bands in % of f irms from a given size-band.

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�Where�companies�experience�an�influence�of�ICT�on�their�business

The business areas where most companies observe “a positive influence of ICT”, out of a list of seven areas proposed, are “internal work organisa-tion” (firms representing 61 % of employment) and “business process efficiency” (57 %, see Figure 21). “Customer service” is close to this (52 %). Inter-estingly, positive ICT effects on procurement costs, which is one of the most commonly quoted objectives of e-business, appears to be compara-tively less relevant, as only 38 % observe posi-tive effects. The same applies to product quality. In all areas, only few companies said they had experienced a negative inf luence of ICT.

Again, there are some differences between size-bands and sectors. In particular, the percent-age of companies saying that they experienced positive effects on business process efficiency and internal work processes is larger for medium- sized and large companies than for small ones. On the other hand, the share of companies that reported positive effects on revenue growth, pro-curement costs and product/service quality is similar for all size-bands.

0 50

Positive

Negative

–10 10 30 70

Work organisation 61–3

Base (100 %): companies using computers, ten sectors, EU 10. N = 7,237. Weighting: data are weighted by employment and should be read as “enterprises representing … % of employees”.

Figure 21 Perceived ICT influence on the company’s businessRevenue growth 44–1

Processes efficiency 57–1

Procurement costs 38–3

Product quality 38–2

Productivity

52–2Customer service

55–2

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�Where�companies�expect�ICT�to�influence�their�business�in�the�future

Firms expect that ICT will have a signifi-cant impact on how they do their business in the future. In particular, they believe that ICT will become even more important as a tool to sup-port planning, decision-making and controlling (see Figure 22).

Without doubt, management and controlling functions in an enterprise depend critically on ICT systems. They provide information faster, more f lexibly and more concisely than would otherwise be possible. In larger enterprises, many of the regular management reports (e. g. from controlling) are automatically generated from ICT-based information systems.

However, there are some pronounced differ-ences between small firms and large companies in how they see the future impact of ICT. In general, large firms expect a much more sig-nificant impact – this holds true for all busi-ness functions. For example, while about 50 % of large companies expect a “high impact” on management and accounting, only 25–35 % of small firms do. Similarly, relatively more large companies than small ones expect that ICT will have a high impact on their future marketing activities and on customer support functions.

Base (100 %): companies using computers, ten sectors, EU 10. N = 7,237. Weighting: data are weighted by employment and should be read as “enterprises representing … % of employees”.

Note: May not add up due to rounding.

0 20 40 60 80 100

Management 33 30 37

Expect medium impactExpect high impact Expect low/no impact

R & D 24 18 58

Production 20 22 58

Logistics 25 25 50

Figure 22 Anticipated future impact of ICT on various business functions

Accounting 40 29 31

Customer support 34 24 41

Marketing 37 27 36

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It is interesting that marketing and customer support have overtaken production and logis-tics as primary application areas for ICT in the scenario of large firms. This applies not only to service sectors such as tourism and telecom-munications (obvious for these industries), but increasingly also to manufacturing sectors. For example, even in a traditional production-focused sector such as the pulp and paper industry, cus-tomer support is perceived as a key function of ICT in the future.

These findings confirm the impression that e-business is increasingly evolving from a tool for cutting costs into an instrument that helps companies serve their customers better. The development in B2C-focused service industries now seems likely to take place in B2B-focused manufacturing industries.

Thus, the use of ICT in business is probably far from having reached its zenith. It is an evo-lutionary development which can be described in terms of innovation life-cycles. The current life-cycle has been characterised by a focus on process efficiency and was led by large players in the private and public sectors. The next life-cycle (which is now beginning to emerge) could see companies go beyond this goal. They will increasingly use ICT not only as a tool to run their business, but to change their business. In the long run, most business will probably be “e-business” in one way or another.

ICT�and�innovation

The capability for innovation is very impor-tant for European companies to stay competi-tive in global competition, in particular to keep their position in higher market segments which rely on differentiation and quality. It is largely recognised that ICT is an important driver and enabler of innovation, in particular for process innovation (e. g. automation, f lexible re-organi-sation).

e-Business W@tch asked companies whether they had launched any new or substantially improved products or services during the twelve months prior to the interview, and if they had introduced new or significantly improved inter-nal processes in the same period of time. Com-panies that indicated that they have introduced innovations were then asked follow-up questions on the role of ICT for their innovation activity.

Enterprises representing about 30 % of employment in the ten sectors studied said that they had launched new (or improved) products in 2005/06. About 50 % of these firms said that their product innovations had been directly related to or enabled by ICT. There are differ-ences by sector. For example, ICT is of course more important for developing new products in ICT-related industries.

In all industries, ICT is a key enabler of proc-ess innovations. In total, companies representing about 30 % of employment in the ten sectors said that they had introduced process innovations in the twelve months prior to the interview. Out of those, about 75 % said that their innovations were ICT-enabled.

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3.2. Scenario for the evolution of e-business until 2010

This section proposes five hypotheses regard-ing the further development of e-business in the next few years. A likely scenario is that we will see a dynamic evolution based on maturing tech-nologies, with quite substantial implications for firms in many industries. Competitive pressure in an increasingly international marketplace will continue to be a powerful driver of process inno-vation. The importance of ICT as an enabler in this context is uncontested.

3.2.1. The end of ICT scepticism – and a new role for information management

The overly pessimistic and hesitant attitude of many companies towards ICT after the burst of the new economy bubble is passé. The cost saving potential of ICT has been broadly recognised by companies. Efficiency and productivity gains have been the key driver in the past and will continue to be an important objective for ICT investments in the future. E-business is a substantial part of process innovation in companies, and firms can-not afford not to take part in these innovations. Large firms, and increasingly the public sector, are spearheading in this development.

This does not mean that companies make the same mistake as in 1999/2000, when many firms made substantial speculative investments, falling victim to the general hype. Firms have learned their lesson and are now pressing hard for evidence proving the return on their ICT investments. This poses challenges for both ICT service providers and for ICT managers in firms who have to “sell” their concepts internally to the management or board. It is often difficult to separate the impact of ICT from other factors inf luencing business, and effects do not always show in the short term. Notwithstanding these challenges, the investment climate has clearly improved compared to previous years.

In parallel to the recuperation of the ICT investment climate, the role of information man-agement in companies may further increase in importance. Information managers will take the role of intermediaries between the ICT depart-ment and the operational departments of a com-pany (procurement, production, marketing), i. e. the internal ICT users. Information managers have to translate user requirements into tech-nical specifications, while considering overall strategy and business objectives. They have to bring all these pieces together into a coherent ICT strategy for the company. Planning an ICT strategy will thus increasingly be part of the overall strategy of companies.

Hypothesis 1

The broad ICT scepticism of the years after the new economy failure is finally overcome. On average, firms’ ICT expenditures will increase at growth rates beyond that of GDP. At the same time, companies will be more determined to monitor the return on investment. This could imply new requirements for information man-agement and ICT controlling.

3.2.2. Further digitisation of business processes – large firms and public sector to lead

While it may take some time for these new technologies to unfold their full potential, the further digitisation of business processes is in high gear already. A focus in this context is currently on processing invoices and payments electronically. The main objective is to elimi-nate paper-based processes by electronic ones, in order to reduce processing time, error rates and ultimately costs.

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In the long run, “e-finance” will go beyond processing invoices and payments between com-panies and include all types of financial serv-ices which a company needs, for example credit transactions with banks and support in export finance.

Banks, insurances, e-payment service provid-ers, and other intermediaries offering financial services (e. g. export support organisations) will play an important role in this development.

In the current phase, large enterprises and the public sector take a leading role in this devel-opment. They are the main beneficiaries, as they typically have to process a large number (“critical mass”) of invoices and payments, thus profiting most from reducing processing time. But they can only do so if their suppliers and customers play along, i. e. if they also have the required sys-tems to send or receive invoices electronically. Thus they exert pressure on SMEs to get ready for e-invoicing.

e-Business W@tch studied this development in a special report in 2005. The assessment was the e-invoicing has a great potential in many sectors and will gain further momentum in the years to come. In summary, the following hypothesis can be proposed:

Hypothesis 2

Further digitisation of B2B, B2G and G2B exchanges and transactions. The digitisation of formerly paper-based business processes will gain momentum. Large companies and the pub-lic sector will drive this development and exert pressure on smaller firms, e. g. their suppliers, to follow on. Invoicing and payment procedures could be the focus of digitisation in the near future.

3.2.3. ICT to change the business – a longer-term scenario

It is quite safe to say that the use of ICT in business is far from having reached its zenith. At first sight, this might appear to be in contrast with the assessment that “e-business has matured in large firms”. However, e-Business W@tch pro-poses that the evolution of e-business can be described in terms of innovation life-cycles. Each of these cycles is characterised by a set of domi-nating technologies that drive innovation in this particular period, by specific business objectives, and the resulting implications for competition in various industries.

The starting point of the current e-business life-cycle can be dated to 2001, after the burst of the new economy bubble. Thus, it has evolved in parallel to the life-cycle of e-Business W@tch. It succeeded the earlier life-cycle (which can be dated from 1995–2001), which was dominated by the paradigm of an all encompassing Internet economy, where all business is conducted over the web. The paradigm governing the current innovation life-cycle has been much more real-istic and rational, focusing on the exploitation of ICT for increasing the efficiency of business processes and saving costs.

While this will continue to be an important business objective in the next few years, it is likely that the next life-cycle (which is now beginning to emerge) will see companies go beyond this goal. Possibly, the “misplaced targets” (see Road-map of 2003) of the earlier e-business life-cycle might see a revival. This time, however, enabled by much more powerful technologies than six to ten years ago, they might be quite realistic. Eventually, all business will become e-business in one way or another. Thus, the term “e-busi-ness” might become meaningless at some point, as the concept is standard business practice.

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Hypothesis 3

A new innovation life-cycle is emerging in e-business. Companies will increasingly use ICT not only as a tool “to run the business”, but to change their business. While companies will continue to use ICT for optimising the efficien-cy of their existing business, global competitive pressure will drive firms to adopt new business models. Transactions will increasingly be web-based. In the long run, most business will be “e-business” in one way or another. The term “e-business” will no longer exist as the concept has become common (business) practice.

3.2.4. VoIP – from cost savings to process innovation

VoIP – i. e. the routing of voice over Inter-net-protocol-based networks – has initially been promoted as a way to save on communication costs. Over the next years, companies will be getting more aware of the technology’s addition-al potential to enable process innovation particu-larly with regard to new internal and external organisational challenges.

Internally, companies require a high degree of f lexibility in order to manage teams and ena-ble them to communicate in an efficient way. Also, new work concepts such as home working or job rotation within corporations are gaining importance. Externally, companies’ boundaries are continuing to blur. For instance, their supply chains are in the process of fragmentation and prolongation, adding more complexity to compa-nies’ operations.

VoIP offers significant potential to deal with these challenges. For example, highly mobile workers are going to be available under a single calling ID irrespective of their current location. In addition, IP-based voice services can be com-

bined with an indication of presence, which is an important feature for individuals that work together in diverse geographies and f lexible teams across companies.

Because the technology is IP-based, voice can also be integrated with internal and external data networks. Concepts such as fixed-mobile convergence (between networks) and unified communication (between speech and data appli-cations) are likely to gain traction among busi-nesses. Likewise, there is potential for the inte-gration of IP-based voice communication into other e-business systems, for example CRM and SCM applications, to further streamline the underlying work processes.

As can be shown by the findings of the 2006 e-Business W@tch Survey, VoIP penetration is already increasing significantly in early-adopter industries such as telecommunication, but also in consumer electronics, ICT manufacturing, and food and beverages. With companies con-tinuing to replace their legacy (ISDN or ana-logue) telephony systems, investment in VoIP equipment and services is very likely to increase in other industries as well.

Hypothesis 4

While VoIP has initially been promoted as a way to save on communication costs, companies will increasingly realise its potential for process innovation. The technology’s high degree of f lexibility provides them with the means to meet the challenges of their increasingly complex business environments. Because it is IP-based, the technology also enables the convergence of fixed/mobile as well as data/voice networks. In addition, VoIP will be increasingly integrated with other e-business tools to further streamline processes.

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3.2.5. Digital convergence – new challenges for e-business integration

Although there is no single definition of con-vergence, the term generally describes technical and marketing developments that result in the blurring of lines between multiple industries and their offerings, particularly in consumer electron-ics, ICT manufacturing, telecommunication and content distribution. Across these industries, the primary drivers of convergence are:

– digitisation of content, enabling its distribu-tion over IP-based channels;

– IP transformation of telecommunication services, enabling the delivery of voice serv-ices over IP-based channels;

– increased availability and affordability of broadband Internet connections, enabling and promoting the digital delivery of high-value content and information services;

– increasing availability and capability of mobile technologies, merging services based on mobile and fixed-line networks.

These developments will have an increasing impact on the provision and distribution of prod-ucts and services, manufacturing and marketing. Processes will need to be further integrated across companies in a highly f lexible way. E-business will be challenged to meet companies’ require-ments in a market environment that is becoming less static and more network-oriented.

With regard to sourcing and manufacturing, convergence will require companies to coop-erate with an increasing number of partners, because not all necessary resources are available in-house. The need for cooperation and integra-tion is, for instance, ref lected in a trend within industries to migrate from proprietary to open

e-business standards. These standards are gain-ing importance because they enable businesses to connect/disconnect their sourcing processes at short notice and with changing partners. Almost 30 % of large telecommunications companies – which are particularly affected by convergence – state that their ICT system is integrated with those of their suppliers. This is more than three times as much as stated by companies across all sectors surveyed.

On the marketing side, many products and services will cease to be stand-alone offerings to consumers. The convergence of services and products requires marketing in the form of cross-selling or bundling (e. g. mobile phones and wireless telephony services or Internet access or telephony and TV access services), or as truly converged services. One example for the latter is telcos’ “triple play” strategy, where telephony, Internet access and TV are offered over a single network. This, on the one hand, requires the exact billing of converged services within a single consumer account, and on the other hand, close cooperation and revenue sharing provisions with content and service providers. E-business tools will have to support these new requirements.

Hypothesis 5

The convergence of digital products and services will continue to have an effect on com-panies’ sourcing, manufacturing and marketing activities. Companies will rely on f lexible and integrated ICT solutions to cooperate with an increasing number of external partners and to manage sell-side activities. Because of their enabling potential, networked, open standards-based e-business technologies will gain further importance in the near future.

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4. Appendix I: E-business survey results by country

The studies of e-Business W@tch have a secto-ral perspective, and focus within sectors on small and medium-sized enterprises. The analysis of geographic differences is not in the foreground. This decision on the focus of the study recog-nises that the e-business activities of a company are mainly determined by its business activity, the configuration of its value system and its size, rather than by the location of a firm.

�Companies�in�Nordic�countries�are�best��connected�within�their�value�system

Nevertheless, the survey data enable some comparisons by country, in particular on the aggregate level, where a sufficient number of interviews is available for each country. In 2005, e-Business W@tch found in a special study that EU enterprises are – on average – level with their counterparts in other advanced economies in their use of ICT. However, there are still some differences within the EU, particularly with regard to the average ICT maturity of smaller companies.

DE ES FR IT FI UK EU 10

Employ ICT practitioners 23 22 26 31 47 19 27

Average share of employees with Internet access at their workplace 41 37 33 29 48 44 43

Have broadband Internet access 73 82 83 69 90 71 76

Enable remote access to the company’s computer network 37 38 36 22 61 33 35

Place orders to suppliers online 71 39 67 44 80 50 57

Receive orders from customers online 34 23 44 31 54 41 35

Use CRM system 17 21 24 9 34 14 18

Use ERP system 14 23 35 15 37 15 19

Track working hours / production time online 21 18 14 8 50 24 18

Use online technologies for collaborative demand forecasting 13 21 29 14 16 23 20

Maintain ICT links with suppliers 9 9 19 11 35 10 12

Maintain ICT links with customers 9 7 12 5 20 6 10

Send e-invoices to the public sector 25 23 21 7 30 20 18

Send e-invoices to customers in the private sector 17 27 26 9 32 22 19

Receive e-invoices from suppliers 18 28 13 20 45 28 22

Say that e-business constitutes a part of the way they operate 82 58 64 67 75 77 70

Table 18 Key e-business indicators for selected EU countries

Weighting: in % of f irms.

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In general, firms in Northern European countries tend to be more inclined towards ICT and e-business than their Southern European counterparts. In particular, as the e-Business Survey 2006 shows, the connectivity between companies is quite advanced in Finland, Swe-den and Denmark, compared to most other EU countries. Within the EU 10 sample (see Appen-dix II – methodology), Finland is the benchmark in ICT connectivity.

Companies from France, the Netherlands, the UK and Germany are very similar in their use of ICT, particularly if emphasis is laid on the larger companies. Firms from the new Member States (Czech Republic and Hungary), although occupying the lower ranks in a benchmarking scoreboard, are not far behind in their use of ICT.

�Impact�of�industry�structure�–��challenges�for�comparisons�by�country

Country data on e-business adoption must be taken with a pinch of salt. They can ref lect, at least to some extent, the structure of the economy rather than the overall e-maturity of firms. In Italy, for example, sectors dominated by small firms are much more prevalent than in other countries. Since large firms are more advanced in electronic business, aggregated data may point to a lower level of e-business activity in Italy. In contrast to Italy, the relative performance of French and Dutch companies is significantly better if the emphasis is on larger firms. These benchmarking results suggest that the digital divide between small and large firms could be quite pronounced in these countries.

5. Appendix II: Methodology of the e-Business Survey 2006

e-Business W@tch collects data on the use of ICT and e-business in European enterprises by means of representative telephone surveys. The e-Business Survey 2006 was the fourth survey after those of 2002, 2003 and 2005. It had a scope of 14,081 interviews with decision-makers in enterprises from 29 European countries.

The survey was conducted in March and April 2006 using Computer-Assisted Telephone Interview (CATI) technology. Field-work was co-ordinated by the German branch of Ipsos GmbH (www.ipsos.de) and conducted in co-operation with their local branches and partner organisations. The countries covered include EU Member States, acceding and candidate coun-tries, and countries of the European Economic Area (EEA).

Population�and�sampling

Most of the tables in this report feature a breakdown of the population of enterprises based on the aggregate of ten EU countries. The “EU 10” cover the Czech Republic, Finland, France, Germany, Hungary, Italy, the Netherlands, Poland, Spain and the UK. In these countries the survey covered all ten sectors and therefore comparability of the sample across sectors is given. The EU 10 represent more than 80 % of the total GDP and inhabitants of the EU 25 and are thus to a large extent representative for the whole EU.

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The survey was carried out as an enterprise survey, i. e. focusing on the enterprise as a busi-ness organisation (legal unit) with one or more establishments. Similarly to 2005, the 2006 survey also included only companies that use computers. The configuration of the survey set-up (e. g. sam-pling) ref lects the mandate of e-Business W@tch to focus on sectors and SMEs. As a result, comparisons should mainly be made between sectors and between size-bands of enterprises. Breakdowns by country are also possible, but should be treated cautiously.

No cut-off was made in terms of minimum size of firms. The sample drawn was a random sample of companies from the respective sec-tor population in each of the countries, with the objective of fulfilling minimum strata with respect to company size class per country-sector cell.

No.Sectors covered No. of enterprises

in EU 25*No. of interviews

conductedNACE Rev. 1.1 Sector name

1 DA 15 (most groups) Food and beverages 282,000 1,709

2 DC 19.3 Footwear 13,700 980

3 DE 21 Pulp, paper and paper products 18,400 1,158

4 DL 30, 32.1 + 2 ICT manufacturing 31,800 1,687

5 DL 32.3 Consumer electronics 5,400 665

6 DM 35.11 Shipbuilding and repair 7,200 150

7 F 45.2 + 3 (selected classes) Construction 1,546,000 2,655

8 H 55.1/3, I 63.3, O 92.33/52 Tourism 1,500,000 2,663

9 I 64.2 Telecommunication services 12,900 1,580

10 N 85.11 Hospital activities (e) 13,000 834

Table 19 Population coverage of the e-Business Survey 2006

* Mostly based on Eurostat SBS, latest available f igures.

(e) = estimated on the basis of f igures for the former EU 15 (no f igures available for EU 25).

Weighting

Due to stratified sampling, the sample size in each size-band is not proportional to the population numbers. If proportional allocation had been used, the sample sizes in the 250+ size-band would have been extremely small, not allowing any reasonable presentation of results. Thus, weighting is required so that results ade-quately ref lect the structure and distribution of enterprises in the population of the respec-tive sector or geographic area. e-Business W@tch applies two different weighting schemes: weight-ing by employment and by the number of enter-prises.

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– Weighting by employment: Values that are reported as employment-weighted figures should be read as “enterprises comprising x % of employees” (in the respective sector or country). The reason for using employ-ment weighting is that there are many more micro enterprises than any other firms. If the weights did not take into account the economic importance of businesses of differ-ent sizes in some way, the results would be dominated by the percentages observed in the micro size-band.

– Weighting by the number of enterprises: Val-ues that are reported as “x % of enterprises” show the share of firms irrespective of their size, i. e. a micro company with a few employ-ees and a large company with thousands of employees both count equally.

Confidence�intervals

In terms of statistical confidence intervals, for totals of all-sectors (for the EU 10), an accuracy of about ± 3 percentage points can be expected for most values. For industry totals (EU 10), con-fidence intervals differ considerably depending on the sector and the respective value; on aver-age, an accuracy of about ± 5 percentage points can be expected. Differences lying within these intervals should not be emphasised.

More�information

More detailed information about the sur-vey methodology, including information about sampling and the business directories used, the number of interviews conducted in each coun-try and sector, data on non-response rates, as well as selected results by country are available on the e-Business W@tch website (at http://www.ebusiness-watch.org/about/methodology.htm).

http://www.ebusiness-watch.org/about/methodology.htm

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The CE market in Western EuropePart Two · EITO 2007

This study has been provided by GfK in close co-operation with the EITO Task Force on the basis of the latest information available as of November 2006.

For the purpose of this study Western Europe includes Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland and the UK.

1. CE market trends

Consumer Electronics (CE) in Europe con-tinued to fare well with a healthy growth of 9.0 % in 2006. This is due to the presence of some dynamic products in the market portfolio, e. g. f lat-screens, Global Positioning Systems (GPS) and Digital Personal Video Players (DPVP). The FIFA World Cup helped the f lat-screen market to achieve a huge additional turnover in 2006, while the product that took the CE world by surprise was the GPS. DPVPs are very popular and have taken the market by storm. However, most markets continue to decline.

Market heavyweights are facing movement within the hierarchy of brands. Distribution channels have also been subject to a variety of changes. The Consumer Electronics Specialist (CES) channel now accounts for more than 50 % of total CE sales but Internet sales are gaining momentum, too.


In 2006, the acceptance of the High Defini-tion (HD) format was confirmed, as HD-com-patible televisions gained market share. This was also fuelled by the growing network of digital reception devices, e. g. Digital Video Broadcast-ing-Terrestrial (DVB-T) in Europe. At the same time, the concept of video mobility appeared in the market with portable devices such as portable TVs, the above-mentioned DPVPs and portable Digital Versatile Discs (DVD).

In 2007 big changes in HD hardware and the software sectors are expected. The con-f lict between Blu-Ray and HD DVD formats to secure their position as the next generation (gen-next) format will be interesting to watch. The Rugby World Cup will be key for the growth of set-top boxes as more and more TV channels offer HD broadcasts.

The market awaits the introduction of the Digital Video Broadcasting-Handhelds (DVB-H) format in many European countries, but this technology as yet lacks cohesive spectrum-plan-ning within the European Commission to over-come technical shortcomings.

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Figure 1 TV formats’ development in Europe, € billion

25

20

15

10

5

020062002 2003 2005

LCD TV

Plasma TV

2004

Rear and front projection TV

CRT TV

2007

2. CE country market comparison

2.1. France

France experienced a slight economic recov-ery in 2006 thanks to the strengthening of the Euro along with a fall in unemployment.

In 2006 the French CE market grew by 10.8 %. There was a huge boost in the first half of the year due to the FIFA World Cup, followed by a slowdown in the second half. However, French customers’ interest in exploring a variety of new products like portable multimedia players, por-table DVD and GPS devices points towards a healthy future for the market. The CE sector will benefit from customer interest in investing time and money on high quality products, resulting in a 2.6 % growth for 2007.

Although it was expected that sales of f lat TV would fall back after the impressive growth seen at the beginning of 2006, Liquid-Crystal Display (LCD) sales held up and plasma sales were again sustained by massive promotions on trade brands.

The Cathode Ray Tube TV (CRT TV) mar-ket is on the wane, despite some respite dur-ing the soccer tournament. The few brands that continue to sell CRT with integrated DVB-T are now looking to delete them from their product portfolio, as they are no longer as popular as their f lat TV equivalent. On the other hand, the slim tube feature is now one of the most attrac-tive segments in this market.

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The DVD hardware market as a whole is fac-ing a downward trend in terms of both volume and value sales. However, the general market is neatly divided between mature technologies (DVD players) and high-end innovative products (portable players, Hard Disc Drive [HDD] record-ers), with the latter enjoying booming sales and high development potential. The DVD players segment remains the most important in terms of volume, but its much lower market value (only a third of the market) underlines its lack of profit-ability compared to recorders. As recorders and portable players hit the mass market in France, hypermarkets’ share of the distribution mix is increasing.

In the set-top box market, in contrast to 2005, DVB-T devices maintained a high sales level. The market benefited from the increase in coverage that took place in June 2006. Flat TVs with an embedded digital terrestrial tuner also enjoyed a successful back to school period. They now account for half of the sales in volume. According to forecasts, around 20 % of French households should have been able to receive a DVB-T signal by the end of 2006.

Surpassing market expectations in terms of sales out, GPS has set new records. Due to new market entries (with a European mapping fea-ture), the “local-only” manufacturers are losing share to the “local and major roads” sector with little difference in average prices.

The camcorder market, on the other hand, continued to suffer and still had a negative value performance. However, trends indicate potential for recovery, thanks to new DVD and HDD for-mats.

Total home audio (audio home systems and separate components) was once again the worst performing CE market. The summer period in 2006 saw customers heading for camcorders, portable audio or car navigation aisles rather than the static audio section. Although the trends in value and volume of audio systems are almost in line, there is a price drop because of the greater share enjoyed by micro systems. The most strik-ing fact is the substantial decrease of mass mer-chandisers in audio systems, with hypermarkets mainly responsible.

In the Tuner-Amplifier-Receiver (TAR) area (separate Hi-Fi elements category), interest was stirred up by the creation of a syndicate for the promotion of Digital Audio Broadcasting (DAB) in France. Set up by the main French radio channels, this syndicate aims at accelerating the implementation of DAB in France.

Market trends for digital multimedia players, fusion MP3 and DPVP are still highly positive both in volume and value. Nevertheless, with built in Hard Disc Drive technology (+HDD), the market only really owes its continued suc-cess to DPVP products, as +HDD MP3 volumes are rapidly decreasing. MP3 products experi-enced their own increase in sales thanks to f lash memory products. Current downward trends are a clear ref lection of the erosion of average prices, especially for 256 MB and 512 MB capacities. In comparison to MP3, DPVP market trends are far more impressive.

In a market which has an overall profile that is healthy, headphones (audio home system cat-egory) are arguably the fastest growing segment in value. On the other hand, ultra high frequency and infrared wireless segments found it difficult to maintain growth. In the near future, Blue-tooth models are expected to inspire a revival of wireless technology.

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In the recording media section, trends for 2006 were positive. Increases in capacity meant that the fastest growing value segment for mem-ory cards was for products of at least 1 GB. How-ever, products with capacity at or below 512 MB generated 53 % of market value. Despite their limited share, small specialists performed well in both markets. Hypermarkets remain the lead-ing channel with a substantial growth.

2.2. Germany

In Germany in 2006, economic growth improved significantly compared to the poor performance of previous years. Stronger growth has also led to more jobs, resulting in a reduc-tion of the unemployment rate.

One reason for Germany’s improvement in 2006 was the country’s hosting of the FIFA World Cup in June and July. This event brought increased consumer optimism and stimulated their desire to buy durable goods, which was at its highest for more than 15 years. In addi-tion, the consumption of private households was especially stimulated in the last three months of 2006 due to the impending introduction of higher value-added tax at the beginning of 2007, increasing from 16 % to 19 %. Hoping to save money, consumers decided to buy CE in November or December 2006 instead of waiting until early 2007. This had an additional impact particularly on the sales of advanced TV.

As a result, the CE market in 2006 grew by 8.2 %, mainly driven by the development of TV, particularly in mid-year just before the World Cup, but also in the last two months of the year.

Figure 2 Personal audio formats’ development in Europe, € million

5,000

4,500

4,000

3,500

3,000

2,500

2,000

1,500

1,000

500

020062002 2003 2005

MP3 digital personal audio

Other digital personal audio

2004

Analogue personal audio

2007

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Consumers intend to buy more and more f lat screens, with larger and larger screen sizes and parallel improvement in picture quality. Expecta-tions are that this sector will continue to grow significantly in future years.

Not surprisingly, traditional CRT TVs declined by more than 40 %, and will suffer further massive losses in 2007. Future demand for this segment will be restricted to cheap basic sets as even 32 ́ ́ LCD-TV-sets are available for less than € 500.

Having declined by 8.2 % in 2006, DVD could well increase again by around 2 % in 2007. The market is becoming more high-tech as consumers choose DVD recorders rather than simple technology DVD players, but even the increase in sales of hard disc drive products can-not offset the chronic price erosion. In addition,

household penetration of DVD in Germany is already estimated to be about 65 % and any fur-ther increase is expected to happen only very slowly. HD-DVD and Blu-Ray may bring fresh stimuli in 2007.

Both the camcorder and the digital camera markets declined in value despite the develop-ment and uptake of new technologies in these markets. This means that DVD camcorder, hard disc drive, and high density technology models are coming through but are subject to the same aggressive pricing as basic products. The same tendency is true for higher pixel-classes and sin-gle-lens ref lex digital cameras.

Figure 3 Home audio formats’ development in Europe, € billion

6

5

4

3

2

1

020062002 2003 20052004

Home cinema systems

Audio home systems

Separate Hi-Fi elements

2007

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Although the Hi-Fi market was still negative in 2006, there is scope for improvement in some segments in 2007. The development of the TV market points to the need for high quality Dolby digital systems. This development can be seen in high price home cinema systems, in high price digital Dolby receivers or amplifiers and even in the positive growth of loudspeaker systems. After consumers have bought a high value f lat-TV set with fantastic picture quality they expect a similar level of sound quality.

Portable audio showed the same negative trends in Germany as in other European coun-tries. MP3 is no longer just a segment of the por-table audio market but also a feature of an ever growing percentage of mobile phone handsets and Personal Digital Assistants (PDAs). Market turnover can be stimulated by sales of docking stations and mini speakers and also by digital personal video players.

2.3. Italy

The overall situation in Italy was character-ised by the elections in spring 2006 resulting in a change of government. Italy won its fourth World Cup. Generally speaking, a World Cup always has an important inf luence on the sales of CE and especially on the sales of TV sets.

Although there was a very slight slowdown in the total Italian CE market towards the end of 2006, the variety of products available to con-sumers was still sufficient to ensure a market value similar to the year before.

Even if some older CE technologies declined against the previous year, the strength of f lat-screen TV and digital personal audio was con-firmed by further robust increases.

Other products were at best f lat in value sales and in some cases, mostly traditional analogue categories, extremely negative. The rapid decline of old CRT TV is the logical consequence of the strong performance of new innovative f lat panels. It should be noted, however, that CRT TV in terms of unit sales still accounts for about 60 % of television sets sold. CRT TV continues to decrease, however, both in volume and value; even small screens, despite the steady decrease in their average price and the varied range on offer, are starting to be affected by the strong growth of LCD. Similarly, the Video Cassette Recorder (VCR), never as popular in Italy as elsewhere in Europe, has quickly been super-seded by DVD players and recorders.

Although the total TV market, comprising both CRT and advanced TV, showed a positive growth of 6.4 % in volume, the much higher pric-es of f lat TV resulted in an increase of 12 % in value. The whole LCD market is growing, par-ticularly screens over 30 ́ ́ in size. Both volume and value trends are positive, at 51 % and 39.7 % respectively.

On the other hand, there has been a slight slowdown in growth of sales of plasma screens. Plasma screens, mostly with a screen size of 42 ́ ́, now compete against LCD TVs available in the same sizes. Although volume growth was 25 %, value sales were unchanged from 2005, ref lect-ing the steep decline in the average price for plasma TV in this new competitive situation.

The DVD recorders market is growing. This is helped by the availability of products at more affordable prices and by the continuing introduc-tion of new brands to the market. Sales of DVD players, on the other hand, are down despite fur-ther reductions in average price.

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The trend for total camcorders is negative, both in value and volume, due to the demise of traditional mainstream products even if some newer segments, especially products with DVD, HD and f lash memory, are enjoying growth.

During 2006, home audio products per-formed badly both in volume and in value. The need for high quality audio that complements HD televisions would provide manufacturers an opportunity to give fresh impetus to home cin-ema in 2007. A growth of high price home audio products can be expected during the year 2007. Three categories will be involved in this trend: high advanced home cinema systems, audio/video receivers and Hi-Fi loudspeakers.

The portable audio segment showed an over-all positive trend in 2006 which was due main-ly to two booming markets, MP3 and DPVP. All analogue portable audio products declined, especially CD players and radio recorders. Here, too, little change is forecast for 2007 so the posi-tive digital and negative analogue trend is set to continue.

In 2006, the recording media market decreased less in volume (–11 %) than in value (–16 %). Value performance was strengthened by the increasing popularity of upmarket products (memory cards and USB). In 2007, only these two latter products will register any growth.

2.4. Spain

Spain’s economy has been growing at around twice the EU average. The government has made only moderate progress in changing labour laws and reforming pension schemes.

The words illusion on the one hand and dis-appointment on the other could perfectly sum-marise and define the behaviour of the Span-ish CE market in 2006. An illusion because the remarkable overall growth, as in 2005, is coming almost exclusively from f lat TV (together with

a slight contribution from portable navigation devices), whereas all other areas, with hardly any exceptions, show very strong decreasing trends. On the other hand, disappointment is felt because, despite the apparently good sales achieved during the FIFA World Cup, much stronger sales were expected in the months of April, May and June.

The rapid progress of digital terrestrial pen-etration (almost one third of Spanish homes are already able to receive the DVB-T signal, after less than one and a half years since the digital switch-on), or even the optimistic economic fore-casts, are not really enough to encourage opti-mism when looking ahead to 2007. In a “non-football event year”, with f lat-TV sales trends becoming less explosive, unless there other CE products show significant recoveries, only slight or more likely f lat growth can be expected in the Spanish CE market in 2007.

The DVD player market is decreasing more rapidly each month. This is the logical conse-quence of years of very high sales, so that Spain is one of the European countries with the high-est penetration of this product, making further market growth really difficult. The growth of DVD recorders is not sufficient to balance over-all DVD market performance, even in value. Similarly, the failure so far of DVD recorders without a hard disc drive is not being offset by recorders that do have a hard disc.

The audio markets have been affected by home cinema and micro promotions by “A” brands at a selling price of € 99. It is difficult to see how this market can recover if promo-tions like these mean that the average Spanish consumer is probably not willing to invest in higher value items as in the past. Success has been enjoyed by systems with media centres and products with USB and especially MP3 connec-tion.

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The distressing news in the portable audio market is that the MP3 market has started to decrease, registering a positive trend only if DPVP products are included. The HDD sector is still a very small market in Spain. Aggres-sive promotions by cheap brands have tried from time to time to stimulate demand for this seg-ment but it still represents only between 5 and 10 % of the whole MP3 family.

The digital still camera market ended 2006 with a f lat performance. Signs of market matu-rity were already seen in 2005 when growth did not match expectation. On the other hand, the trend towards high-featured cameras continues to drive the market and average price erosion is therefore kept in check.

6 megapixels was the most popular resolu-tion segment among consumers. Cameras with 2.5 ́ ́ LCD screens were worth nearly 50 % of the market. Ref lex cameras also grew in 2006, with shares close to 5 % and 20 % in units and value respectively.

In 2007, the market is expected to decline despite the impact of replacement and additional camera purchase and the evolution of cheaper ref lex cameras.

For the second consecutive year, game con-soles enjoyed double-digit growth. The € 399 million turnover achieved in 2006 was the high-est ever with more than 2.2 million devices sold. As in previous years, innovation was the main source of growth.

Figure 4 Set-top boxes and kits’ development in Europe, € million

2,500

2,000

1,500

1,000

500

020062002 2003 2005

Digital set-top boxes and kits

Analogue set-top boxes and kits

2004 2007

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2.5. United Kingdom

UK retail sales in 2006 grew at only a very modest level compared to previous years, despite the healthy overall performance of CE products. Most commentators agreed that the economy was in reasonable health and also felt that future growth would be assured through the continued use of Sterling rather than the Euro.

The market for CE products in the UK seemed buoyant in 2006, with an increase in market turnover of 12 %. Unfortunately this growth was mainly due to the ongoing develop-ment of the f lat-TV market, with very few other products even maintaining their performance of the previous year. Of course, the FIFA World Cup stimulated consumer interest in the whole CE market and there was short-term success for a few categories, most notably home cinema systems, as retailers understood the benefit of matching the quality of the visual offering from f lat TV with corresponding audio performance. Elsewhere in the vision sector both DVD and camcorder products performed less well than in 2005. The audio market enjoyed some growth in turnover but here too success came from a limited range of products, namely MP3/DPVP and DAB, as static audio sectors suffered fur-ther reverses. One thing that just about every market had in common was the chronic decline in prices that had characterised just about every one of the previous ten years, and it is hard to imagine this trend being halted in 2007.

The f lat-TV market would have continued its impressive growth even without the World Cup, as f lat TV continued to eclipse traditional CRT with further emphasis on larger screen sizes. By the end of 2006 it was almost impossible to find an LCD TV over 26 ́ ́ that was not a high-definition product, even if few could receive HD broadcasts which were almost exclusively avail-able in conjunction with a high-priced Sky tele-

vision set-top box. There was also an impressive increase in sales of integrated digital televisions as the UK belatedly prepared for the change from analogue to digital broadcasting, scheduled to take place between 2008 and 2012. However, it still felt like a case of too little too late, as nearly five million TVs sold in 2006 were ana-logue. Even if this figure reduces dramatically in 2007, there are still somewhere between 60 and 70 million analogue televisions that will need to be replaced in the next six years. Even if it were feasible to connect two to three televisions per household with set-top boxes, the demand can-not be matched by the four to five million a year currently being sold.

A depressing confirmation of the maturity of DVD is the dramatic slowdown in its over-all sales, although there was certainly growth for DVD recorders, albeit at an average price heading inexorably downwards, but the success of Sky Plus personal video recorders prevented products with hard disc drives matching the suc-cess found in some mainland European coun-tries. The most exciting development here prom-ises to be the introduction of HD-DVD and Blu-Ray, with all neutrals hoping there will not be a repeat of the format war between Betamax and VHS video recorders that characterised the start of the 1980s.

The increased penetration of DVD meant that it was also the most popular segment in the camcorder market. Indeed, this market seemed to lend itself to all kinds of innovation, which included its own variation on the hard disc drive and memory card. Unfortunately, camcorders with Digital Video Cassettes (DVC) that had dominated the market since the start of the twenty-first century suffered a steep decline and, even more ominously, an increased selection of mobile phones were able to capture moving film

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images, leading many to content themselves with this alternative to the camcorder. This continued a trend that had already had an adverse effect on the digital camera market, contributing to this latter product group’s faltering progress. Mod-est volume growth was not sufficient to stop a decline in turnover, even though the average of megapixels per camera was on the increase. At least there was reasonable growth for the inno-vatory single lens ref lex version of the product.

The impact of ever more versatile mobile phones was also felt in the MP3 market as this category was also mimicked by its telephonic cousin; although digital portable audio play-ers grew further, the triple-digit increase rates in units and value of previous years seemed a distant memory as the market reached maturity and was often overlooked in favour of its fast growing video equivalent. Prices were particu-larly competitive in the f lash memory segment.

Elsewhere, in the separate Hi-Fi elements cat-egory, one million units were sold in 2006, split between portable audio radio cassette recorders, personal stereo and especially transistor radios on the one hand, and increasing numbers of mini and micro audio systems. Although audio systems and also Hi-Fi separate components, suffered a significant overall decline, there is still a suspicion that an ageing population could still return to embrace static audio Hi-Fi via audio systems incorporating media centres, and also the increased popularity of two-channel home cinema systems, rather than docking stations combined with the aforementioned MP3.

Lastly, the game consoles market ended 2006 with the industry hoping that its own HD-DVD component would be a successful addition to the Xbox 360, after the strong performance of this and other products during 2006.

Figure 5 Blank recording media’s development in Europe, € billion

6

5

4

3

2

1

020062002 2003 20052004

Digital recording media

Analogue recording media

2007

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* Western Europe incl. Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, Switzerland and the UK.Note: These market estimations and forecasts result from GfK-manufacturers’ collaboration. Data published for the previous year are as of November, anticipatingChristmas trade. As a result GfK revises these data the following March, after data for the previous year have been confirmed.

Western Europe* 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 24,454 24,973 20,286 15,208 10,043 2.1 –18.8 –25.0 –34.0Advanced TV 2,066 4,667 10,483 17,361 22,496 126.0 124.6 65.6 29.6

Plasma display 328 802 1,579 2,325 2,718 144.7 97.0 47.2 16.9Liquid-crystal display TV 908 2,822 7,799 13,933 18,624 210.8 176.4 78.6 33.7Rear and front projection TV 830 1,043 1,104 1,103 1,154 25.7 5.8 –0.1 4.7

Digital versatile discs 25,532 32,312 32,647 30,167 28,868 26.6 1.0 –7.6 –4.3Video cassette recorders 8,046 5,344 2,961 1,714 1,067 –33.6 –44.6 –42.1 –37.8Analogue camcorders 645 395 152 41 14 –38.8 –61.6 –73.2 –66.5Digital camcorders 2,916 3,742 4,129 4,246 4,205 28.3 10.3 2.8 –1.0Digital still cameras 16,080 25,365 27,934 27,842 26,624 57.7 10.1 –0.3 –4.4Analogue set-top boxes and kits 2,042 1,642 1,760 1,520 1,297 –19.6 7.2 –13.6 –14.6Digital set-top boxes and kits 5,580 9,880 14,534 17,478 20,326 77.1 47.1 20.3 16.3Digital multimedia players 14,496 22,684 39,007 40,905 40,191 56.5 72.0 4.9 –1.7

MP3-format-based digital personal audio sets and DPVP 1,828 9,837 30,739 36,051 37,036 438.1 212.5 17.3 2.7

Analogue personal audio sets 26,252 25,556 24,035 21,766 19,198 –2.7 –6.0 –9.4 –11.8Home cinema systems 3,527 4,455 3,448 2,962 2,741 26.3 –22.6 –14.1 –7.5Audio home systems 9,024 8,676 7,806 6,721 5,995 –3.9 –10.0 –13.9 –10.8Separate Hi-Fi elements 6,338 5,438 4,745 4,371 4,147 –14.2 –12.7 –7.9 –5.1Game consoles 12,517 11,795 14,245 17,312 19,186 –5.8 20.8 21.5 10.8Analogue recording media 284,848 229,509 172,511 126,056 90,378 –19.4 –24.8 –26.9 –28.3Digital recording media 2,083,683 2,367,900 2,594,207 2,570,856 2,507,951 13.6 9.6 –0.9 –2.4

Western Europe* 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 10,159 8,520 5,500 3,163 1,722 –16.1 –35.4 –42.5 –45.6Advanced TV 4,821 8,440 13,390 19,968 23,071 75.1 58.7 49.1 15.5

Plasma display 1,720 2,924 3,804 4,550 4,582 70.0 30.1 19.6 0.7Liquid-crystal display TV 1,174 3,515 7,995 14,045 17,211 199.5 127.4 75.7 22.5Rear and front projection TV 1,927 2,001 1,592 1,374 1,278 3.8 –20.4 –13.7 –6.9

Digital versatile discs 4,010 4,290 4,321 4,193 4,099 7.0 0.7 –3.0 –2.2Video cassette recorders 1,089 604 299 158 93 –44.5 –50.5 –47.2 –41.3Analogue camcorders 263 132 41 10 3 –49.9 –68.9 –75.3 –70.2Digital camcorders 2,270 2,256 2,101 1,897 1,722 –0.6 –6.9 –9.7 –9.2Digital still cameras 5,566 7,299 7,565 7,148 6,522 31.1 3.6 –5.5 –8.8Analogue set-top boxes and kits 162 98 91 97 56 –39.5 –7.1 6.8 –42.9Digital set-top boxes and kits 821 1,193 1,402 1,524 1,797 45.3 17.5 8.7 17.9Digital multimedia players 1,300 2,035 3,552 3,875 3,925 56.6 74.6 9.1 1.3

MP3-format-based digital personal audio sets and DPVP 320 1,307 3,194 3,698 3,820 308.0 144.4 15.8 3.3

Analogue personal audio sets 1,258 1,145 1,000 875 741 –9.0 –12.6 –12.5 –15.3Home cinema systems 1,572 1,487 1,181 1,044 958 –5.4 –20.6 –11.6 –8.2Audio home systems 1,777 1,445 1,165 971 803 –18.7 –19.3 –16.7 –17.3Separate Hi-Fi elements 1,759 1,473 1,307 1,188 1,106 –16.3 –11.2 –9.1 –6.9Game consoles 2,169 1,761 2,345 3,176 3,808 –18.8 33.2 35.4 19.9All other categories 6,715 7,900 9,311 10,274 10,641 16.0 17.9 10.3 3.6

Analogue recording media 822 702 518 368 256 –14.6 –26.2 –29.0 –30.3Digital recording media 2,596 3,805 4,502 4,516 4,516 44.5 18.3 0.3 0.0

Total CE 45,710 50,077 54,572 59,560 61,067 9.4 9.0 9.1 2.5

170

European Information Technology Observatory · EITO 2007Ta

ble

3 Fr

ance

, CE

sale

s in

thou

sand

uni

ts

Note: These market estimations and forecasts result from GfK-manufacturers’ collaboration. Data published for the previous year are as of November, anticipating Christmas trade. As a result GfK revises these data the following March, after data for the previous year have been confirmed.

Tabl

e 4

Fr

ance

, CE

sale

s in

€ m

illio

n

France 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 3,905 3,940 3,430 2,700 1,630 0.9 –12.9 –21.3 –39.6Advanced TV 396 827 1,622 2,921 3,907 108.8 96.1 80.1 33.8

Plasma display 80 180 310 493 563 125.0 72.2 59.0 14.2Liquid-crystal display TV 140 420 1,100 2,250 3,175 200.0 161.9 104.5 41.1Rear and front projection TV 176 227 212 178 169 29.0 –6.6 –16.0 –5.1

Digital versatile discs 4,680 6,380 6,500 5,950 6,200 36.3 1.9 –8.5 4.2Video cassette recorders 1,450 950 475 275 180 –34.5 –50.0 –42.1 –34.5Analogue camcorders 110 60 27 10 1 –45.5 –55.0 –63.0 –90.0Digital camcorders 500 620 730 770 790 24.0 17.7 5.5 2.6Digital still cameras 2,500 4,000 4,600 4,650 4,500 60.0 15.0 1.1 –3.2Analogue set-top boxes and kits 378 411 358 330 216 8.7 –12.9 –7.8 –34.5Digital set-top boxes and kits 222 269 1,241 1,870 2,484 21.2 361.3 50.7 32.8Digital multimedia players 2,330 3,550 6,095 6,639 6,537 52.4 71.7 8.9 –1.5


Analogue personal audio sets 4,803 4,801 4,551 4,221 3,745 0.0 –5.2 –7.3 –11.3Home cinema systems 410 570 600 560 520 39.0 5.3 –6.7 –7.1Audio home systems 1,589 1,459 1,320 1,131 1,048 –8.2 –9.6 –14.3 –7.4Separate Hi-Fi elements 988 869 717 649 607 –12.0 –17.5 –9.6 –6.5Game consoles 2,538 2,346 2,752 3,370 3,555 –7.6 17.3 22.5 5.5Analogue recording media 48,780 41,900 31,700 21,350 13,500 –14.1 –24.3 –32.6 –36.8Digital recording media 293,660 335,900 289,250 248,200 212,125 14.4 –13.9 –14.2 –14.5

France 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 1,494 1,237 842 502 226 –17.2 –31.9 –40.4 –54.9Advanced TV 1,132 1,666 2,140 3,305 3,650 47.3 28.4 54.5 10.4

Plasma display 423 689 772 958 816 63.0 12.1 24.0 –14.8Liquid-crystal display TV 193 509 1,064 2,135 2,661 164.5 108.8 100.7 24.6Rear and front projection TV 516 468 304 212 173 –9.3 –35.0 –30.2 –18.3

Digital versatile discs 793 847 875 890 931 6.9 3.3 1.7 4.6Video cassette recorders 191 100 48 26 14 –47.9 –52.4 –45.0 –44.9Analogue camcorders 50 21 8 3 0 –57.4 –64.3 –65.6 –90.8Digital camcorders 431 414 387 362 348 –4.1 –6.4 –6.5 –4.0Digital still cameras 988 1,172 1,219 1,139 1,035 18.7 4.0 –6.5 –9.2Analogue set-top boxes and kits 22 20 19 13 6 –9.1 –3.0 –34.5 –56.5Digital set-top boxes and kits 37 36 116 146 178 –2.7 221.0 26.4 22.2Digital multimedia players 241 349 527 533 669 44.4 51.0 1.3 25.4

MP3-format-based digital personal audio sets and DPVP 59 218 470 513 660 271.3 115.5 9.0 28.7

Analogue personal audio sets 230 199 162 146 123 –13.4 –19.0 –9.8 –15.9Home cinema systems 213 208 179 160 151 –2.4 –14.1 –10.7 –5.5Audio home systems 354 279 214 177 153 –21.2 –23.6 –17.2 –13.6Separate Hi-Fi elements 337 289 236 222 202 –14.2 –18.3 –6.1 –8.9Game consoles 431 331 454 691 899 –23.3 37.2 52.2 30.2All other categories 1,352 1,670 1,630 1,720 1,712 23.6 –2.4 5.5 –0.5

Analogue recording media 223 185 132 86 53 –17.0 –28.5 –34.9 –38.6Digital recording media 583 937 881 826 767 60.7 –6.0 –6.2 –7.2

Total CE 8,296 8,838 9,054 10,035 10,298 6.5 2.4 10.8 2.6

171


Tabl

e 5

Ger

man

y, C

E sa

les

in th

ousa

nd u

nits

Tabl

e 6

Ger

man

y, C

E sa

les

in €

mill

ion

Note: These market estimations and forecasts result from GfK-manufacturers’ collaboration. Data published for the previous year are as of November, anticipatingChristmas trade. As a result GfK revises these data the following March, after data for the previous year have been confirmed.

Germany 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 5,221 5,028 4,069 2,723 1,741 –3.7 –19.1 –33.1 –36.1Advanced TV 493 930 1,947 3,338 4,433 88.6 109.4 71.4 32.8

Plasma display 37 105 315 465 640 183.8 200.0 47.6 37.6Liquid-crystal display TV 181 497 1,297 2,545 3,470 174.6 161.0 96.2 36.3Rear and front projection TV 275 328 335 328 323 19.3 2.1 –2.1 –1.6

Digital versatile discs 6,455 6,355 5,935 5,384 5,044 –1.5 –6.6 –9.3 –6.3Video cassette recorders 1,336 860 590 344 218 –35.6 –31.4 –41.7 –36.6Analogue camcorders 156 73 33 3 1 –53.2 –54.8 –90.9 –66.7Digital camcorders 516 681 807 830 824 32.0 18.5 2.9 –0.7Digital still cameras 4,900 7,000 7,430 7,100 6,700 42.9 6.1 –4.4 –5.6Analogue set-top boxes and kits 1,313 850 945 358 250 –35.3 11.2 –62.1 –30.2Digital set-top boxes and kits 1,762 3,860 4,165 4,512 4,653 119.1 7.9 8.3 3.1Digital multimedia players 3,415 5,565 10,037 8,121 7,672 63.0 80.4 –19.1 –5.5

MP3-format-based digital personal audio sets and DPVP 870 3,160 8,383 7,113 7,003 263.2 165.3 –15.1 –1.5

Analogue personal audio sets 6,262 5,826 5,400 4,956 4,467 –7.0 –7.3 –8.2 –9.9Home cinema systems 900 975 726 613 564 8.3 –25.5 –15.6 –8.0Audio home systems 1,795 1,785 1,763 1,617 1,424 –0.6 –1.2 –8.3 –11.9Separate Hi-Fi elements 2,061 1,743 1,573 1,487 1,430 –15.4 –9.8 –5.5 –3.8Game consoles 2,699 2,460 2,650 2,921 3,360 –8.9 7.7 10.2 15.0Analogue recording media 62,412 51,075 42,400 32,200 23,900 –18.2 –17.0 –24.1 –25.8Digital recording media 724,103 833,766 1,005,850 1,025,250 1,008,975 15.1 20.6 1.9 –1.6

Germany 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 2,292 1,922 1,315 738 421 –16.1 –31.6 –43.8 –43.0Advanced TV 820 1,512 2,657 4,131 4,753 84.5 75.7 55.4 15.1

Plasma display 181 343 674 831 989 89.4 96.6 23.2 19.0Liquid-crystal display TV 197 597 1,474 2,861 3,366 203.7 147.0 94.0 17.7Rear and front projection TV 442 572 509 439 399 29.4 –11.1 –13.6 –9.2

Digital versatile discs 847 816 824 756 774 –3.6 0.9 –8.2 2.3Video cassette recorders 194 101 61 32 19 –47.6 –39.5 –48.4 –40.1Analogue camcorders 61 22 7 1 0 –64.3 –67.3 –92.4 –67.6Digital camcorders 363 370 392 364 342 2.1 5.9 –7.1 –6.2Digital still cameras 1,426 1,820 1,917 1,867 1,675 27.6 5.3 –2.6 –10.3Analogue set-top boxes and kits 91 41 54 29 22 –54.9 31.5 –46.6 –23.4Digital set-top boxes and kits 279 423 423 451 530 51.6 0.0 6.7 17.4Digital multimedia players 284 452 751 632 620 59.0 66.2 –15.8 –1.9

MP3-format-based digital personal audio sets and DPVP 108 328 679 596 599 203.9 107.1 –12.3 0.5

Analogue personal audio sets 282 239 212 194 168 –15.6 –10.9 –8.7 –13.6Home cinema systems 310 286 231 226 215 –7.7 –19.1 –2.2 –4.8Audio home systems 318 259 240 214 177 –18.5 –7.3 –10.6 –17.4Separate Hi-Fi elements 469 369 333 315 301 –21.2 –9.7 –5.4 –4.5Game consoles 389 317 398 487 588 –18.3 25.3 22.5 20.7All other categories 1,746 1,911 2,230 2,590 2,711 7.3 16.7 16.2 4.7

Analogue recording media 169 129 104 76 55 –24.1 –19.0 –27.3 –27.2Digital recording media 684 873 1,059 1,137 1,209 27.6 21.3 7.3 6.3

Total CE 10,169 10,861 12,046 13,028 13,316 6.4 10.9 8.2 2.2

172


ble

7 It

aly,

CE

sale

s in

thou

sand

uni

ts

Note: These market estimations and forecasts result from GfK-manufacturers’ collaboration. Data published for the previous year are as of November, anticipatingChristmas trade. As a result GfK revises these data the following March, after data for the previous year have been confirmed.

Tabl

e 8

Ital

y, C

E sa

les

in €

mill

ion

Italy 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%


Plasma display 32 105 200 250 270 228.1 90.5 25.0 8.0Liquid-crystal display TV 145 465 1,258 1,900 2,100 220.7 170.5 51.0 10.5Rear and front projection TV 55 78 77 78 82 42.1 –1.3 1.3 5.1

Digital versatile discs 2,522 4,310 4,600 4,390 4,350 70.9 6.7 –4.6 –0.9Video cassette recorders 1,020 710 410 250 160 –30.4 –42.3 –39.0 –36.0Analogue camcorders 75 50 14 4 3 –33.3 –72.0 –71.4 –25.0Digital camcorders 505 730 700 750 800 44.6 –4.1 7.1 6.7Digital still cameras 1,062 2,400 2,640 2,250 2,300 126.0 10.0 –14.8 2.2Analogue set-top boxes and kits 15 5 37 20 0 –66.7 640.0 –45.1 –100.0Digital set-top boxes and kits 663 1,775 2,613 2,010 2,530 167.7 47.2 –23.1 25.9Digital multimedia players 1,523 2,421 3,987 4,761 4,901 59.0 64.7 19.4 2.9

MP3-format-based digital personal audio sets and DPVP 59 433 2,535 3,750 4,000 633.9 485.5 47.9 6.7

Analogue personal audio sets 2,885 2,780 2,590 2,060 1,710 –3.6 –6.8 –20.5 –17.0Home cinema systems 320 560 500 400 360 75.0 –10.7 –20.0 –10.0Audio home systems 956 1,048 875 732 658 9.6 –16.5 –16.3 –10.1Separate Hi-Fi elements 362 445 392 364 333 22.9 –11.8 –7.2 –8.5Game consoles 1,106 1,154 1,545 2,070 2,300 4.3 33.9 34.0 11.1Analogue recording media 43,000 33,500 20,700 19,000 16,200 –22.1 –38.2 –8.2 –14.7Digital recording media 206,350 192,449 173,210 154,250 134,610 –6.7 –10.0 –10.9 –12.7

Italy 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 1,132 987 697 552 410 –12.8 –29.4 –20.8 –25.7Advanced TV 455 1,007 1,601 2,022 2,056 121.5 58.9 26.3 1.7

Plasma display 164 355 427 425 405 116.2 20.3 –0.5 –4.7Liquid-crystal display TV 186 530 1,088 1,520 1,575 185.6 105.3 39.7 3.6Rear and front projection TV 105 122 85 77 76 16.4 –30.0 –9.5 –2.1

Digital versatile discs 401 480 445 400 421 19.6 –7.3 –10.1 5.1Video cassette recorders 122 67 33 19 11 –44.9 –51.4 –42.8 –40.3Analogue camcorders 29 16 4 1 1 –45.3 –78.1 –71.4 –25.0Digital camcorders 374 402 315 281 280 7.4 –21.5 –10.7 –0.4Digital still cameras 356 648 752 576 573 82.1 16.1 –23.4 –0.6Analogue set-top boxes and kits 1 0 1 2 0 –90.0 0.0 74.7 –100.0Digital set-top boxes and kits 133 291 287 199 226 118.8 –1.4 –30.6 13.6Digital multimedia players 111 146 314 388 412 32.0 114.6 23.8 6.2


Analogue personal audio sets 123 111 95 69 51 –9.8 –14.2 –27.3 –25.5Home cinema systems 136 165 134 100 90 21.5 –18.9 –25.4 –10.0Audio home systems 180 157 115 87 74 –13.2 –26.3 –24.6 –15.3Separate Hi-Fi elements 98 104 83 72 65 5.6 –19.8 –13.4 –10.3Game consoles 201 192 233 325 361 –4.8 21.8 39.3 11.1All other categories 707 836 1,056 1,032 1,019 18.3 26.4 –2.3 –1.2

Analogue recording media 75 88 56 51 44 16.7 –36.3 –8.4 –13.3Digital recording media 219 337 485 403 378 54.3 43.6 –16.8 –6.2

Total CE 4,559 5,608 6,165 6,126 6,049 23.0 9.9 –0.6 –1.2

173


Tabl

e 9

Spai

n, C

E sa

les

in th

ousa

nd u

nits

Tabl

e 10

Sp

ain,

CE

sale

s in

€ m

illio

n


Spain 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%


Plasma display 25 75 150 195 215 200.0 100.0 30.0 10.3Liquid-crystal display TV 60 250 900 1,600 2,200 316.7 260.0 77.8 37.5Rear and front projection TV 66 66 70 73 86 0.0 6.1 4.3 17.8

Digital versatile discs 3,223 3,976 3,818 3,290 2,950 23.4 –4.0 –13.8 –10.3Video cassette recorders 519 296 161 161 161 –42.9 –45.7 0.0 0.0Analogue camcorders 33 14 4 2 1 –58.4 –68.0 –65.9 –66.7Digital camcorders 326 412 477 460 400 26.5 15.7 –3.6 –13.0Digital still cameras 1,470 2,620 2,860 2,881 2,748 78.2 9.2 0.7 –4.6Analogue set-top boxes and kits 6 1 0 0 0 –89.5 –100.0 0.0 0.0Digital set-top boxes and kits 124 99 950 2,100 3,050 –20.2 859.6 121.1 45.2Digital multimedia players 1,487 2,397 3,829 4,329 4,538 61.2 59.7 13.1 4.8

MP3-format-based digital personal audio sets and DPVP 82 1,041 3,077 3,844 4,164 1,169.5 195.6 24.9 8.3

Analogue personal audio sets 2,640 2,527 2,276 2,121 1,961 –4.3 –9.9 –6.8 –7.5Home cinema systems 412 780 332 300 250 89.4 –57.5 –9.6 –16.7Audio home systems 844 794 698 605 478 –6.0 –12.1 –13.3 –21.0Separate Hi-Fi elements 528 450 361 288 270 –14.8 –19.9 –20.3 –6.1Game consoles 1,800 1,900 2,012 2,270 2,890 5.6 5.9 12.8 27.3Analogue recording media 22,524 18,560 15,277 10,700 7,000 –17.6 –17.7 –30.0 –34.6Digital recording media 337,063 342,098 368,115 307,530 288,260 1.5 7.6 –16.5 –6.3

Spain 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 985 814 538 312 181 –17.4 –33.9 –42.1 –42.0Advanced TV 375 741 1,372 1,976 2,321 97.6 85.1 44.0 17.5

Plasma display 140 266 332 322 290 89.6 25.1 –3.1 –9.8Liquid-crystal display TV 84 349 928 1,558 1,936 314.9 166.3 67.9 24.2Rear and front projection TV 151 127 112 96 94 –15.9 –11.9 –14.5 –1.3

Digital versatile discs 457 429 428 375 311 –6.1 –0.4 –12.4 –16.9Video cassette recorders 67 32 16 16 16 –52.6 –50.3 0.0 0.0Analogue camcorders 14 5 1 0 0 –65.0 –75.2 –68.8 –73.3Digital camcorders 260 255 244 207 150 –1.9 –4.4 –15.1 –27.5Digital still cameras 510 721 732 720 687 41.2 1.6 –1.6 –4.6Analogue set-top boxes and kits 1 0 0 0 0 –93.0 –100.0 0.0 0.0Digital set-top boxes and kits 32 23 83 150 199 –28.1 259.6 81.4 32.7Digital multimedia players 120 190 311 380 376 58.8 63.6 22.3 –0.9


Analogue personal audio sets 122 106 87 77 68 –12.5 –18.1 –12.0 –11.3Home cinema systems 168 162 94 84 63 –3.2 –41.8 –11.0 –25.6Audio home systems 155 129 106 85 61 –17.1 –18.1 –19.7 –27.5Separate Hi-Fi elements 148 121 96 75 66 –18.2 –20.3 –21.7 –12.8Game consoles 347 304 326 404 549 –12.5 7.2 24.0 35.9All other categories 704 889 997 1,041 1,005 26.4 12.1 4.4 –3.5

Analogue recording media 69 60 50 34 21 –12.8 –17.2 –32.0 –39.3Digital recording media 280 445 530 462 394 58.9 19.1 –12.9 –14.6

Total CE 4,465 4,921 5,431 5,902 6,053 10.2 10.4 8.7 2.6

174


ble

11

Uni

ted

Kin

gdom

, CE

sale

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ble

12

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ted

Kin

gdom

, CE

sale

s in

€ m

illio

n


United Kingdom 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 5,841 6,042 4,277 2,790 1,290 3.4 –29.2 –34.8 –53.8Advanced TV 505 1,178 2,704 4,328 5,830 133.3 129.5 60.1 34.7

Plasma display 74 192 336 530 580 159.5 75.0 57.7 9.4Liquid-crystal display TV 240 748 2,100 3,520 4,950 211.7 180.7 67.6 40.6Rear and front projection TV 191 238 268 278 300 24.6 12.6 3.7 7.9

Digital versatile discs 5,436 7,067 7,581 7,180 6,330 30.0 7.3 –5.3 –11.8Video cassette recorders 2,498 1,756 917 490 250 –29.7 –47.8 –46.6 –49.0Analogue camcorders 202 151 55 15 5 –25.2 –63.6 –72.7 –66.7Digital camcorders 575 763 814 820 770 32.7 6.7 0.7 –6.1Digital still cameras 3,454 5,450 6,167 6,710 6,350 57.8 13.2 8.8 –5.4Analogue set-top boxes and kits 12 1 0 0 0 –91.7 –100.0 0.0 0.0Digital set-top boxes and kits 2,528 3,449 4,418 4,950 4,990 36.4 28.1 12.0 0.8Digital multimedia players 3,669 5,333 9,629 11,873 11,553 45.4 80.6 23.3 –2.7


Analogue personal audio sets 7,020 7,175 6,925 6,283 5,361 2.2 –3.5 –9.3 –14.7Home cinema systems 755 658 486 380 360 –12.8 –26.1 –21.8 –5.3Audio home systems 2,664 2,517 2,180 1,757 1,560 –5.5 –13.4 –19.4 –11.2Separate Hi-Fi elements 1,577 1,272 1,117 1,019 948 –19.3 –12.2 –8.8 –7.0Game consoles 2,690 2,150 3,482 4,600 4,950 –20.1 62.0 32.1 7.6Analogue recording media 70,220 54,370 38,298 24,550 16,010 –22.6 –29.6 –35.9 –34.8Digital recording media 217,769 307,077 399,870 485,950 524,680 41.0 30.2 21.5 8.0

United Kingdom 2003 2004 2005 2006 2007 2004/03%

2005/04%

2006/05%

2007/06%

Cathode ray tube TV 2,469 2,146 1,233 630 266 –13.1 –42.6 –48.9 –57.8Advanced TV 1,218 2,125 3,414 5,106 6,426 74.4 60.7 49.5 25.9

Plasma display 366 710 940 1,219 1,247 93.8 32.4 29.7 2.3Liquid-crystal display TV 297 880 2,083 3,538 4,851 195.8 136.8 69.8 37.1Rear and front projection TV 555 536 391 349 328 –3.4 –27.0 –10.8 –6.1

Digital versatile discs 894 1,016 1,044 1,079 951 13.6 2.7 3.3 –11.8Video cassette recorders 320 204 95 46 24 –36.3 –53.2 –52.2 –47.9Analogue camcorders 80 53 16 4 1 –33.8 –69.0 –77.0 –70.7Digital camcorders 414 466 440 373 312 12.6 –5.7 –15.1 –16.4Digital still cameras 1,123 1,646 1,677 1,597 1,435 46.6 1.9 –4.8 –10.1Analogue set-top boxes and kits 1 0 0 0 0 –100.0 0.0 0.0 0.0Digital set-top boxes and kits 285 347 367 402 431 21.8 5.8 9.4 7.2Digital multimedia players 330 559 1,149 1,405 1,329 69.7 105.4 22.3 –5.4

MP3-format-based digital personal audio sets and DPVP 86 372 1,064 1,363 1,310 334.6 186.3 28.1 –3.9

Analogue personal audio sets 333 350 329 290 244 5.2 –5.9 –11.9 –15.8Home cinema systems 316 263 197 148 137 –17.0 –25.0 –24.7 –7.7Audio home systems 487 399 315 258 199 –18.0 –21.0 –18.3 –22.9Separate Hi-Fi elements 427 364 354 307 286 –14.7 –2.7 –13.2 –6.9Game consoles 495 350 651 897 1,040 –29.2 85.8 37.8 15.9All other categories 1,145 1,430 1,972 2,281 2,477 24.9 37.9 15.7 8.6

Analogue recording media 141 130 96 63 42 –7.3 –26.2 –34.4 –33.1Digital recording media 440 653 869 1,004 1,084 48.5 33.1 15.6 8.0

Total CE 10,335 11,718 13,254 14,821 15,556 13.4 13.1 11.8 5.0

175


Category Products included analogue/digital

Cathode ray tube TV CRT TV, TV/VCR combinations analogue

Advanced TV Plasma TV, LCD TV, rear projection TV, front projection TV digital

Plasma display Plasma TV digital

Liquid-crystal display TV LCD TV digital

Rear and front projection TV Rear projection TV, front projection TV digital

Digital versatile discs DVD players (including DVD/VCR combinations, excluding DVD-PC), DVD recorders

digital

Video cassette recorders VCR, VC players analogue

Analogue camcorders Camcorders analogue

Digital camcorders Camcorders digital

Digital still cameras Digital still cameras digital

Analogue set-top boxes and kits Set-top boxes and satellite sets (set-top box and dish in one package)

analogue

Digital set-top boxes and kits Set-top boxes and satellite sets (set-top box and dish in one package)

digital

Digital multimedia players Portable CD, CDMP3 (portable CD player which can play MP3 format), MD (MiniDisc), MP3 solid state (MP3 player without CD function), DPVP (Digital Personal Video Player)

digital

MP3-format-based digital personal audio sets and DPVP

MP3 solid state players (Hard Disc Drive [HDD], flash, memory card) and DPVP (Digital Personal Video Player)

digital

Analogue personal audio sets Portable radios, clock radios, dictation systems, all radio recorders, personal stereos

analogue

Audio home systems Micro, mini, midi, audio systems and horizontal systems (exclude home cinema systems)

analogue

Home cinema systems Audio home systems with digital Dolby and DVD player in one box

digital

Separate Hi-Fi elements Amplifiers, tuners, receivers, cassette decks, CD decks (play and record), MD decks (play and record), turntables, speakers (pairs and systems)

analogue

Game consoles Home game consoles, portable game consoles digital

All other categories Recording media, in-car electronics, audio/video accessories analogue

Analogue recording media Audio tapes, video tapes analogue

Digital recording media MiniDisc, CD-R (audio and data), DVD-R, memory cards, mobile USB memory

digital

Total CE All products mentioned above

4. Definitions and methodology

The Consumer Electronics market estimates and forecasts of these tables are based on extra-polated GfK retail panels and GfK estimations, partly on co-operation with CE industry associa-tions.

Data published for the previous year are as of November, anticipating Christmas trade. As a result GfK revises these data the following March, after data for the previous year have been confirmed.

http://www.simovirtual.com

http://www.ifema.es

mailto:[email protected]

Part Three

180


The data and forecasts presented in this section have been jointly prepared by IDC and the EITO Task Force on the basis of the information available as of December 2006.

ICT market size and growth trends by country and technology reflect the opinion of both the EITO Task Force and IDC. Data and trends in the Statis-tical outlook are the result of the overall statistical framework provided by IDC, and the considerations and assumptions by the EITO Task Force.

1. Introduction

This section presents statistics which illus-trate the shape and structures behind the IT and communications markets in Europe. The subject is presented in three main sub-sections:

– the shape of the various national ICT mar-kets, within an international context, and the patterns of trade between them;

– the individual market structures with an eye on the competitive aspects, as well as com-parative measures of ICT penetration;

– the role of technological advancement in altering the underlying economics of ICT.

Terms are defined at the end of the section.

Statistical outlook

2. Methodology

The following analysis attempts to shed light on some of the more important aspects of the European markets for telecommunications and information technology products and services, including substantial elements of the associated market for office automation products.

The basis for the study is the marketplace. The results are expressed in end-user spending. Valuation is largely based upon the perform-ance of primary vendors, with research results crosschecked against a continuous programme of end-user interviews and distribution channel monitoring. Data on trade f lows have also been collected, and matched as closely as possible to market-oriented segmentation, since these data can provide information relating to the position of Europe with respect to the world. What is presented then, is a comprehensive body of data which aims to illuminate the European ICT market.

Starting with the 2002 yearbook, the EITO Task Force decided to validate historical data provided in previous editions in order to enhance the reliability and accuracy of the statistics pro-vided. Small changes in historical data have, therefore, been adopted on the basis of new information whenever appropriate.

181

Statistical outlookPart Three · EITO 2007

3. European ICT markets and patterns of trade

Totals and percentages of the data presented in tables and figures may not add up due to rounding.

All forecast data are prepared in local cur-rencies and subsequently converted at 2005 exchange rates of those currencies against the Euro for all the years of the historical and the forecast period. Growth rates, therefore, corre-spond to local currency growth rates. No adjust-ment is made for the effects of inf lation. Trade data are reported in current Euro, according to the standard reporting conventions.

Unless otherwise stated, the heading EU refers to Austria, Belgium/Luxembourg, Bulgar-ia, the Czech Republic, Denmark, Estonia, Fin-land, France, Germany, Greece, Hungary, the Republic of Ireland, Italy, Latvia, Lithuania, the Netherlands, Poland, Portugal, Romania, Slova-kia, Slovenia, Spain, Sweden and the UK. The heading EU 15 refers to Austria, Belgium/Lux-embourg, Denmark, Finland, France, Germany, Greece, the Republic of Ireland, Italy, the Neth-erlands, Portugal, Spain, Sweden and the UK. Other Europe is represented by data on Norway, and Switzerland. European figures are the sum of EU countries plus Norway and Switzerland.

182


Economicbackground

1 Real GDP growth . . . . . . . 185

2 Nominal GDP growth . . . . . . 185

3 Real gross private non-residential fixed capital formation growth . . . 186

InternationalICTmarkets

4 Worldwide IT market growth trends . 189

5 Worldwide telecommunications market growth trends . . . . . . 189

6 Worldwide ICT market growth trends . 190

7 Worldwide ICT markets by product . 191

8 Worldwide ICT markets by product, average annual growth by value . . . 191

MajorEuropeanICTanddigitalCEmarkets

9 France . . . . . . . . . . . 196

10 Germany . . . . . . . . . . 196

11 Italy . . . . . . . . . . . . 196

12 Spain . . . . . . . . . . . . 196

13 United Kingdom . . . . . . . . 196

EuropeanICTmarkets

14 IT market by country . . . . . . 197

15 Telecommunications market by country . . . . . . . . . . 198

16 ICT market by country . . . . . . 199

17 Europe . . . . . . . . . . . 200

18 EU . . . . . . . . . . . . 201

19 EU 15 . . . . . . . . . . . 202

20 EU 15 plus Norway and Switzerland . 203

21 Austria . . . . . . . . . . . 204

22 Belgium/Luxembourg . . . . . . 205

23 Denmark . . . . . . . . . . 206

24 Finland . . . . . . . . . . . 207

25 France . . . . . . . . . . . 208

26 Germany . . . . . . . . . . 209

27 Greece . . . . . . . . . . . 210

28 Ireland . . . . . . . . . . . 211

29 Italy . . . . . . . . . . . . 212

30 Netherlands . . . . . . . . . 213

31 Norway . . . . . . . . . . . 214

32 Portugal . . . . . . . . . . . 215

33 Spain . . . . . . . . . . . . 216

34 Sweden . . . . . . . . . . . 217

35 Switzerland . . . . . . . . . . 218

36 United Kingdom . . . . . . . . 219

37 Bulgaria . . . . . . . . . . . 220

38 Czech Republic . . . . . . . . 221

39 Estonia . . . . . . . . . . . 222

40 Hungary . . . . . . . . . . . 223

41 Latvia . . . . . . . . . . . 224

42 Lithuania . . . . . . . . . . 225

43 Poland . . . . . . . . . . . 226

44 Romania. . . . . . . . . . . 227

45 Slovakia . . . . . . . . . . . 228

46 Slovenia . . . . . . . . . . . 229

4. List of tables

183


IThardwareshipments(units)

47 Europe . . . . . . . . . . . 230

48 EU . . . . . . . . . . . . 230

49 EU 15 . . . . . . . . . . . 230

50 EU 15 plus Norway and Switzerland . 230

51 Austria . . . . . . . . . . . 231

52 Belgium/Luxembourg . . . . . . 231

53 Denmark . . . . . . . . . . 231

54 Finland . . . . . . . . . . . 231

55 France . . . . . . . . . . . 232

56 Germany . . . . . . . . . . 232

57 Greece . . . . . . . . . . . 232

58 Ireland . . . . . . . . . . . 232

59 Italy . . . . . . . . . . . . 233

60 Netherlands . . . . . . . . . 233

61 Norway . . . . . . . . . . . 233

62 Portugal . . . . . . . . . . . 233

63 Spain . . . . . . . . . . . . 234

64 Sweden . . . . . . . . . . . 234

65 Switzerland . . . . . . . . . . 234

66 United Kingdom . . . . . . . . 234

67 Bulgaria . . . . . . . . . . . 235

68 Czech Republic . . . . . . . . 235

69 Estonia . . . . . . . . . . . 235

70 Hungary . . . . . . . . . . . 235

71 Latvia . . . . . . . . . . . 235

72 Lithuania . . . . . . . . . . 236

73 Poland . . . . . . . . . . . 236

74 Romania. . . . . . . . . . . 236

75 Slovakia . . . . . . . . . . . 236

76 Slovenia . . . . . . . . . . . 236

ICTtradeflows

77 EU . . . . . . . . . . . . 238

78 France . . . . . . . . . . . 238

79 Germany . . . . . . . . . . 239

80 Italy . . . . . . . . . . . . 239

81 Spain . . . . . . . . . . . . 240

82 United Kingdom . . . . . . . . 240

MarketstructuresandpenetrationofICT

83 France . . . . . . . . . . . 242

84 Germany . . . . . . . . . . 242

85 Italy . . . . . . . . . . . . 242

86 Spain . . . . . . . . . . . . 242

87 United Kingdom . . . . . . . . 243

88 Per capita IT expenditure . . . . . 243

89 IT expenditure as % of GDP . . . . 243

90 Per capita telecommunications expenditure. . . . . . . . . . 244

91 Telecommunications expenditure as % of GDP . . . . . . . . . 244

92 Per capita ICT expenditure . . . . 245

93 ICT expenditure as % of GDP . . . 245

Appendix

94 Main lines . . . . . . . . . . 246

95 ADSL lines. . . . . . . . . . 246

96 Cable modem subscriptions . . . . 247

97 Mobile subscriptions . . . . . . 247

98 Internet users (wire-based) . . . . 248

184


Economicbackground

1 Economic developments in the EU 15 186

2 Economic developments in Japan . . 187

3 Economic developments in the US . . 187

4 Growth of gross private non-residential fixed capital formation in the EU 15, the US and Japan. . . . . . . . 188

5 Growth of real gross domestic product in the EU 15, the US and Japan. . . 188

InternationalICTmarkets

6 Worldwide ICT market by product, 2006 . . . . . . . . 190

7 World ICT market regional proportions by product, 2006 . . . . . . . . 192

8 World ICT market product proportions by region, 2006 . . . . . . . . 192

5. List of figures

9 World ICT markets, average annual growth, 2006–2008 . . . . . . . 193

10 EU 15 plus Norway and Switzerland IT market growth rates, 1999–2008 . . 193

11 European IT market by region, 2006 and market growth, 2006–2008 . . . 194

12 European ICT market, proportions by class of business, 2006 and market growth, 2006–2008 . . . . . . . 194

13 Worldwide number of Internet hosts, 2000–2006 . . . . . . . . . . 195

185


2000 2001 2002 2003 2004 2005 2006* 2007* 2008*Austria 2.8 0.6 0.5 0.8 2.3 2.6 3.2 2.5 2.4Belgium 3.9 0.7 1.4 1.0 2.7 1.5 2.9 2.3 2.1Denmark 3.5 0.7 0.5 0.7 1.9 3.0 3.5 2.6 1.6Finland 5.3 2.5 1.6 1.9 3.3 3.0 5.0 2.8 2.7France 4.0 1.8 1.1 1.1 2.0 1.2 2.1 2.2 2.3Germany 3.5 1.4 0.0 –0.2 0.8 1.1 2.6 1.8 2.1Greece 4.5 5.1 3.8 4.8 4.7 3.7 4.0 3.8 3.8Ireland 9.2 5.9 6.0 4.3 4.3 5.5 5.1 5.1 4.5Italy 3.8 1.7 0.3 0.1 0.9 0.1 1.8 1.4 1.6Netherlands 3.5 1.4 0.1 0.3 2.0 1.5 3.0 3.1 3.0Norway 2.8 2.7 1.1 1.1 3.1 2.3 2.4 3.2 2.7Portugal 3.9 2.0 0.8 –1.1 1.2 0.4 1.3 1.5 1.7Spain 5.0 3.6 2.7 3.0 3.2 3.5 3.7 3.3 3.1Sweden 4.4 1.2 2.0 1.8 3.3 2.7 4.3 3.6 2.9Switzerland 3.6 1.0 0.3 –0.2 2.3 1.9 3.0 2.2 2.0United Kingdom 3.8 2.4 2.1 2.7 3.3 1.9 2.6 2.6 2.8EU 15 3.9 1.9 1.1 1.1 2.0 1.6 2.7 2.3 2.4US 3.7 0.8 1.6 2.5 3.9 3.2 3.3 2.4 2.7Japan 2.9 0.4 0.1 1.8 2.3 2.7 2.8 2.0 2.0

Table 1 Real GDP growth in %, 2000–2008

Source: OECD, December 2006 * Estimates and projections

Table 2 Nominal GDP growth in %, 2000–2008

6. Economic background

2000 2001 2002 2003 2004 2005 2006* 2007* 2008*Austria 5.3 2.6 2.2 2.4 4.0 4.2 4.6 4.2 4.4Belgium 5.9 2.7 3.3 2.6 5.2 3.6 5.0 4.2 3.8Denmark 6.6 3.2 2.8 2.7 4.1 5.9 5.5 5.0 4.5Finland 7.9 5.7 2.9 1.5 3.9 3.8 5.7 4.0 4.3France 5.6 3.8 3.5 3.0 3.8 3.1 3.9 3.9 4.2Germany 2.8 2.6 1.4 0.8 1.6 1.7 3.3 3.5 3.3Greece 8.0 7.0 7.8 8.4 8.3 7.5 7.3 7.0 7.1Ireland 15.4 11.7 11.3 6.9 6.3 9.2 8.0 8.2 7.7Italy 5.9 4.8 3.7 3.2 3.8 2.2 3.9 3.3 3.7Netherlands 7.5 6.7 3.9 2.5 2.7 3.2 4.3 4.0 5.0Norway 19.1 3.9 –0.5 3.8 8.9 10.9 10.3 5.3 6.7Portugal 7.1 5.8 4.7 1.5 4.0 3.0 3.3 3.4 3.5Spain 8.7 8.0 7.1 7.3 7.4 7.8 7.5 7.0 6.8Sweden 5.8 3.2 3.6 3.7 4.6 3.9 5.7 5.8 5.6Switzerland 4.4 1.7 1.9 1.0 2.9 1.9 3.9 3.2 3.3United Kingdom 5.1 4.6 5.2 5.9 6.0 4.1 4.9 5.2 4.9EU 15 5.4 4.3 3.7 3.4 4.1 3.5 4.6 4.4 4.5US 5.9 3.2 3.4 4.7 6.9 6.3 6.3 5.0 5.4Japan 1.2 –0.9 –1.4 0.2 1.1 1.3 1.8 2.2 2.7


186


2000 2001 2002 2003 2004 2005 2006* 2007* 2008*Austria 11.4 3.1 –7.9 9.2 0.7 1.4 3.4 2.7 2.3Belgium 4.5 3.1 –1.9 –2.3 6.6 4.8 4.4 5.9 4.2Denmark 6.4 –0.3 0.6 0.2 1.3 8.5 16.7 6.5 5.5Finland 10.2 10.2 –6.8 0.5 2.5 6.0 3.3 4.3 3.9France 8.5 3.4 –3.1 1.3 2.4 3.5 4.4 4.2 3.4Germany 8.0 –2.6 –7.1 0.0 0.7 4.2 8.0 5.4 3.1Greece 10.2 7.9 6.3 15.3 7.0 0.8 6.2 5.8 6.0Ireland 3.8 –10.1 2.9 –0.2 7.6 23.6 6.6 11.9 9.9Italy 8.0 2.1 5.3 –3.6 1.7 –3.1 4.5 5.4 3.6Netherlands 1.0 –2.9 –7.6 –1.0 –2.3 2.7 4.6 5.0 0.1Norway –4.0 –4.0 –1.5 –2.8 8.3 12.7 4.4 7.3 2.5Portugal1 5.0 0.4 –4.8 –10.8 1.8 –1.3 0.1 3.7 n. a.Spain 8.9 5.3 2.4 6.7 4.4 7.4 6.7 5.1 4.9Sweden 8.2 –2.9 –7.1 1.2 3.9 8.9 8.7 6.2 5.2Switzerland 4.8 –2.1 2.1 –4.2 5.4 3.7 6.8 5.0 3.1United Kingdom 4.5 1.3 1.2 –2.2 2.3 3.2 4.9 5.7 5.7EU 15 7.1 1.1 –1.7 0.3 2.2 3.2 5.7 5.2 4.1US 8.7 –4.2 –9.2 1.0 5.9 6.8 7.6 5.2 4.4Japan 7.9 1.3 –5.3 5.9 4.9 7.5 9.2 4.2 3.2

Table 3 Real gross private non-residential fixed capital formation, growth in %, 2000–2008


Figure 1Economic developmentsin the EU 15, 1990–2008

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20082007

% growth

–10

–8

–6

–4

–2

0

2

4

6

8

10

12Real GDP

Nominal GDP

GFCF*

Source: OECD * GFCF – Gross Fixed Capital Formation

1 Source: OECD, December 2005

187


Figure 2Economic developmentsin Japan, 1990–2008

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20082007

% growth Real GDP

Nominal GDP

GFCF*

–15

–10

–5

0

5

10

15

Figure 3Economic developmentsin the US, 1990–2008

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 20082007

% growth

Real GDP

Nominal GDP

GFCF*

–15

–10

–5

0

5

10

15



188


Figure 4Growth of gross privatenon-residential fixedcapital formationin the EU 15, the USand Japan, 1990–2008

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

% growth EU 15

US

Japan

–15

–10

–5

0

5

10

15

Figure 5Growth of real gross domestic productin the EU 15, the USand Japan, 1990–2008

1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

% growthEU 15

US

Japan

–2

–1

0

1

2

3

4

5

6

Source: OECD

Source: OECD

189


Table 4 Worldwide IT market growth trends; market value in € billion at constant 2005 exchange rates*

* See definitions 14.5.5. exchange rates.

Table 5 Worldwide telecommunications market growth trends; market value in € billion at constant 2005 exchange rates*


€ billion 2004 2005 2006 2007 2008Europe 298.5 313.1 324.4 338.6 354.5US 310.0 327.6 347.2 368.2 388.9Japan 123.8 127.6 129.2 132.1 134.2Rest of World 103.6 113.8 126.0 138.9 152.4Total 835.9 882.1 926.8 977.8 1,030.0

% growthEurope 3.1 4.9 3.6 4.4 4.7US 4.2 5.7 6.0 6.0 5.6Japan 1.9 3.1 1.2 2.3 1.6Rest of World 4.5 9.8 10.7 10.3 9.7Total 3.5 5.5 5.1 5.5 5.3

% breakdownEurope 35.7 35.5 35.0 34.6 34.4US 37.1 37.1 37.5 37.7 37.8Japan 14.8 14.5 13.9 13.5 13.0Rest of World 12.4 12.9 13.6 14.2 14.8Total 100.0 100.0 100.0 100.0 100.0

€ billion 2004 2005 2006 2007 2008Europe 336.2 347.7 355.6 360.9 365.0US 215.1 221.1 227.3 233.4 238.3Japan 152.8 155.1 157.0 157.4 157.2Rest of World 318.3 344.1 366.3 385.3 404.1Total 1,022.4 1,068.0 1,106.2 1,137.0 1,164.6

% growthEurope 4.7 3.4 2.3 1.5 1.1US 1.2 2.8 2.8 2.7 2.1Japan 2.4 1.5 1.2 0.3 –0.1Rest of World 6.8 8.1 6.5 5.2 4.9Total 4.2 4.5 3.6 2.8 2.4


7. International ICT markets

190


Figure 6Worldwide ICT marketby product, 2006

Computer hardware

14 %End-user communi-

cations equipment

9 %

Datacom and network

equipment 3 %

Office equipment

1 %

Software 10 %

IT services 20 %

Carrier services

43 %

Total value = € 2,033 billion

Table 6 Worldwide ICT market growth trends; market value in € billion at constant 2005 exchange rates*


€ billion 2004 2005 2006 2007 2008Europe 634.7 660.9 680.0 699.5 719.5US 525.1 548.8 574.4 601.5 627.1Japan 276.6 282.7 286.2 289.5 291.4Rest of World 421.9 457.8 492.3 524.2 556.5Total 1,858.3 1,950.2 2,032.9 2,114.7 2,194.5

% growthEurope 4.0 4.1 2.9 2.9 2.9US 2.9 4.5 4.7 4.7 4.3Japan 2.2 2.2 1.2 1.2 0.7Rest of World 6.2 8.5 7.5 6.5 6.2Total 3.9 4.9 4.2 4.0 3.8


Source: EITO in co-operation with IDC

191


Table 7 Worldwide ICT markets by product, 2006 and 2008, € billion at constant 2005 exchanges rates*


2006 EU Other Europe US Japan Rest of

World World

ICT equipment 156.4 7.7 127.5 99.0 161.1 551.7Software 71.5 4.1 89.9 22.7 18.6 206.8IT services 132.4 7.9 160.5 50.1 46.1 396.9Carrier services 288.9 11.0 196.6 114.4 266.4 877.4Total 649.2 30.7 574.5 286.2 492.2 2,032.8

2008 EU Other Europe US Japan Rest of

World World

ICT equipment 162.7 8.0 139.4 98.6 190.7 599.4Software 81.2 4.7 105.6 24.5 22.5 238.5IT services 147.2 8.8 177.4 53.7 55.1 442.2Carrier services 296.0 11.0 204.7 114.6 288.2 914.6Total 687.1 32.5 627.1 291.4 556.5 2,194.7

EU Other Europe

US Japan Rest of World

World

ICT equipment 2.0 1.7 4.6 –0.2 8.8 4.2Software 6.5 6.8 8.4 3.9 9.8 7.4IT services 5.4 5.4 5.1 3.5 9.4 5.5Carrier services 1.2 0.1 2.0 0.1 4.0 2.1TotalICT 2.9 2.8 4.5 0.9 6.3 3.9

Table 8 Worldwide ICT markets by product, % average annual growth by value, 2006–2008

192


Figure 8World ICT market product proportions by region in %, 2006

Figure 7 World ICT market regional proportions by product in %, 2006



Carrier Services

IT services

Software

ICT equipment

0 % 20 % 40 % 60 % 80 % 100 %

EU Other Europe US Japan Rest of World

Total

Other Europe

EU

US

Japan

Rest of World

0 % 20 % 40 % 60 % 80 % 100 %

ICT equipment Software IT services Carrier services

World

193


Figure 10EU 15 plus Norwayand SwitzerlandIT market growth ratesin %, 1999–2008

Figure 9World ICT markets,average annual growthin %, 2006–2008

–5.0–4.0–3.0–2.0–1.0

01.02.03.04.05.06.07.08.09.0

10.011.012.013.0

1999/98

10.8

12.1

1.0

–1.9

–3.4

4.4 4.54.23.3

2.6

2000/99 2001/00 2002/01 2003/02 2004/03 2005/04 2006/05 2008/072007/06


0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

9.0

10.0

Europe

4.5

1.3

2.9

5.8

2.4

4.5

1.9

0.1 0.9

10.0

5.0

6.3

5.4

2.6

3.9

US Japan Rest of World World

ITTelecomTotal


194


Figure 12 European ICT market, proportions by class of business, 2006 and market growth, 2006–2008

Figure 11 European IT market by region, 2006 and market growth, 2006–2008

Other Europe** 5 %

ITmarketproportions,2006

Top 5* 71 %

Other EU*** 24 %

ITmarketgrowth,CAGR2006–2008

%

Total

Top 5*

EU

Other Europe**

Other EU***


* Top 5 are Germany, France, UK, Italy and Spain ** includes Norway and Switzerland *** Other EU excludes Cyprus and Malta


Computer hardware 12 %

ICTmarketproportions,2006

Software 11 %

Carrier services 44 %

ICTmarketgrowth,CAGR2006–2008%

Office equipment

End-user communications equipment

Carrier services

Computer hardware

Software


IT services


6 %

IT services 21 %

Office equipment 1 %


equipment 4 %



4.5

4.3

4.6

4.2

5.3

0.9

1.2

1.8

2.0

2.2

5.4

6.5

0.0 1.0 2.0 3.0 4.0 5.0 6.0

0.0 1.0 2.0 3.0 4.0 5.0 6.0

7.0

195


Figure 13 Worldwide number ofInternet hosts, millions,2000–2006

Source: Internet Software Consortium (www.isc.org/)

439

93110

126147

162 172

209233

285

318

353

395

Jul 06Jan 00 Jul 00 Jan 01 Jul 01 Jan 02 Jul 02 Jan 03 Jul 03 Jan 04 Jul 04 Jan 05 Jul 05 Jan 06

450

400

350

300

250

200

150

100

50

0

72

estimate

http://www.isc.org/

196


United Kingdom 2004 2005 2006 2007 2005/04 %

2006/05 %

2007/06 %

Total IT 60.7 64.1 66.3 69.7 5.5 3.6 5.0Total telecommunications 54.3 55.9 57.3 57.6 3.0 2.6 0.5Total ICT* 115.0 120.0 123.7 127.3 4.4 3.1 2.9Total digital CE** 7.4 9.8 12.0 13.1 32.1 22.5 9.4TotalICTanddigitalCE 122.4 129.8 135.7 140.4 6.0 4.5 3.5

Table 9 France, ICT and digital CE market value, € billion

France 2004 2005 2006 2007 2005/04 %

2006/05 %

2007/06 %


* May not add up due to rounding.

** Source: EITO in co-operation with GfK

Germany 2004 2005 2006 2007 2005/04 %

2006/05 %

2007/06 %

Total IT 63.8 65.8 67.6 70.0 3.1 2.8 3.5Total telecommunications 64.8 66.1 66.2 66.0 1.9 0.2 -0.3Total ICT* 128.6 131.8 133.8 136.0 2.5 1.5 1.6Total digital CE** 6.9 8.7 10.1 10.7 26.0 16.2 6.5TotalICTanddigitalCE 135.5 140.5 143.9 146.7 3.7 2.4 1.9

Table 10 Germany, ICT and digital CE market value, € billion

Italy 2004 2005 2006 2007 2005/04 %

2006/05 %

2007/06 %


Table 11 Italy, ICT and digital CE market value, € billion

Spain 2004 2005 2006 2007 2005/04 %

2006/05 %

2007/06 %


Table 12 Spain, ICT and digital CE market value, € billion

Table 13 United Kingdom, ICT and digital CE market value, € billion

8. Major European ICT and digital CE markets









197


Europe 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Austria 6,606 6,910 7,095 7,356 7,689 4.6 2.7 3.7 4.5

Belgium/Luxembourg 8,114 8,418 8,735 9,191 9,693 3.7 3.8 5.2 5.5

Denmark 6,565 6,866 7,060 7,206 7,425 4.6 2.8 2.1 3.0

Finland 4,949 5,158 5,341 5,497 5,721 4.2 3.5 2.9 4.1

France 50,540 53,256 54,922 57,443 60,128 5.4 3.1 4.6 4.7

Germany 63,816 65,789 67,632 69,998 72,600 3.1 2.8 3.5 3.7

Greece 1,936 2,028 2,122 2,263 2,417 4.7 4.6 6.7 6.8

Ireland 2,369 2,501 2,648 2,767 2,903 5.6 5.8 4.5 4.9

Italy 24,607 24,858 25,235 25,764 26,521 1.0 1.5 2.1 2.9

Netherlands 15,984 16,720 17,548 18,394 19,316 4.6 4.9 4.8 5.0

Portugal 2,554 2,680 2,771 2,925 3,044 4.9 3.4 5.6 4.1

Spain 11,904 12,885 13,678 14,516 15,473 8.2 6.2 6.1 6.6

Sweden 10,611 11,106 11,407 11,760 12,246 4.7 2.7 3.1 4.1

UK 60,690 64,046 66,323 69,669 73,164 5.5 3.6 5.0 5.0

Bulgaria 298 405 430 494 549 35.8 6.2 14.8 11.2

Czech Republic 2,332 2,634 2,915 3,215 3,499 12.9 10.6 10.3 8.8

Estonia 212 238 252 273 286 12.4 5.8 8.4 4.8

Hungary 1,786 1,918 2,027 2,173 2,333 7.4 5.6 7.2 7.4

Latvia 205 237 261 287 316 16.0 9.9 9.9 10.1

Lithuania 261 307 344 377 409 17.6 12.1 9.6 8.6

Poland 3,701 4,715 5,375 5,906 6,497 27.4 14.0 9.9 10.0

Romania 818 1,018 1,211 1,303 1,479 24.4 19.0 7.6 13.5

Slovakia 714 808 901 1,004 1,110 13.2 11.4 11.4 10.6

Slovenia 540 576 609 640 668 6.6 5.9 5.0 4.4

EU 282,112 296,078 306,840 320,421 335,487 5.0 3.6 4.4 4.7

EU 15 271,245 283,222 292,516 304,750 318,341 4.4 3.3 4.2 4.5

Norway 5,711 6,006 6,218 6,395 6,691 5.2 3.5 2.8 4.6

Switzerland 10,685 11,046 11,320 11,798 12,336 3.4 2.5 4.2 4.6

EU 15 + Norway and Switzerland 287,641 300,274 310,054 322,943 337,369 4.4 3.3 4.2 4.5

Europe 298,508 313,131 324,378 338,614 354,514 4.9 3.6 4.4 4.7

Table 14 IT market by country, € million

9. European ICT markets

198


Europe 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Austria 7,495 7,642 7,813 7,977 8,125 2.0 2.2 2.1 1.9


Denmark 5,975 6,143 6,230 6,249 6,253 2.8 1.4 0.3 0.1

Finland 4,572 4,654 4,716 4,750 4,770 1.8 1.3 0.7 0.4

France 40,378 41,268 41,765 42,456 43,045 2.2 1.2 1.7 1.4

Germany 64,799 66,050 66,170 65,999 66,057 1.9 0.2 –0.3 0.1

Greece 5,869 6,059 6,237 6,383 6,453 3.2 2.9 2.3 1.1

Ireland 3,815 3,905 3,976 4,034 4,069 2.4 1.8 1.5 0.9

Italy 42,690 44,234 45,153 46,023 46,694 3.6 2.1 1.9 1.5

Netherlands 15,407 15,796 16,119 16,364 16,553 2.5 2.0 1.5 1.2

Portugal 6,173 6,427 6,547 6,672 6,766 4.1 1.9 1.9 1.4

Spain 28,254 30,117 31,310 31,855 32,143 6.6 4.0 1.7 0.9

Sweden 10,290 10,434 10,683 10,806 10,950 1.4 2.4 1.2 1.3

UK 54,257 55,907 57,335 57,627 57,650 3.0 2.6 0.5 0.0

Bulgaria 1,321 1,438 1,564 1,682 1,765 8.9 8.8 7.5 4.9

Czech Republic 3,298 3,698 3,999 4,279 4,471 12.1 8.2 7.0 4.5

Estonia 498 555 600 626 650 11.6 8.0 4.4 3.8

Hungary 3,674 3,857 4,058 4,218 4,336 5.0 5.2 3.9 2.8

Latvia 659 764 841 910 963 16.0 10.1 8.2 5.8

Lithuania 827 896 970 994 1,014 8.3 8.3 2.5 2.0

Poland 8,807 9,661 10,483 11,172 11,776 9.7 8.5 6.6 5.4

Romania 2,572 3,104 3,556 3,970 4,284 20.7 14.5 11.7 7.9

Slovakia 1,337 1,439 1,541 1,638 1,714 7.6 7.1 6.3 4.6

Slovenia 830 944 997 1,061 1,116 13.8 5.7 6.4 5.1

EU 323,394 334,734 342,426 347,626 351,613 3.5 2.3 1.5 1.1

EU 15 299,574 308,377 313,816 317,076 319,525 2.9 1.8 1.0 0.8

Norway 4,033 4,072 4,110 4,139 4,163 1.0 0.9 0.7 0.6

Switzerland 8,751 8,931 9,040 9,147 9,240 2.1 1.2 1.2 1.0


Europe 336,179 347,737 355,576 360,912 365,015 3.4 2.3 1.5 1.1

Table 15 Telecommunications market by country, € million

199


Europe 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Austria 14,101 14,551 14,908 15,333 15,814 3.2 2.5 2.9 3.1


Denmark 12,540 13,009 13,290 13,455 13,678 3.7 2.2 1.2 1.7

Finland 9,521 9,811 10,057 10,247 10,491 3.0 2.5 1.9 2.4

France 90,918 94,524 96,688 99,900 103,173 4.0 2.3 3.3 3.3

Germany 128,615 131,839 133,802 135,997 138,657 2.5 1.5 1.6 2.0

Greece 7,806 8,087 8,359 8,647 8,870 3.6 3.4 3.4 2.6

Ireland 6,183 6,406 6,624 6,801 6,972 3.6 3.4 2.7 2.5

Italy 67,297 69,092 70,389 71,786 73,215 2.7 1.9 2.0 2.0

Netherlands 31,391 32,517 33,667 34,758 35,869 3.6 3.5 3.2 3.2

Portugal 8,727 9,107 9,317 9,597 9,811 4.3 2.3 3.0 2.2

Spain 40,158 43,003 44,989 46,371 47,616 7.1 4.6 3.1 2.7

Sweden 20,900 21,541 22,089 22,566 23,195 3.1 2.5 2.2 2.8

UK 114,947 119,953 123,658 127,297 130,814 4.4 3.1 2.9 2.8

Bulgaria 1,619 1,843 1,994 2,176 2,314 13.8 8.2 9.1 6.3

Czech Republic 5,630 6,332 6,914 7,494 7,970 12.5 9.2 8.4 6.4

Estonia 709 794 852 899 936 11.9 7.3 5.5 4.1

Hungary 5,460 5,775 6,084 6,390 6,669 5.8 5.4 5.0 4.4

Latvia 863 1,002 1,102 1,197 1,278 16.0 10.0 8.6 6.8

Lithuania 1,088 1,203 1,314 1,371 1,423 10.6 9.2 4.4 3.8

Poland 12,507 14,376 15,858 17,078 18,273 14.9 10.3 7.7 7.0

Romania 3,390 4,122 4,767 5,274 5,763 21.6 15.6 10.6 9.3

Slovakia 2,051 2,248 2,442 2,641 2,823 9.6 8.6 8.2 6.9

Slovenia 1,370 1,519 1,607 1,701 1,784 10.9 5.7 5.9 4.9

EU 605,507 630,812 649,267 668,047 687,099 4.2 2.9 2.9 2.9

EU 15 570,819 591,599 606,332 621,826 637,866 3.6 2.5 2.6 2.6

Norway 9,744 10,078 10,329 10,534 10,854 3.4 2.5 2.0 3.0

Switzerland 19,437 19,978 20,359 20,945 21,576 2.8 1.9 2.9 3.0


Europe 634,687 660,868 679,954 699,526 719,529 4.1 2.9 2.9 2.9

Table 16 ICT market by country, € million

200


Europe 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 19,892 19,915 19,816 20,049 20,407 0.1 –0.5 1.2 1.8

PCs 43,329 45,177 44,117 44,536 46,034 4.3 –2.3 0.9 3.4

Other computer hardware and add-ons 17,669 18,823 19,046 19,464 19,883 6.5 1.2 2.2 2.1

Computer hardware 80,890 83,915 82,979 84,050 86,324 3.7 –1.1 1.3 2.7

Mobile telephone sets 19,207 20,379 21,221 21,894 22,428 6.1 4.1 3.2 2.4

Other end-user communications equipment 7,587 7,503 7,402 7,315 7,236 –1.1 –1.3 –1.2 –1.1

End-user communications equipment 26,793 27,882 28,624 29,209 29,664 4.1 2.7 2.0 1.6

Copiers 4,447 4,538 4,615 4,681 4,732 2.1 1.7 1.4 1.1

Other office equipment 4,031 4,089 4,140 4,160 4,185 1.5 1.2 0.5 0.6

Office equipment 8,478 8,628 8,755 8,842 8,917 1.8 1.5 1.0 0.9

PBX, key systems, circuit switching equipment and transmission 11,730 11,691 11,681 11,728 11,724 –0.3 –0.1 0.4 0.0

Cellular mobile radio infrastructure 9,220 9,683 9,968 10,374 10,790 5.0 2.9 4.1 4.0

Packet switching and routing equipment 3,383 3,381 3,425 3,459 3,474 –0.1 1.3 1.0 0.4

Other datacom and network equipment 17,266 17,954 18,740 19,307 19,813 4.0 4.4 3.0 2.6

Datacom and network equipment 41,599 42,709 43,814 44,867 45,801 2.7 2.6 2.4 2.1

Total ICT equipment 157,760 163,133 164,172 166,967 170,707 3.4 0.6 1.7 2.2

System software 35,507 37,946 40,531 43,401 46,514 6.9 6.8 7.1 7.2

Application software 31,443 33,195 35,102 37,187 39,345 5.6 5.7 5.9 5.8

Software products 66,951 71,142 75,633 80,588 85,859 6.3 6.3 6.6 6.5

IT services 126,344 133,178 140,250 147,985 155,937 5.4 5.3 5.5 5.4

Fixed voice telephone services 92,234 90,073 85,549 81,295 77,193 –2.3 –5.0 –5.0 –5.0

Fixed data services 51,329 56,183 60,940 64,781 68,539 9.5 8.5 6.3 5.8

Mobile telephone services 125,120 131,708 137,552 141,701 144,798 5.3 4.4 3.0 2.2

CaTV services 14,949 15,450 15,858 16,208 16,497 3.3 2.6 2.2 1.8

Carrier services 283,632 293,414 299,899 303,985 307,027 3.4 2.2 1.4 1.0

Total ICT 634,687 660,868 679,954 699,526 719,529 4.1 2.9 2.9 2.9

Total IT 298,508 313,131 324,378 338,614 354,514 4.9 3.6 4.4 4.7

Total telecommunications 336,179 347,737 355,576 360,912 365,015 3.4 2.3 1.5 1.1Tabl

e 17

Eu

rope

, IC

T m

arke

t val

ue, €

mill

ion

201


EU* 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 18,828 18,783 18,697 18,930 19,275 –0.2 –0.5 1.2 1.8

PCs 41,002 42,846 41,937 42,425 43,892 4.5 –2.1 1.2 3.5

Other computer hardware and add-ons 16,794 17,885 18,095 18,509 18,906 6.5 1.2 2.3 2.1





Copiers 4,226 4,306 4,373 4,429 4,472 1.9 1.6 1.3 1.0



PBX, key systems, circuit switching equipment and transmission 11,009 10,967 10,951 10,986 10,972 –0.4 –0.2 0.3 –0.1


Packet switching and routing equipment 3,290 3,312 3,357 3,391 3,406 0.7 1.4 1.0 0.4

Other datacom and network equipment 16,391 17,054 17,833 18,389 18,885 4.0 4.6 3.1 2.7



System software 33,620 35,928 38,352 41,057 43,999 6.9 6.7 7.1 7.2



IT services 119,136 125,659 132,380 139,696 147,186 5.5 5.3 5.5 5.4




CaTV services 14,048 14,547 14,954 15,304 15,592 3.6 2.8 2.3 1.9


Total ICT 605,507 630,812 649,267 668,047 687,099 4.2 2.9 2.9 2.9

Total IT 282,112 296,078 306,840 320,421 335,487 5.0 3.6 4.4 4.7

Total telecommunications 323,394 334,734 342,426 347,626 351,613 3.5 2.3 1.5 1.1 Tabl

e 18

EU

, IC

T m

arke

t val

ue, €

mill

ion

* Does not include Cyprus and Malta.

202


EU 15 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 17,968 17,833 17,699 17,827 18,067 –0.8 –0.8 0.7 1.3

PCs 38,485 39,679 38,321 38,566 39,692 3.1 –3.4 0.6 2.9

Portable 15,529 17,371 18,262 19,454 20,893 11.9 5.1 6.5 7.4

Desktop 22,956 22,308 20,059 19,112 18,799 –2.8 –10.1 –4.7 –1.6

Printers and MFPs 9,813 10,454 10,713 11,057 11,307 6.5 2.5 3.2 2.3

Other computer hardware 5,871 6,107 5,890 5,850 5,903 4.0 –3.6 –0.7 0.9





Copiers 4,029 4,104 4,167 4,226 4,275 1.9 1.6 1.4 1.1



PBX and key systems 3,315 3,395 3,430 3,457 3,475 2.4 1.0 0.8 0.5

Packet switching and routing equipment 2,864 2,841 2,838 2,821 2,816 –0.8 –0.1 –0.6 –0.2

Circuit switching equipment 2,010 1,763 1,573 1,435 1,331 –12.3 –10.8 –8.8 –7.3


Transmission 4,905 5,037 5,156 5,287 5,397 2.7 2.4 2.5 2.1

Other data communications and network equipment 15,560 16,156 16,904 17,429 17,888 3.8 4.6 3.1 2.6



System software 32,731 34,898 37,196 39,773 42,590 6.6 6.6 6.9 7.1



Professional services 84,242 88,937 94,016 99,543 105,110 5.6 5.7 5.9 5.6

Support services 31,754 32,962 34,160 35,423 36,749 3.8 3.6 3.7 3.7

IT services 115,995 121,899 128,176 134,966 141,859 5.1 5.1 5.3 5.1




CaTV services 12,864 13,238 13,506 13,709 13,837 2.9 2.0 1.5 0.9


Total ICT 570,819 591,599 606,332 621,826 637,866 3.6 2.5 2.6 2.6

Total IT 271,245 283,222 292,516 304,750 318,341 4.4 3.3 4.2 4.5


e 19

EU

15,

ICT

mar

ket v

alue

, € m

illio

n

203


EU 15 plus Norway and Switzerland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 19,032 18,965 18,818 18,945 19,199 –0.4 –0.8 0.7 1.3

PCs 40,812 42,009 40,501 40,678 41,835 2.9 –3.6 0.4 2.8

Portable 16,575 18,497 19,403 20,608 22,117 11.6 4.9 6.2 7.3

Desktop 24,237 23,512 21,098 20,070 19,718 –3.0 –10.3 –4.9 –1.8


Other computer hardware 6,171 6,424 6,185 6,126 6,179 4.1 –3.7 –0.9 0.9





Copiers 4,250 4,336 4,410 4,478 4,535 2.0 1.7 1.6 1.3



PBX and key systems 3,425 3,510 3,550 3,581 3,602 2.5 1.1 0.9 0.6

Packet switching and routing equipment 2,957 2,910 2,906 2,889 2,885 –1.6 –0.2 –0.6 –0.2

Circuit switching equipment 2,121 1,855 1,653 1,506 1,396 –12.5 –10.9 –8.9 –7.3


Transmission 5,404 5,553 5,686 5,834 5,957 2.8 2.4 2.6 2.1




System software 34,618 36,917 39,376 42,117 45,105 6.6 6.7 7.0 7.1





IT services 123,203 129,418 136,045 143,255 150,609 5.0 5.1 5.3 5.1




CaTV services 13,765 14,141 14,409 14,614 14,742 2.7 1.9 1.4 0.9


Total ICT 600,000 621,655 637,020 653,305 670,296 3.6 2.5 2.6 2.6

Total IT 287,641 300,274 310,054 322,943 337,369 4.4 3.3 4.2 4.5


e 20

EU

15

plus

Nor

way

and

Switz

erla

nd, I

CT

mar

ket v

alue

, € m

illio

n

204


Austria 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 414 400 389 397 410 –3.4 –2.8 2.0 3.4

PCs 886 903 864 876 941 1.9 –4.3 1.3 7.5

Portable 424 451 464 497 562 6.3 3.0 7.1 13.1

Desktop 462 452 400 379 379 –2.1 –11.5 –5.4 0.1

Printers and MFPs 271 293 308 323 334 8.2 5.1 4.8 3.5

Other computer hardware 138 144 137 137 145 4.1 –4.6 0.1 5.3


Mobile telephone sets 358 333 348 366 380 –7.0 4.5 5.0 4.0

Other end-user communications equipment 145 145 145 146 146 0.3 0.2 0.3 0.2

End-user communications equipment 503 478 493 511 526 –4.9 3.2 3.6 2.9

Copiers 108 115 121 127 133 6.7 5.2 5.0 4.0

Other office equipment 78 78 79 79 79 0.7 0.5 0.3 0.2

Office equipment 186 194 200 206 212 4.2 3.3 3.2 2.6

PBX and key systems 104 109 114 118 122 5.6 4.5 3.6 2.9

Packet switching and routing equipment 63 55 56 57 58 –13.2 1.6 1.7 1.4

Circuit switching equipment 93 76 65 57 52 –18.1 –14.5 –11.6 –9.3

Cellular mobile radio infrastructure 228 217 208 208 208 –5.0 –4.0 0.0 0.0

Transmission 99 103 106 109 112 3.7 3.0 3.2 2.6

Other data communications and network equipment 274 284 300 304 307 3.5 5.8 1.2 1.0

Datacom and network equipment 861 844 849 854 859 –2.0 0.7 0.6 0.6

Total ICT equipment 3,260 3,256 3,242 3,305 3,428 –0.1 –0.4 1.9 3.7

System software 769 817 872 930 994 6.2 6.7 6.7 6.8

Application software 652 680 722 766 811 4.3 6.1 6.2 5.9



Support services 768 814 839 864 890 6.0 3.0 3.0 3.1

IT services 2,999 3,190 3,302 3,416 3,533 6.4 3.5 3.5 3.4




CaTV services 574 599 615 627 638 4.4 2.6 2.1 1.7


Total ICT 14,101 14,551 14,908 15,333 15,814 3.2 2.5 2.9 3.1

Total IT 6,606 6,910 7,095 7,356 7,689 4.6 2.7 3.7 4.5


e 21

A

ustr

ia, I

CT

mar

ket v

alue

, € m

illio

n

205


Belgium/Luxembourg 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 579 599 592 644 684 3.4 –1.1 8.9 6.1

PCs 1,149 1,170 1,169 1,215 1,308 1.8 –0.1 3.9 7.6

Portable 519 563 594 647 719 8.5 5.5 9.0 11.2

Desktop 631 608 576 568 589 –3.7 –5.3 –1.3 3.6

Printers and MFPs 329 340 337 345 352 3.3 –0.7 2.3 2.1



Mobile telephone sets 832 837 816 922 1,018 0.5 –2.5 13.0 10.4

Other end-user communications equipment 227 226 224 222 221 –0.8 –0.7 –0.8 –0.6

End-user communications equipment 1,060 1,062 1,040 1,144 1,239 0.2 –2.1 10.0 8.3

Copiers 138 137 135 134 134 –1.0 –1.5 –0.4 –0.3


Office equipment 268 268 267 267 267 0.1 –0.4 0.0 0.0


Packet switching and routing equipment 104 109 102 95 90 4.4 –6.2 –6.9 –5.5


Cellular mobile radio infrastructure 156 188 220 242 261 20.0 17.0 10.0 8.0

Transmission 122 126 129 133 137 3.4 2.8 3.0 2.4


Datacom and network equipment 953 1,002 1,049 1,080 1,108 5.1 4.7 3.0 2.6


System software 804 860 925 993 1,071 7.0 7.5 7.3 7.9

Application software 900 938 989 1,043 1,098 4.1 5.5 5.5 5.3



Support services 973 999 1,044 1,091 1,133 2.7 4.4 4.5 3.9

IT services 3,492 3,629 3,834 4,056 4,270 3.9 5.6 5.8 5.3




CaTV services 619 622 625 626 628 0.6 0.4 0.3 0.2

Carrier services 8,019 8,122 8,127 8,112 8,111 1.3 0.1 –0.2 0.0

Total ICT 17,714 18,159 18,496 19,071 19,691 2.5 1.9 3.1 3.3

Total IT 8,114 8,418 8,735 9,191 9,693 3.7 3.8 5.2 5.5


e 22

Be

lgiu

m/L

uxem

bour

g, IC

T m

arke

t val

ue, €

mill

ion

206


Denmark 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 421 414 385 374 368 –1.7 –7.1 –2.7 –1.7

PCs 983 966 929 837 809 –1.7 –3.8 –9.9 –3.4

Portable 375 423 464 451 428 12.6 9.8 –2.9 –5.1

Desktop 608 544 465 387 381 –10.6 –14.4 –16.9 –1.4


Other computer hardware 122 127 122 103 95 4.5 –3.9 –15.6 –7.6

Computer hardware 1,770 1,778 1,731 1,620 1,586 0.5 –2.6 –6.4 –2.1

Mobile telephone sets 277 326 383 404 422 17.5 17.5 5.5 4.4


End-user communications equipment 361 407 463 482 499 12.8 13.6 4.2 3.4

Copiers 101 106 110 113 116 5.2 3.6 3.2 2.6

Other office equipment 69 69 68 68 68 –0.2 –0.1 –0.1 –0.1



Packet switching and routing equipment 69 58 57 57 57 –16.1 –0.7 –0.8 –0.6



Transmission 214 222 228 235 241 3.6 2.8 3.1 2.5



Total ICT equipment 3,092 3,149 3,191 3,123 3,124 1.8 1.3 –2.1 0.1

System software 718 773 842 914 985 7.6 9.0 8.5 7.7





IT services 2,811 3,019 3,125 3,252 3,382 7.4 3.5 4.1 4.0




CaTV services 574 598 613 625 635 4.2 2.5 2.0 1.6

Carrier services 5,165 5,279 5,297 5,283 5,258 2.2 0.3 –0.3 –0.5

Total ICT 12,540 13,009 13,290 13,455 13,678 3.7 2.2 1.2 1.7

Total IT 6,565 6,866 7,060 7,206 7,425 4.6 2.8 2.1 3.0


e 23

D

enm

ark,

ICT

mar

ket v

alue

, € m

illio

n

207


Finland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 329 350 342 316 312 6.3 –2.4 –7.4 –1.3

PCs 719 740 722 672 663 3.0 –2.5 –6.9 –1.4

Portable 274 303 313 329 316 10.5 3.4 5.0 –4.0

Desktop 445 437 409 343 347 –1.6 –6.6 –16.0 1.2




Mobile telephone sets 187 212 202 208 212 13.4 –4.4 2.6 2.1


End-user communications equipment 252 276 266 271 275 9.7 –3.5 1.9 1.5

Copiers 82 87 92 96 100 6.3 5.2 5.0 4.0







Transmission 102 106 109 113 116 4.0 3.2 3.5 2.8


Datacom and network equipment 612 619 653 663 671 1.2 5.4 1.5 1.3

Total ICT equipment 2,316 2,412 2,415 2,368 2,376 4.2 0.1 –1.9 0.3

System software 655 701 754 808 868 7.1 7.5 7.1 7.4





IT services 2,033 2,111 2,219 2,346 2,479 3.8 5.1 5.7 5.6


Fixed data services 850 897 967 998 1,040 5.5 7.8 3.2 4.1


CaTV services 373 384 391 397 402 3.0 1.8 1.5 1.2


Total ICT 9,521 9,811 10,057 10,247 10,491 3.0 2.5 1.9 2.4

Total IT 4,949 5,158 5,341 5,497 5,721 4.2 3.5 2.9 4.1


e 24

Fi

nlan

d, IC

T m

arke

t val

ue, €

mill

ion

208


France 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 2,898 2,861 2,775 2,714 2,744 –1.3 –3.0 –2.2 1.1

PCs 6,195 6,659 6,298 6,447 6,660 7.5 –5.4 2.4 3.3

Portable 2,398 2,742 2,836 3,146 3,376 14.4 3.4 10.9 7.3

Desktop 3,797 3,916 3,462 3,301 3,284 3.1 –11.6 –4.6 –0.5


Other computer hardware 858 893 819 814 828 4.1 –8.3 –0.7 1.7


Mobile telephone sets 2,219 2,494 2,464 2,518 2,561 12.4 –1.2 2.2 1.7


End-user communications equipment 3,457 3,699 3,643 3,669 3,690 7.0 –1.5 0.7 0.6

Copiers 885 909 925 946 963 2.7 1.8 2.3 1.8




Packet switching and routing equipment 404 454 414 374 346 12.5 –8.7 –9.6 –7.7


Cellular mobile radio infrastructure 649 746 851 961 1,061 15.0 14.0 13.0 10.4

Transmission 779 798 813 831 845 2.4 1.9 2.1 1.7



Total ICT equipment 21,929 23,043 22,745 23,224 23,817 5.1 –1.3 2.1 2.6

System software 6,136 6,635 7,073 7,519 7,997 8.1 6.6 6.3 6.4





IT services 23,947 25,139 26,523 28,058 29,550 5.0 5.5 5.8 5.3




CaTV services 939 968 985 999 1,011 3.0 1.8 1.4 1.2


Total ICT 90,918 94,524 96,688 99,900 103,173 4.0 2.3 3.3 3.3

Total IT 50,540 53,256 54,922 57,443 60,128 5.4 3.1 4.6 4.7


e 25

Fr

ance

, IC

T m

arke

t val

ue, €

mill

ion

209


Germany 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 4,699 4,641 4,633 4,638 4,653 –1.2 –0.2 0.1 0.3

PCs 8,730 8,663 8,280 8,232 8,278 –0.8 –4.4 –0.6 0.6

Portable 3,510 3,861 4,054 4,175 4,342 10.0 5.0 3.0 4.0

Desktop 5,220 4,802 4,226 4,057 3,935 –8.0 –12.0 –4.0 –3.0


Other computer hardware 1,629 1,683 1,655 1,640 1,609 3.3 –1.7 –0.9 –1.9

Computer hardware 17,349 17,377 16,982 16,926 16,956 0.2 –2.3 –0.3 0.2



End-user communications equipment 5,156 5,168 5,100 5,031 4,967 0.2 –1.3 –1.3 –1.3

Copiers 810 810 826 826 826 0.0 2.0 0.0 0.0

Other office equipment 527 527 532 522 522 0.0 1.0 –2.0 0.0

Office equipment 1,337 1,337 1,358 1,348 1,348 0.0 1.6 –0.8 0.0

PBX and key systems 1,258 1,258 1,220 1,184 1,148 0.0 –3.0 –3.0 –3.0

Packet switching and routing equipment 811 827 844 852 861 2.0 2.0 1.0 1.0


Cellular mobile radio infrastructure 1,235 1,285 1,259 1,196 1,196 4.0 –2.0 –5.0 0.0

Transmission 590 614 626 632 639 4.0 2.0 1.0 1.0


Datacom and network equipment 8,757 8,926 8,946 8,909 8,948 1.9 0.2 –0.4 0.4

Total ICT equipment 32,599 32,808 32,386 32,214 32,219 0.6 –1.3 –0.5 0.0

System software 7,934 8,251 8,664 9,140 9,689 4.0 5.0 5.5 6.0





IT services 25,644 26,817 28,067 29,458 30,931 4.6 4.7 5.0 5.0




CaTV services 2,261 2,329 2,376 2,423 2,423 3.0 2.0 2.0 0.0


Total ICT 128,615 131,839 133,802 135,997 138,657 2.5 1.5 1.6 2.0

Total IT 63,816 65,789 67,632 69,998 72,600 3.1 2.8 3.5 3.7

Total telecommunications 64,799 66,050 66,170 65,999 66,057 1.9 0.2 –0.3 0.1 Tabl

e 26

G

erm

any,

ICT

mar

ket v

alue

, € m

illio

n

210


Greece 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 128 127 131 145 147 –0.9 2.7 11.2 1.1

PCs 410 412 408 430 476 0.4 –1.0 5.5 10.8

Portable 195 210 222 253 296 7.8 5.8 14.0 16.8

Desktop 215 202 186 177 180 –6.4 –8.0 –4.8 2.1



Computer hardware 717 730 733 782 840 1.7 0.4 6.8 7.4

Mobile telephone sets 371 430 416 399 386 15.7 –3.2 –4.0 –3.2


End-user communications equipment 512 579 573 565 559 13.0 –1.1 –1.4 –1.0

Copiers 48 49 49 50 50 2.3 0.9 1.4 1.1






Cellular mobile radio infrastructure 201 191 195 209 220 –5.0 2.0 7.0 5.6

Transmission 60 62 64 66 67 3.2 2.6 2.9 2.3




System software 201 215 220 226 233 7.0 2.4 2.8 3.2


Software products 345 367 386 406 428 6.5 5.0 5.3 5.3

Professional services 449 484 517 553 592 7.9 6.8 7.0 6.9


IT services 673 720 768 821 878 7.0 6.7 6.8 7.0


Fixed data services 647 726 842 970 1,082 12.2 16.0 15.2 11.5


CaTV services – – – – – – – – –


Total ICT 7,806 8,087 8,359 8,647 8,870 3.6 3.4 3.4 2.6

Total IT 1,936 2,028 2,122 2,263 2,417 4.7 4.6 6.7 6.8


e 27

G

reec

e, IC

T m

arke

t val

ue, €

mill

ion

211


Ireland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 249 212 224 211 218 –15.0 5.8 –5.8 3.6

PCs 501 567 596 619 638 13.1 5.0 3.9 3.2

Portable 185 203 216 241 268 10.2 6.1 11.5 11.5

Desktop 317 364 380 378 370 14.8 4.4 –0.4 –2.2


Other computer hardware 61 64 67 67 68 6.4 4.3 0.0 1.8

Computer hardware 909 950 998 1,017 1,049 4.5 5.0 1.9 3.2

Mobile telephone sets 196 187 194 209 222 –4.3 3.5 7.7 6.2


End-user communications equipment 253 248 257 276 292 –2.1 3.9 7.2 5.8

Copiers 42 43 45 46 47 4.2 3.1 3.3 2.6







Transmission 48 49 51 52 54 3.5 2.8 3.1 2.5




System software 246 268 284 299 318 8.9 5.9 5.2 6.4





IT services 749 797 854 914 972 6.4 7.2 7.0 6.4


Fixed data services 423 483 525 555 581 14.2 8.7 5.8 4.8


CaTV services 240 255 265 273 280 6.4 3.8 3.1 2.5


Total ICT 6,183 6,406 6,624 6,801 6,972 3.6 3.4 2.7 2.5

Total IT 2,369 2,501 2,648 2,767 2,903 5.6 5.8 4.5 4.9


e 28

Ir

elan

d, IC

T m

arke

t val

ue, €

mill

ion

212


Italy 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 1,939 1,925 1,902 1,887 1,907 –0.7 –1.2 –0.8 1.1

PCs 4,098 4,123 4,157 4,210 4,270 0.6 0.8 1.3 1.4

Portable 1,703 1,924 2,090 2,236 2,390 13.0 8.6 7.0 6.9

Desktop 2,395 2,199 2,067 1,974 1,880 –8.2 –6.0 –4.5 –4.8



Computer hardware 7,775 7,947 8,038 8,127 8,249 2.2 1.2 1.1 1.5




Copiers 534 535 534 535 536 0.2 –0.1 0.2 0.1






Cellular mobile radio infrastructure 1,577 1,514 1,453 1,459 1,464 –4.0 –4.0 0.4 0.3

Transmission 837 851 880 918 950 1.7 3.4 4.3 3.4




System software 2,536 2,584 2,680 2,827 3,034 1.9 3.7 5.5 7.3



Professional services 6,982 6,947 7,051 7,227 7,480 –0.5 1.5 2.5 3.5

Support services 2,867 2,827 2,813 2,827 2,869 –1.4 –0.5 0.5 1.5

IT services 9,849 9,774 9,864 10,054 10,350 –0.8 0.9 1.9 2.9




CaTV services – – – – – – – – –


Total ICT 67,297 69,092 70,389 71,786 73,215 2.7 1.9 2.0 2.0

Total IT 24,607 24,858 25,235 25,764 26,521 1.0 1.5 2.1 2.9


e 29

Ita

ly, I

CT

mar

ket v

alue

, € m

illio

n

213


Netherlands 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 817 841 874 912 923 3.0 3.9 4.4 1.2

PCs 1,982 2,071 2,060 2,015 2,112 4.5 –0.5 –2.2 4.8

Portable 777 874 946 1,033 1,131 12.4 8.3 9.2 9.4

Desktop 1,205 1,197 1,114 982 981 –0.6 –6.9 –11.9 0.0







Copiers 201 204 205 208 210 1.5 0.6 1.2 1.0







Transmission 467 487 504 523 538 4.3 3.4 3.8 3.0




System software 2,494 2,675 2,878 3,118 3,354 7.3 7.6 8.3 7.6





IT services 6,361 6,606 7,052 7,481 7,863 3.9 6.8 6.1 5.1




CaTV services 934 939 942 944 946 0.5 0.3 0.2 0.2


Total ICT 31,391 32,517 33,667 34,758 35,869 3.6 3.5 3.2 3.2

Total IT 15,984 16,720 17,548 18,394 19,316 4.6 4.9 4.8 5.0


e 30

N

ethe

rland

s, IC

T m

arke

t val

ue, €

mill

ion

214


Norway 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 304 335 355 329 325 10.3 6.0 –7.3 –1.3

PCs 849 813 753 670 638 –4.2 –7.4 –11.0 –4.8

Portable 365 378 376 357 340 3.6 –0.7 –5.1 –4.7

Desktop 483 435 377 313 298 –10.0 –13.3 –17.0 –4.9







Copiers 89 92 93 94 95 2.5 1.3 1.4 1.1






Cellular mobile radio infrastructure 157 125 110 121 131 –20.0 –12.0 10.0 8.0

Transmission 137 142 147 152 156 4.1 3.2 3.6 2.9


Datacom and network equipment 638 603 599 617 633 –5.4 –0.8 3.1 2.7


System software 608 659 722 786 853 8.3 9.7 8.9 8.5





IT services 2,750 2,949 3,087 3,277 3,503 7.3 4.7 6.2 6.9

Fixed voice telephone services 1,009 993 942 891 843 –1.6 –5.2 –5.4 –5.3



CaTV services 103 104 104 105 105 1.1 0.6 0.5 0.4

Carrier services 3,343 3,379 3,400 3,390 3,379 1.1 0.6 –0.3 –0.3

Total ICT 9,744 10,078 10,329 10,534 10,854 3.4 2.5 2.0 3.0

Total IT 5,711 6,006 6,218 6,395 6,691 5.2 3.5 2.8 4.6


e 31

N

orwa

y, IC

T m

arke

t val

ue, €

mill

ion

215


Portugal 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 181 176 159 184 196 –2.8 –9.5 15.8 6.4

PCs 551 581 586 608 611 5.5 0.8 3.7 0.5

Portable 228 245 272 295 310 7.7 11.1 8.2 5.1

Desktop 323 336 314 313 301 4.0 –6.6 –0.2 –3.9



Computer hardware 974 1,031 1,034 1,091 1,110 5.9 0.3 5.5 1.8




Copiers 70 71 71 72 73 1.9 –0.1 1.2 0.9







Transmission 66 69 71 74 76 4.2 3.3 3.7 2.9




System software 255 275 291 311 336 7.8 5.8 7.1 7.8





IT services 801 827 871 920 969 3.3 5.3 5.6 5.3


Fixed data services 992 1,116 1,240 1,328 1,410 12.5 11.1 7.1 6.2


CaTV services 65 69 71 73 75 5.9 3.5 2.8 2.3


Total ICT 8,727 9,107 9,317 9,597 9,811 4.3 2.3 3.0 2.2

Total IT 2,554 2,680 2,771 2,925 3,044 4.9 3.4 5.6 4.1


e 32

Po

rtug

al, I

CT

mar

ket v

alue

, € m

illio

n

216


Spain 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 920 902 905 921 943 –1.9 0.4 1.7 2.5

PCs 2,082 2,469 2,556 2,640 2,805 18.6 3.5 3.3 6.3

Portable 1,063 1,333 1,442 1,580 1,750 25.4 8.1 9.6 10.7

Desktop 1,019 1,136 1,114 1,060 1,055 11.5 –1.9 –4.9 –0.4

Printers and MFPs 571 546 566 586 596 –4.3 3.7 3.5 1.7






Copiers 185 190 190 191 192 2.5 0.5 0.5 0.4







Transmission 316 323 328 334 338 2.0 1.6 1.8 1.4




System software 1,483 1,598 1,723 1,851 2,001 7.8 7.8 7.5 8.1





IT services 4,532 4,944 5,395 5,890 6,400 9.1 9.1 9.2 8.7




CaTV services 269 318 380 406 429 18.0 19.5 6.9 5.5


Total ICT 40,158 43,003 44,989 46,371 47,616 7.1 4.6 3.1 2.7

Total IT 11,904 12,885 13,678 14,516 15,473 8.2 6.2 6.1 6.6


e 33

Sp

ain,

ICT

mar

ket v

alue

, € m

illio

n

217


Tabl

e 34

Sw

eden

, IC

T m

arke

t val

ue, €

mill

ion

Sweden 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 649 721 739 750 756 11.1 2.4 1.5 0.9

PCs 1,462 1,506 1,348 1,206 1,178 3.0 –10.5 –10.6 –2.3

Portable 559 604 584 578 552 7.9 –3.3 –0.9 –4.4

Desktop 903 902 764 627 626 –0.1 –15.3 –17.9 –0.3




Mobile telephone sets 1,119 1,043 1,179 1,176 1,174 –6.8 13.0 –0.2 –0.2


End-user communications equipment 1,451 1,374 1,510 1,506 1,504 –5.3 9.9 –0.2 –0.2

Copiers 112 118 123 128 132 5.0 4.1 4.0 3.2

Other office equipment 88 88 88 88 88 –0.1 –0.1 0.0 0.0





Cellular mobile radio infrastructure 235 242 194 190 187 3.0 –20.0 –2.0 –1.6

Transmission 129 131 134 136 138 2.0 1.6 1.8 1.4

Other data communications and network equipment 621 618 641 651 660 –0.5 3.7 1.6 1.3

Datacom and network equipment 1,237 1,235 1,215 1,230 1,243 –0.2 –1.6 1.3 1.1


System software 1,188 1,284 1,393 1,517 1,636 8.1 8.5 8.8 7.8





IT services 4,797 4,989 5,237 5,500 5,783 4.0 5.0 5.0 5.2




CaTV services 1,057 1,097 1,122 1,143 1,160 3.8 2.3 1.8 1.5


Total ICT 20,900 21,541 22,089 22,566 23,195 3.1 2.5 2.2 2.8

Total IT 10,611 11,106 11,407 11,760 12,246 4.7 2.7 3.1 4.1

Total telecommunications 10,290 10,434 10,683 10,806 10,950 1.4 2.4 1.2 1.3

218


Switzerland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 760 797 764 789 808 4.8 –4.1 3.3 2.3

PCs 1,478 1,517 1,427 1,442 1,505 2.6 –5.9 1.0 4.4

Portable 681 748 766 797 884 9.9 2.3 4.1 10.8

Desktop 797 769 661 644 621 –3.6 –14.0 –2.5 –3.7







Copiers 132 141 150 158 165 6.9 6.0 5.7 4.5







Transmission 362 374 384 395 404 3.2 2.6 2.9 2.3

Other data communications and network equipment 624 646 643 647 651 3.5 –0.6 0.7 0.6

Datacom and network equipment 1,442 1,436 1,466 1,543 1,618 –0.4 2.1 5.3 4.9

Total ICT equipment 5,142 5,313 5,226 5,372 5,562 3.3 –1.6 2.8 3.5

System software 1,279 1,360 1,458 1,558 1,663 6.4 7.2 6.9 6.7





IT services 4,459 4,570 4,783 5,012 5,248 2.5 4.7 4.8 4.7




CaTV services 798 799 799 800 800 0.1 0.0 0.0 0.0


Total ICT 19,437 19,978 20,359 20,945 21,576 2.8 1.9 2.9 3.0

Total IT 10,685 11,046 11,320 11,798 12,336 3.4 2.5 4.2 4.6


e 35

Sw

itzer

land

, IC

T m

arke

t val

ue, €

mill

ion

219


United Kingdom 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 3,745 3,664 3,650 3,734 3,804 –2.2 –0.4 2.3 1.9

PCs 8,736 8,847 8,348 8,559 8,942 1.3 –5.6 2.5 4.5

Portable 3,320 3,635 3,765 3,992 4,452 9.5 3.6 6.0 11.5

Desktop 5,416 5,212 4,583 4,566 4,490 –3.8 –12.1 –0.4 –1.7


Other computer hardware 1,143 1,176 1,086 1,091 1,112 2.9 –7.6 0.4 2.0


Mobile telephone sets 2,799 2,872 3,245 3,235 3,227 2.6 13.0 –0.3 –0.3

Other end-user communications equipment 1,205 1,248 1,276 1,308 1,334 3.5 2.3 2.5 2.0


Copiers 714 730 740 752 762 2.2 1.4 1.6 1.3

Other office equipment 993 1,012 1,026 1,035 1,042 2.0 1.4 0.8 0.7


PBX and key systems 385 382 380 378 377 –0.7 –0.6 –0.5 –0.4




Transmission 1,075 1,096 1,112 1,131 1,146 1.9 1.5 1.7 1.3




System software 7,311 7,961 8,597 9,320 10,076 8.9 8.0 8.4 8.1





IT services 27,308 29,337 31,064 32,801 34,501 7.4 5.9 5.6 5.2




CaTV services 4,958 5,059 5,121 5,171 5,211 2.0 1.2 1.0 0.8

Carrier services 46,016 47,532 48,439 48,591 48,491 3.3 1.9 0.3 –0.2

Total ICT 114,947 119,953 123,658 127,297 130,814 4.4 3.1 2.9 2.8

Total IT 60,690 64,046 66,323 69,669 73,164 5.5 3.6 5.0 5.0


e 36

U

nite

d K

ingd

om, I

CT

mar

ket v

alue

, € m

illio

n

220


Bulgaria 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 22 37 34 41 46 67.9 –7.6 20.1 10.8

Workstations 0 0 0 0 0 –23.8 –54.7 –28.9 1.9

PCs 85 136 141 173 194 60.0 3.2 23.1 11.9

Add-ons 40 60 66 72 77 47.3 11.0 8.7 7.3





Copiers 6 7 8 8 8 12.4 5.4 1.6 0.0



LAN hardware 14 16 19 22 26 21.3 16.6 15.2 16.7

PBX, key systems, circuit switching equipment and transmission 38 38 38 38 35 –1.7 0.8 1.0 –8.1



Other datacom and network equipment 20 22 24 26 27 8.7 8.1 7.5 6.9


Total ICT equipment 483 592 624 693 741 22.7 5.4 11.1 7.0

System software 14 16 18 20 22 12.8 12.4 10.3 10.5



IT services 51 59 63 69 81 16.3 6.7 9.1 16.5

Fixed voice telephone services 340 354 320 306 294 4.0 –9.5 –4.4 –3.8


Mobile telephone services 558 628 745 823 877 12.7 18.6 10.5 6.5

CaTV services 54 60 67 73 80 12.2 10.9 9.5 8.6


Total ICT 1,619 1,843 1,994 2,176 2,314 13.8 8.2 9.1 6.3

Total IT 298 405 430 494 549 35.8 6.2 14.8 11.2


e 37

Bu

lgar

ia, I

CT

mar

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, € m

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n

221


Czech Republic 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 200 194 217 254 280 –2.7 11.8 16.9 10.2

Workstations 2 1 1 2 1 –42.8 8.1 16.2 –7.4

PCs 432 482 537 602 657 11.5 11.4 12.1 9.3

Add-ons 220 252 279 309 330 14.7 10.5 11.0 6.7

Computer hardware 854 929 1,034 1,166 1,269 8.9 11.2 12.8 8.8


Other end-user communications equipment 36 36 36 36 37 –0.5 1.2 1.0 0.7


Copiers 42 43 44 44 44 3.8 2.7 0.0 –0.7



LAN hardware 64 73 76 77 79 13.9 3.8 1.7 1.9

PBX, key systems, circuit switching equipment and transmission 80 82 85 87 84 2.8 3.6 2.5 –3.7



Other datacom and network equipment 119 121 123 125 124 1.6 1.6 1.5 –0.3



System software 220 259 295 327 360 17.4 14.0 11.0 10.0



IT services 802 925 1,017 1,117 1,227 15.3 10.0 9.8 9.8

Fixed voice telephone services 672 660 610 577 550 –1.9 –7.5 –5.4 –4.7



CaTV services 88 97 110 121 132 10.5 13.5 10.0 9.0


Total ICT 5,630 6,332 6,914 7,494 7,970 12.5 9.2 8.4 6.4

Total IT 2,332 2,634 2,915 3,215 3,499 12.9 10.6 10.3 8.8


e 38

C

zech

Rep

ublic

, IC

T m

arke

t val

ue, €

mill

ion

222


Estonia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 10 10 11 13 14 –1.1 10.0 16.8 5.5

Workstations 0 0 0 0 0 –46.7 –69.8 –8.8 21.4

PCs 76 88 89 94 92 15.8 1.1 5.7 –1.3

Add-ons 23 29 30 33 34 25.5 5.5 8.6 3.8



Other end-user communications equipment 6 6 6 6 6 –0.6 0.9 1.0 –0.9


Copiers 3 3 3 3 3 0.5 1.4 1.3 –0.2



LAN hardware 8 9 10 11 12 15.0 10.0 9.5 13.2




Other datacom and network equipment 9 7 6 6 4 –15.6 –11.6 –10.0 –25.3

Datacom and network equipment 68 68 69 70 70 –0.5 1.2 1.7 –0.8


System software 12 13 13 14 15 6.6 7.0 7.2 6.8



IT services 45 51 57 65 74 12.5 12.8 13.4 13.5




CaTV services 17 19 21 24 26 13.6 12.0 10.4 9.3

Carrier services 410 465 508 532 555 13.4 9.2 4.8 4.2

Total ICT 709 794 852 899 936 11.9 7.3 5.5 4.1

Total IT 212 238 252 273 286 12.4 5.8 8.4 4.8

Total telecommunications 498 555 600 626 650 11.6 8.0 4.4 3.8 Tabl

e 39

Es

toni

a, IC

T m

arke

t val

ue, €

mill

ion

223


Hungary 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 142 145 146 155 171 1.8 0.9 5.9 10.2

Workstations 1 1 0 0 0 –15.9 –41.1 33.6 –24.8

PCs 320 346 349 369 390 8.2 1.0 5.8 5.5

Add-ons 171 178 191 202 211 4.4 6.8 6.3 4.3





Copiers 39 37 37 37 37 –4.1 0.5 0.0 –1.4


Office equipment 61 61 63 64 65 –0.3 2.6 2.0 0.6

LAN hardware 50 60 65 66 67 19.5 7.9 2.2 1.9




Other datacom and network equipment 38 36 36 36 36 –5.4 0.5 1.3 0.1

Datacom and network equipment 357 375 392 404 403 4.8 4.5 3.1 –0.1


System software 180 194 208 226 245 7.7 7.3 8.4 8.3



IT services 589 641 689 748 817 8.8 7.5 8.5 9.2




CaTV services 196 223 248 269 291 13.6 11.2 8.7 7.9


Total ICT 5,460 5,775 6,084 6,390 6,669 5.8 5.4 5.0 4.4

Total IT 1,786 1,918 2,027 2,173 2,333 7.4 5.6 7.2 7.4


e 40

H

unga

ry, I

CT

mar

ket v

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, € m

illio

n

224


Latvia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 11 12 14 15 16 9.8 11.5 5.8 11.0

Workstations 0 0 0 0 0 –47.9 –66.1 –12.1 21.4

PCs 56 69 75 82 90 23.6 8.8 9.9 9.2

Add-ons 22 27 30 33 35 22.7 11.4 8.2 6.7



Other end-user communications equipment 10 10 10 10 10 –1.5 –0.7 0.2 –1.8


Copiers 4 4 4 4 4 2.4 1.5 2.2 0.0



LAN hardware 4 6 6 7 8 26.0 11.0 10.0 16.2


Cellular mobile radio infrastructure 41 40 38 38 37 –2.2 –3.3 –1.8 –2.3



Datacom and network equipment 80 82 83 84 83 2.1 1.3 1.5 –0.9


System software 14 16 17 19 20 11.0 8.8 9.0 8.3



IT services 54 61 69 78 88 12.8 12.8 13.2 13.4




CaTV services 24 27 29 32 35 11.7 10.5 9.2 8.3


Total ICT 863 1,002 1,102 1,197 1,278 16.0 10.0 8.6 6.8

Total IT 205 237 261 287 316 16.0 9.9 9.9 10.1

Total telecommunications 659 764 841 910 963 16.0 10.1 8.2 5.8 Tabl

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225


Lithuania 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 14 16 17 18 21 10.0 4.8 8.9 18.0

Workstations 0 0 0 0 0 –72.3 –70.0 –6.6 6.5

PCs 80 102 117 129 137 26.8 14.7 10.0 6.4

Add-ons 32 39 45 48 50 21.7 15.5 6.5 4.4





Copiers 6 7 7 7 7 4.0 3.5 –1.1 –2.5



LAN hardware 9 11 12 13 14 13.0 9.0 8.3 12.2


Cellular mobile radio infrastructure 48 47 47 47 46 –1.5 –0.9 –0.2 –1.9





System software 15 18 20 22 24 15.8 10.8 11.4 10.0



IT services 50 56 64 72 82 13.3 13.2 13.4 13.5




CaTV services 18 20 22 25 27 13.6 12.0 10.4 9.3


Total ICT 1,088 1,203 1,314 1,371 1,423 10.6 9.2 4.4 3.8

Total IT 261 307 344 377 409 17.6 12.1 9.6 8.6

Total telecommunications 827 896 970 994 1,014 8.3 8.3 2.5 2.0 Tabl

e 42

Li

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nia,

ICT

mar

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226


Poland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 276 325 343 365 395 17.4 5.6 6.5 8.2

Workstations 2 1 1 1 1 –2.1 –31.9 –16.1 –15.9

PCs 932 1,316 1,562 1,632 1,754 41.2 18.7 4.4 7.5

Add-ons 370 456 515 550 575 23.4 12.8 6.8 4.6




End-user communications equipment 775 923 1,041 1,107 1,175 19.1 12.8 6.3 6.2

Copiers 53 55 55 53 49 3.9 –0.9 –3.9 –6.0


Office equipment 94 98 99 98 97 4.5 1.3 –0.6 –1.9

LAN hardware 90 96 97 99 100 7.0 1.3 2.0 0.7




Other datacom and network equipment 186 198 193 192 193 6.4 –2.8 –0.5 0.9



System software 299 359 410 464 512 20.2 14.1 13.1 10.5


Software products 622 741 850 973 1,083 19.2 14.7 14.5 11.3

IT services 1,032 1,368 1,570 1,824 2,121 32.5 14.8 16.1 16.3


Fixed data services 864 818 928 1,046 1,175 –5.3 13.4 12.7 12.4


CaTV services 470 509 559 622 699 8.4 9.8 11.2 12.4


Total ICT 12,507 14,376 15,858 17,078 18,273 14.9 10.3 7.7 7.0

Total IT 3,701 4,715 5,375 5,906 6,497 27.4 14.0 9.9 10.0


e 43

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land

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227


Romania 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 73 86 86 97 107 17.7 0.4 12.5 10.5

Workstations 0 0 0 0 0 –10.1 –32.5 –6.3 –20.0

PCs 263 348 440 450 530 32.5 26.4 2.2 17.8

Add-ons 103 145 186 196 215 41.7 28.0 5.1 10.2





Copiers 22 23 24 24 23 1.9 5.4 –1.6 –2.8



LAN hardware 27 32 35 39 45 18.4 10.7 10.3 15.6

PBX, key systems, circuit switching equipment and transmission 120 115 113 112 107 –4.1 –1.8 –0.8 –4.9






System software 46 54 61 67 73 16.1 12.2 10.1 10.2



IT services 135 161 191 224 259 19.0 18.8 17.2 15.7

Fixed voice telephone services 540 552 563 568 562 2.1 2.1 0.9 –1.0



CaTV services 217 241 265 289 312 11.1 10.0 8.9 8.0


Total ICT 3,390 4,122 4,767 5,274 5,763 21.6 15.6 10.6 9.3

Total IT 818 1,018 1,211 1,303 1,479 24.4 19.0 7.6 13.5


e 44

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228


Slovakia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 67 79 81 92 104 17.7 2.9 12.6 13.2

Workstations 0 0 0 0 0 –32.4 –20.3 8.4 –5.0

PCs 159 160 181 205 229 0.7 13.3 12.8 11.9

Add-ons 75 81 91 99 107 7.6 12.2 8.3 8.5



Other end-user communications equipment 19 19 19 19 18 –1.9 –0.4 0.0 –2.5


Copiers 15 16 17 16 16 9.4 3.1 –0.3 –4.2


Office equipment 28 31 32 33 33 8.4 4.6 2.3 –0.2

LAN hardware 26 30 32 35 40 12.9 9.0 7.2 16.2







System software 51 61 69 77 84 18.9 12.6 11.9 9.2



IT services 208 253 288 325 363 21.8 13.6 13.0 11.7




CaTV services 61 67 74 80 86 10.6 9.6 8.6 7.7


Total ICT 2,051 2,248 2,442 2,641 2,823 9.6 8.6 8.2 6.9

Total IT 714 808 901 1,004 1,110 13.2 11.4 11.4 10.6


e 45

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CT

mar

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229


Slovenia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Server systems 43 46 48 54 54 7.5 4.7 11.4 1.5

Workstations 0 0 0 0 0 –35.4 –3.1 5.4 –9.4

PCs 115 121 126 124 127 4.9 4.4 –1.2 2.0

Add-ons 49 52 56 58 58 6.5 6.8 3.0 0.6





Copiers 7 7 7 7 7 4.1 2.1 –1.6 –3.3


Office equipment 13 13 13 14 13 3.8 2.6 0.5 –0.7

LAN hardware 24 27 28 29 32 9.3 5.5 2.8 11.8







System software 36 40 44 48 52 10.4 9.6 9.7 9.5



IT services 175 186 196 208 217 6.1 5.5 6.1 4.2

Fixed voice telephone services 180 201 203 199 195 11.6 1.1 –2.0 –2.0



CaTV services 41 46 52 59 68 13.0 13.3 13.6 14.9


Total ICT 1,370 1,519 1,607 1,701 1,784 10.9 5.7 5.9 4.9

Total IT 540 576 609 640 668 6.6 5.9 5.0 4.4

Total telecommunications 830 944 997 1,061 1,116 13.8 5.7 6.4 5.1 Tabl

e 46

Sl

oven

ia, I

CT

mar

ket v

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, € m

illio

n

230


Europe 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 1,703,617 1,885,830 1,914,131 1,985,173 2,070,241 10.7 1.5 3.7 4.3Workstations 47,468 38,032 26,726 21,630 20,471 –19.9 –29.7 –19.1 –5.4PCs 43,708,414 51,324,592 55,359,236 60,666,179 66,178,405 17.4 7.9 9.6 9.1Printers/MFPs 34,084,683 37,056,584 37,817,228 38,522,191 39,075,955 8.7 2.1 1.9 1.4LAN cards 39,020,040 48,243,764 60,858,512 74,119,984 85,359,565 23.6 26.1 21.8 15.2

EU* 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 1,603,744 1,777,629 1,815,842 1,890,018 1,975,501 10.8 2.1 4.1 4.5Workstations 45,890 36,371 24,531 20,080 18,920 –20.7 –32.6 –18.1 –5.8PCs 41,734,116 49,001,678 53,014,369 58,226,366 63,559,512 17.4 8.2 9.8 9.2Printers/MFPs 32,777,758 35,604,863 36,330,593 37,005,039 37,527,343 8.6 2.0 1.9 1.4LAN cards 37,581,137 46,499,966 58,675,183 71,481,624 82,346,296 23.7 26.2 21.8 15.2

EU 15 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 1,509,648 1,654,766 1,679,510 1,749,217 1,825,523 9.6 1.5 4.2 4.4Workstations 44,855 35,297 23,623 19,273 18,179 –21.3 –33.1 –18.4 –5.7PCs 38,376,512 44,634,847 47,897,483 52,667,047 57,469,686 16.3 7.3 10.0 9.1

Portable 14,246,168 18,687,374 22,548,578 26,530,578 30,240,037 31.2 20.7 17.7 14.0Desktop 24,130,344 25,947,473 25,348,905 26,136,469 27,229,649 7.5 –2.3 3.1 4.2

Printers/MFPs 29,851,430 32,172,913 32,528,636 32,930,901 33,207,523 7.8 1.1 1.2 0.8LAN cards 35,594,694 44,294,249 56,251,021 68,846,585 79,552,154 24.4 27.0 22.4 15.5

Table 49 EU 15 IT hardware shipments, units

Table 48 EU IT hardware shipments, units

Table 47 Europe IT hardware shipments, units

EU 15 + Norway and Switzerland

2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 1,609,521 1,762,967 1,777,799 1,844,372 1,920,263 9.5 0.8 3.7 4.1Workstations 46,433 36,958 25,818 20,823 19,730 –20.4 –30.1 –19.3 –5.2PCs 40,350,810 46,957,761 50,242,350 55,106,860 60,088,579 16.4 7.0 9.7 9.0



Table 50 EU 15 plus Norway and Switzerland IT hardware shipments, units

10. IT hardware shipments

*Does not include Cyprus and Malta.

231


Austria 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 36,644 40,779 39,201 41,129 44,147 11.3 –3.9 4.9 7.3Workstations 249 165 173 173 141 –33.7 4.8 0.0 –18.5PCs 919,623 1,013,501 1,102,329 1,185,641 1,312,106 10.2 8.8 7.6 10.7

Portable 429,018 490,727 555,937 644,215 741,138 14.4 13.3 15.9 15.0Desktop 490,605 522,774 546,392 541,426 570,968 6.6 4.5 –0.9 5.5

Printers/MFPs 568,194 604,761 612,733 626,600 639,120 6.4 1.3 2.3 2.0LAN cards 492,035 605,467 785,605 947,167 1,079,707 23.1 29.8 20.6 14.0

Belgium/ Luxembourg

2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 48,864 50,615 56,308 68,612 79,186 3.6 11.2 21.9 15.4Workstations 872 412 310 288 295 –52.8 –24.8 –7.1 2.4PCs 952,914 1,092,385 1,249,118 1,341,100 1,541,337 14.6 14.3 7.4 14.9

Portable 393,510 482,743 601,500 686,370 808,613 22.7 24.6 14.1 17.8Desktop 559,404 609,642 647,618 654,730 732,724 9.0 6.2 1.1 11.9

Printers/MFPs 849,099 838,379 854,084 867,827 877,558 –1.3 1.9 1.6 1.1LAN cards 929,506 1,100,019 1,474,705 1,811,453 2,096,111 18.3 34.1 22.8 15.7

Denmark 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 45,701 46,273 44,217 44,157 44,700 1.3 –4.4 –0.1 1.2Workstations 192 121 103 114 86 –37.0 –14.9 10.7 –24.6PCs 800,198 1,037,561 1,157,267 1,124,130 1,148,799 29.7 11.5 –2.9 2.2

Portable 344,702 527,278 680,808 686,830 707,299 53.0 29.1 0.9 3.0Desktop 455,496 510,283 476,459 437,300 441,500 12.0 –6.6 –8.2 1.0

Printers/MFPs 562,009 568,408 575,598 588,840 598,613 1.1 1.3 2.3 1.7LAN cards 585,105 725,862 919,971 1,122,678 1,292,283 24.1 26.7 22.0 15.1

Table 53 Denmark IT hardware shipments, units

Table 52 Belgium/Luxembourg IT hardware shipments, units

Table 51 Austria IT hardware shipments, units

Finland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 31,318 32,125 28,702 24,632 23,366 2.6 –10.7 –14.2 –5.1Workstations 431 301 129 141 74 –30.2 –57.1 9.3 –47.5PCs 680,753 841,611 865,601 891,261 934,700 23.6 2.9 3.0 4.9


Printers/MFPs 392,543 398,448 409,657 411,557 410,618 1.5 2.8 0.5 –0.2LAN cards 447,521 541,403 695,504 846,856 973,042 21.0 28.5 21.8 14.9

Table 54 Finland IT hardware shipments, units

232


France 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 227,791 257,334 262,014 263,536 275,445 13.0 1.8 0.6 4.5Workstations 9,384 9,181 7,029 5,375 6,213 –2.2 –23.4 –23.5 15.6PCs 6,736,971 8,103,535 8,748,054 9,699,658 10,589,047 20.3 8.0 10.9 9.2



Table 55 France IT hardware shipments, units

Germany 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 343,435 368,364 375,546 398,121 411,204 7.3 1.9 6.0 3.3Workstations 16,024 12,228 8,798 7,223 6,265 –23.7 –28.1 –17.9 –13.3PCs 8,352,413 9,091,467 9,236,588 9,995,558 11,016,752 8.8 1.6 8.2 10.2



Table 56 Germany IT hardware shipments, units

Greece 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 19,084 20,241 22,691 27,384 28,567 6.1 12.1 20.7 4.3Workstations 168 68 37 39 31 –59.5 –45.6 5.4 –20.5PCs 517,402 522,655 579,163 642,576 717,909 1.0 10.8 10.9 11.7

Portable 169,797 221,108 273,686 326,243 389,845 30.2 23.8 19.2 19.5Desktop 347,605 301,547 305,477 316,333 328,064 –13.3 1.3 3.6 3.7

Printers/MFPs 465,620 517,795 528,516 544,547 554,934 11.2 2.1 3.0 1.9LAN cards 191,490 257,327 365,713 487,123 601,950 34.4 42.1 33.2 23.6

Table 57 Greece IT hardware shipments, units

Ireland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 24,647 31,123 39,293 38,199 42,216 26.3 26.3 –2.8 10.5Workstations 58 98 60 37 68 69.0 –38.8 –38.3 83.8PCs 484,699 593,805 696,990 820,503 900,109 22.5 17.4 17.7 9.7

Portable 124,914 189,597 255,354 323,174 373,529 51.8 34.7 26.6 15.6Desktop 359,785 404,208 441,636 497,329 526,580 12.3 9.3 12.6 5.9


Table 58 Ireland IT hardware shipments, units

233


Norway 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 36,273 40,278 38,189 32,418 30,522 11.0 –5.2 –15.1 –5.8Workstations 527 420 241 198 286 –20.3 –42.6 –17.8 44.4PCs 744,739 935,115 1,011,876 994,810 1,025,100 25.6 8.2 –1.7 3.0


Printers/MFPs 505,098 579,646 582,109 588,015 594,930 14.8 0.4 1.0 1.2LAN cards 587,251 742,875 904,682 1,104,870 1,272,570 26.5 21.8 22.1 15.2

Table 61 Norway IT hardware shipments, units

Netherlands 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 87,189 97,041 103,764 112,311 115,521 11.3 6.9 8.2 2.9Workstations 2,269 1,793 654 479 309 –21.0 –63.5 –26.8 –35.5PCs 2,050,745 2,423,716 2,599,929 2,772,828 3,301,636 18.2 7.3 6.7 19.1

Portable 678,466 947,801 1,202,560 1,394,401 1,742,321 39.7 26.9 16.0 25.0Desktop 1,372,279 1,475,915 1,397,369 1,378,427 1,559,315 7.6 –5.3 –1.4 13.1

Printers/MFPs 1,348,782 1,417,253 1,412,424 1,403,466 1,399,477 5.1 –0.3 –0.6 –0.3LAN cards 2,167,248 2,532,500 3,340,220 4,080,693 4,701,324 16.9 31.9 22.2 15.2

Table 60 Netherlands IT hardware shipments, units

Italy 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 142,184 166,635 158,741 152,074 156,900 17.2 –4.7 –4.2 3.2Workstations 2,169 1,677 1,149 1,153 542 –22.7 –31.5 0.3 –53.0PCs 3,683,457 4,357,406 4,823,367 5,364,971 5,643,620 18.3 10.7 11.2 5.2

Portable 1,535,809 2,101,185 2,559,049 3,005,202 3,281,627 36.8 21.8 17.4 9.2Desktop 2,147,648 2,256,221 2,264,318 2,359,769 2,361,993 5.1 0.4 4.2 0.1

Printers/MFPs 3,673,641 3,913,895 3,884,661 3,874,252 3,861,767 6.5 –0.7 –0.3 –0.3LAN cards 1,961,250 2,670,907 3,377,412 4,182,973 4,872,541 36.2 26.5 23.9 16.5

Table 59 Italy IT hardware shipments, units

Portugal 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 23,347 25,834 22,789 29,112 32,615 10.7 –11.8 27.7 12.0Workstations 131 136 90 74 58 3.8 –33.8 –17.8 –21.6PCs 581,058 659,638 760,931 848,476 896,449 13.5 15.4 11.5 5.7

Portable 219,110 305,781 438,613 509,798 557,759 39.6 43.4 16.2 9.4Desktop 361,948 353,857 322,318 338,678 338,690 –2.2 –8.9 5.1 0.0


Table 62 Portugal IT hardware shipments, units

234


Switzerland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 63,600 67,923 60,100 62,737 64,218 6.8 –11.5 4.4 2.4Workstations 1,051 1,241 1,954 1,352 1,265 18.1 57.5 –30.8 –6.4PCs 1,229,559 1,387,799 1,332,991 1,445,003 1,593,793 12.9 –3.9 8.4 10.3

Portable 512,792 632,105 665,809 762,697 870,032 23.3 5.3 14.6 14.1Desktop 716,767 755,694 667,182 682,306 723,761 5.4 –11.7 2.3 6.1

Printers/MFPs 801,827 872,075 904,526 929,137 953,682 8.8 3.7 2.7 2.6LAN cards 851,652 1,000,923 1,278,647 1,533,490 1,740,699 17.5 27.7 19.9 13.5

Table 65 Switzerland IT hardware shipments, units

Sweden 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 63,143 69,400 71,184 73,010 74,450 9.9 2.6 2.6 2.0Workstations 4,067 2,709 1,429 1,156 1,064 –33.4 –47.2 –19.1 –8.0PCs 1,251,023 1,568,213 1,539,872 1,383,411 1,448,701 25.4 –1.8 –10.2 4.7

Portable 447,243 648,102 735,585 715,311 777,201 44.9 13.5 –2.8 8.7Desktop 803,780 920,111 804,287 668,100 671,500 14.5 –12.6 –16.9 0.5

Printers/MFPs 809,206 837,300 861,986 879,074 896,534 3.5 2.9 2.0 2.0LAN cards 935,257 1,319,507 1,407,774 1,703,990 1,948,589 41.1 6.7 21.0 14.4

Table 64 Sweden IT hardware shipments, units

Spain 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 82,364 92,295 107,039 117,473 128,237 12.1 16.0 9.7 9.2Workstations 1,375 1,723 1,475 1,239 1,214 25.3 –14.4 –16.0 –2.0PCs 2,894,256 3,722,579 4,380,329 5,030,887 5,423,262 28.6 17.7 14.9 7.8

Portable 1,197,356 1,670,401 2,172,587 2,694,732 3,042,909 39.5 30.1 24.0 12.9Desktop 1,696,900 2,052,178 2,207,742 2,336,155 2,380,353 20.9 7.6 5.8 1.9


Table 63 Spain IT hardware shipments, units

United Kingdom 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 333,937 356,707 348,021 359,467 368,969 6.8 –2.4 3.3 2.6Workstations 7,466 4,685 2,187 1,782 1,819 –37.2 –53.3 –18.5 2.1PCs 8,471,000 9,606,775 10,157,945 11,566,047 12,595,259 13.4 5.7 13.9 8.9



Table 66 United Kingdom IT hardware shipments, units

235


Bulgaria 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 2,956 4,872 4,862 5,596 6,430 64.8 –0.2 15.1 14.9Workstations 33 24 19 12 11 –27.3 –20.8 –36.8 –8.3PCs 122,997 197,682 200,104 248,849 277,863 60.7 1.2 24.4 11.7Printers/MFPs 109,474 137,701 141,164 158,400 172,105 25.8 2.5 12.2 8.7LAN cards 47,178 53,895 60,362 67,183 73,230 14.2 12.0 11.3 9.0

Table 67 Bulgaria IT hardware shipments, units

Estonia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 2,440 2,817 3,472 3,953 4,453 15.5 23.3 13.9 12.6Workstations 32 18 13 8 6 –43.8 –27.8 –38.5 –25.0PCs 99,695 126,311 140,916 154,199 165,510 26.7 11.6 9.4 7.3Printers/MFPs 42,564 46,656 51,919 55,512 58,374 9.6 11.3 6.9 5.2LAN cards 42,495 45,200 47,550 49,690 51,727 6.4 5.2 4.5 4.1

Table 69 Estonia IT hardware shipments, units

Czech Republic 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 18,569 23,402 25,237 25,796 26,597 26.0 7.8 2.2 3.1Workstations 340 321 287 299 283 –5.6 –10.6 4.2 –5.4PCs 491,310 600,516 679,350 752,067 821,266 22.2 13.1 10.7 9.2Printers/MFPs 465,680 515,992 550,539 578,896 604,145 10.8 6.7 5.2 4.4LAN cards 316,553 341,244 358,989 376,938 391,262 7.8 5.2 5.0 3.8

Table 68 Czech Republic IT hardware shipments, units

Hungary 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 13,170 16,389 20,277 20,731 21,563 24.4 23.7 2.2 4.0Workstations 138 181 114 115 101 31.2 –37.0 0.9 –12.2PCs 372,533 435,113 475,578 527,496 570,268 16.8 9.3 10.9 8.1Printers/MFPs 384,629 424,068 471,201 509,984 544,234 10.3 11.1 8.2 6.7LAN cards 245,756 267,874 291,179 315,347 334,899 9.0 8.7 8.3 6.2

Table 70 Hungary IT hardware shipments, units

Latvia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 1,904 2,365 2,917 3,020 3,632 24.2 23.3 3.5 20.3Workstations 18 24 15 4 4 33.3 –37.5 –73.3 0.0PCs 76,825 97,429 128,286 154,880 174,739 26.8 31.7 20.7 12.8

Printers/MFPs 60,584 91,682 102,061 109,625 116,033 51.3 11.3 7.4 5.8

LAN cards 41,827 45,846 49,697 53,673 57,269 9.6 8.4 8.0 6.7

Table 71 Latvia IT hardware shipments, units

236


Poland 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 33,542 44,935 49,731 46,133 47,246 34.0 10.7 –7.2 2.4Workstations 201 328 312 215 192 63.2 –4.9 –31.1 –10.7PCs 1,306,369 1,779,875 2,191,074 2,248,635 2,400,947 36.2 23.1 2.6 6.8Printers/MFPs 1,156,044 1,328,148 1,502,272 1,602,999 1,709,638 14.9 13.1 6.7 6.7LAN cards 932,198 1,050,000 1,170,750 1,280,801 1,347,402 12.6 11.5 9.4 5.2

Table 73 Poland IT hardware shipments, units

Lithuania 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %


Table 72 Lithuania IT hardware shipments, units

Slovenia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 4,680 5,633 5,809 6,415 6,521 20.4 3.1 10.4 1.7Workstations 81 55 59 56 52 –32.1 7.3 –5.1 –7.1PCs 144,204 153,840 166,718 160,895 169,313 6.7 8.4 –3.5 5.2Printers/MFPs 116,870 127,856 135,630 143,193 149,814 9.4 6.1 5.6 4.6LAN cards 72,023 80,125 88,378 95,448 100,889 11.2 10.3 8.0 5.7

Table 76 Slovenia IT hardware shipments, units

Slovakia 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %

Servers 5,297 6,419 7,024 7,278 8,247 21.2 9.4 3.6 13.3Workstations 94 68 50 63 59 –27.7 –26.5 26.0 –6.3PCs 204,594 213,525 246,326 279,405 313,201 4.4 15.4 13.4 12.1Printers/MFPs 167,348 205,899 226,875 242,455 257,546 23.0 10.2 6.9 6.2LAN cards 96,623 102,530 110,527 119,480 128,441 6.1 7.8 8.1 7.5

Table 75 Slovakia IT hardware shipments, units

Romania 2004 2005 2006 2007 2008 2005/04 %

2006/05 %

2007/06 %

2008/07 %


Table 74 Romania IT hardware shipments, units

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11. ICT trade flows

The data presented on trade are based upon the Combined Nomenclature, an international standard for such data. Details concerning the product categories included are given at the end of the statistical section. In general terms, the trade data can be considered to match well but not exactly with the classification used for IT and telecommunications hardware throughout the statistical section. Data processing equipment, electronic office equipment and components and related spares are all included. Semiconduc-tor devices and other electronic components are not included.

Figures are presented in current Euro, according to standard valuation rules. Imports are generally stated at customs value or by ref-erence to the concept of customs value (cif ); exports are stated at the value of the goods at the place and time that they leave the statistical area of the exporting Member State (fob). Data availability for this exercise has been governed by the framework of the European Commis-sion’s statistical systems which now includes EU countries only.

The term intra-EU refers to trade between EU 15 Member States for the years 2003 and 2004 and to trade between EU 25 Member States for the year 2005. Extra-EU trade is that between a Member State and a non-EU Member State. It should be noted that intra-EU import statistics are based upon the country of consignment, and not necessarily on the country of origin.

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EU 2003 2004 2005

Imports intra-EU 57,286,880 89,800,117 94,841,584

Imports extra-EU 48,767,994 74,024,070 79,362,955

Imports total 106,054,874 163,824,187 174,204,538

Exports intra-EU 53,192,408 93,448,769 98,781,733

Exports extra-EU 20,334,517 34,029,250 38,861,415

Exports total 73,526,925 127,478,019 137,643,148

Extra-EU/intra-EU exports 38.2 % 36.4 % 39.3 %

Extra-EU/intra-EU imports 85.1 % 82.4 % 83.7 %

Trade balance –32,527,950 –36,346,167 –36,561,390

Extra-EU trade balance –28,433,477 –39,994,820 –40,501,540

Table 77EU* Trade in ICT hardware, € thousand

* Refers to EU 15 for 2003 and EU 25 for 2004 and 2005.

France 2003 2004 2005

Imports intra-EU 7,776,689 11,507,907 12,078,134

Imports extra-EU 3,306,118 4,777,579 4,249,474

Imports total 11,082,806 16,285,486 16,327,608

Exports intra-EU 3,537,922 5,542,587 4,744,231

Exports extra-EU 2,015,921 2,897,462 2,917,982

Exports total 5,553,842 8,440,049 7,662,214



Trade balance –5,528,964 –7,845,437 –8,665,394


Table 78FranceTrade in ICT hardware, € thousand

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Germany 2003 2004 2005

Imports intra-EU 9,630,965 15,593,664 14,439,400

Imports extra-EU 10,794,255 16,005,079 16,762,737

Imports total 20,425,221 31,598,743 31,202,137

Exports intra-EU 9,656,987 18,830,847 16,820,610

Exports extra-EU 4,853,476 7,589,275 7,958,911

Exports total 14,510,463 26,420,122 24,779,520



Trade balance –5,914,757 –5,178,620 –6,422,616


Table 79 Germany Trade in ICT hardware, € thousand

Italy 2003 2004 2005

Imports intra-EU 5,252,773 7,284,135 7,592,638

Imports extra-EU 1,414,862 2,022,628 1,977,165

Imports total 6,667,635 9,306,764 9,569,803

Exports intra-EU 1,033,629 2,007,640 2,099,845

Exports extra-EU 619,367 1,158,542 1,186,024

Exports total 1,652,996 3,166,182 3,285,869



Trade balance –5,014,639 –6,140,582 –6,283,933

Extra-EU trade balance –795,495 –864,087 –791,140

Table 80 Italy Trade in ICT hardware, € thousand

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Table 81SpainTrade in ICT hardware, € thousand

Spain 2003 2004 2005

Imports intra-EU 4,072,427 5,822,353 6,845,951

Imports extra-EU 852,077 1,025,326 1,102,220

Imports total 4,924,504 6,847,680 7,948,170

Exports intra-EU 598,307 1,306,080 1,213,256

Exports extra-EU 377,489 459,305 467,480

Exports total 975,796 1,765,385 1,680,736



Trade balance –3,948,708 –5,082,295 –6,267,434

Extra-EU trade balance –474,588 –566,022 –634,739

Table 82 United Kingdom Trade in ICT hardware, € thousand

United Kingdom 2003 2004 2005

Imports intra-EU 10,388,838 14,284,579 15,013,646

Imports extra-EU 8,099,016 11,738,393 12,020,178

Imports total 18,487,853 26,022,973 27,033,824

Exports intra-EU 6,933,480 10,435,902 11,134,248

Exports extra-EU 3,093,287 5,095,813 6,070,552

Exports total 10,026,767 15,531,715 17,204,801



Trade balance –8,461,087 –10,491,258 –9,829,023


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12. Market structures and penetration of ICT

The different markets in Europe certain-ly have features in common, but equally the degree of variation amongst the countries is also considerable. The tables which follow attempt to illustrate the degree to which European coun-tries are distinguished in terms of their competi-tive fabric, and overall use of IT and telecom-munications.

The market share of a leader in a particular market is, for the purposes of this study, a com-posite measure. For the hardware market it is obtained by considering the top leaders position in each of the hardware products segments to assess the degree to which the market leaders in various related sectors (from high-end serv-ers to personal computers) dominate this mar-ket. The software and services markets are here

defined in terms that stress their independent structures. For software the market share of a leader is obtained by considering the relative position of software suppliers for whom software revenue is identifiable. For services it is obtained on the basis of services revenue as identified and released by the players. Consequently the leader market share information is not sensitive to the balance of power between the traditional hard-ware suppliers and the independent specialists.

The figure on market concentration is based on the cumulative market share (measured on total IT revenue) of the top 10 IT vendors, in each year, with the composition of the top 10 varying each year.

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Table 83 FranceMarket structures and penetration of ICT

France 2003 2004 2005Industry leader’s share Hardware 11.3 % 11.4 % 10.4 %

Software 7.5 % 8.3 % 8.4 %Services 4.6 % 6.2 % 6.5 %

Industry concentration (top 10 vendors) Total IT 25.1 % 30.2 % 30.6 %Market comparisons IT market versus GDP 3.08 % 3.04 % 3.11 %

Per capita IT expenditure (€) 827 847 888ICT market versus GDP 5.54 % 5.47 % 5.51 %

Per capita ICT expenditure (€) 1,486 1,523 1,577

Germany 2003 2004 2005Industry leader’s share Hardware 17.5 % 18.0 % 19.7 %





Table 84 GermanyMarket structures and penetration of ICT

Table 85 ItalyMarket structures and penetration of ICT

Italy 2003 2004 2005Industry leader’s share Hardware 17.6 % 18.9 % 17.8 %





Spain 2003 2004 2005Industry leader’s share Hardware 9.3 % 9.9 % 9.8 %




Per capita ICT expenditure (€) 944 1,017 1,088

Table 86 SpainMarket structures and penetration of ICT

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United Kingdom 2003 2004 2005Industry leader’s share Hardware 5.7 % 5.6 % 5.6 %



Per capita IT expenditure (€) 987 1,017 1,070ICT market versus GDP 6.93 % 6.62 % 6.68 %


Table 87 United KingdomMarket structures and penetration of ICT

Table 88 (left)Per capitaIT expenditure, €

Table 89 (right)IT expenditureas % of GDP

2003 2004 2005 2006Austria 776 791 826 847 Belgium/Luxembourg 762 785 813 843 Denmark 1,186 1,226 1,278 1,309 Finland 921 951 989 1,022 France 827 847 888 913 Germany 762 773 797 819 Greece 177 182 190 199 Ireland 573 604 630 659 Italy 422 427 430 437 Netherlands 981 988 1,027 1,072 Portugal 247 253 264 272 Spain 291 302 326 345Sweden 1,199 1,192 1,246 1,277 UK 987 1,017 1,070 1,104Bulgaria 33 40 54 58 Czech Republic 199 228 257 285 Estonia 121 151 171 181 Hungary 152 178 192 203 Latvia 74 88 102 113 Lithuania 59 73 86 96 Poland 79 96 122 139 Romania 27 37 46 54 Slovakia 109 132 149 166 Slovenia 243 279 297 314 EU 570 586 614 635 EU 15 703 717 747 770Norway 1,205 1,261 1,320 1,361 Switzerland 1,515 1,466 1,508 1,536

EU 15 plus Norway and Switzerland 724 738 768 792

Europe 590 605 634 655 US 1,032 1,067 1,118 1,174 Japan 954 970 999 1,010

2003 2004 2005 2006Austria 2.86 2.80 2.81 2.76 Belgium/Luxembourg 2.87 2.81 2.82 2.78 Denmark 3.35 3.32 3.29 3.20 Finland 3.28 3.25 3.27 3.20 France 3.08 3.04 3.11 3.08 Germany 2.91 2.89 2.93 2.91 Greece 1.21 1.15 1.12 1.09 Ireland 1.62 1.60 1.55 1.52 Italy 1.82 1.77 1.75 1.71 Netherlands 3.30 3.26 3.30 3.32 Portugal 1.82 1.78 1.81 1.81 Spain 1.47 1.42 1.42 1.40 Sweden 3.96 3.77 3.85 3.75 UK 3.67 3.49 3.57 3.52 Bulgaria 1.43 1.51 1.95 1.95 Czech Republic 2.69 2.76 3.01 3.20 Estonia 2.31 2.72 2.88 2.86 Hungary 2.09 2.37 2.45 2.49 Latvia 1.90 2.11 2.29 2.34 Lithuania 1.31 1.50 1.66 1.76 Poland 1.67 1.93 2.36 2.58 Romania 1.26 1.61 1.90 2.13 Slovakia 2.05 2.14 2.34 2.48 Slovenia 1.93 2.09 2.14 2.18 EU 2.75 2.70 2.74 2.71 EU 15 2.80 2.73 2.75 2.72 Norway 2.76 2.78 2.52 2.37 Switzerland 3.84 3.68 3.74 3.69

EU 15 plus Norway and Switzerland 2.83 2.75 2.78 2.74

Europe 2.78 2.72 2.76 2.73 US 3.08 3.30 3.28 3.27 Japan 3.24 3.35 3.47 3.45

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Table 90 (left)Per capitatelecommunications expenditure, €

Table 91 (right)Telecommunications expenditureas % of GDP

2003 2004 2005 2006Austria 870 897 913 932 Belgium/Luxembourg 907 929 941 942 Denmark 1,079 1,116 1,143 1,155 Finland 858 878 892 903 France 659 676 688 694 Germany 757 785 800 801Greece 533 552 569 585 Ireland 940 972 984 990 Italy 709 740 766 781 Netherlands 930 952 970 984 Portugal 585 611 634 643Spain 653 716 762 791Sweden 1,115 1,156 1,170 1,196 UK 879 909 934 955Bulgaria 134 176 193 210 Czech Republic 297 322 361 391 Estonia 318 355 398 430 Hungary 344 366 385 405 Latvia 241 282 330 363 Lithuania 172 231 250 271 Poland 209 228 250 271 Romania 91 115 139 159 Slovakia 224 247 265 284 Slovenia 387 428 486 514 EU 642 672 694 709EU 15 762 792 814 826Norway 860 890 895 899 Switzerland 1,166 1,200 1,219 1,227

EU 15 plus Norway and Switzerland 771 801 822 835

Europe 652 681 704 718US 737 740 755 769 Japan 1,172 1,197 1,214 1,228



Europe 3.07 3.07 3.06 2.99 US 2.20 2.29 2.21 2.14 Japan 3.99 4.13 4.22 4.20

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Table 92 (left) Per capita ICT expenditure, €

Table 93 (right) ICT expenditure as % of GDP

2003 2004 2005 2006Austria 1,646 1,688 1,739 1,779 Belgium/Luxembourg 1,670 1,715 1,755 1,784 Denmark 2,265 2,342 2,421 2,464 Finland 1,779 1,829 1,881 1,925 France 1,486 1,523 1,577 1,607 Germany 1,519 1,558 1,597 1,620 Greece 710 735 760 783 Ireland 1,513 1,576 1,614 1,649 Italy 1,131 1,167 1,196 1,218 Netherlands 1,911 1,940 1,997 2,056 Portugal 832 864 898 915Spain 944 1,017 1,088 1,136Sweden 2,314 2,348 2,416 2,473 UK 1,865 1,925 2,003 2,059Bulgaria 168 215 247 268 Czech Republic 496 549 618 675 Estonia 439 506 569 610 Hungary 496 544 577 608 Latvia 314 370 432 476 Lithuania 231 304 336 367 Poland 288 324 372 410 Romania 118 152 185 213 Slovakia 333 378 414 450 Slovenia 631 707 783 828 EU 1,212 1,257 1,308 1,344EU 15 1,465 1,510 1,561 1,597Norway 2,065 2,151 2,215 2,260 Switzerland 2,681 2,666 2,727 2,763

EU 15 plus Norway and Switzerland 1,494 1,539 1,591 1,626

Europe 1,241 1,286 1,337 1,374US 1,769 1,807 1,873 1,943 Japan 2,126 2,167 2,212 2,238



Europe 5.85 5.79 5.82 5.72 US 5.28 5.59 5.49 5.41 Japan 7.23 7.48 7.69 7.65

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13. Appendix

Main lines 2005 2006 2007 2008 2009 2010 CAGR % 2005–2010

Denmark 3,420 3,300 3,168 3,042 2,935 2,832 –3.7Finland 2,135 2,050 1,972 1,897 1,830 1,766 –3.7France 33,600 32,928 32,269 31,463 30,676 29,909 –2.3Germany 55,050 55,325 55,049 54,223 53,301 52,235 –1.0Italy 25,815 25,247 24,489 23,755 22,971 22,213 –3.0Norway 2,160 2,128 2,096 2,064 2,033 2,003 –1.5Spain 18,315 18,315 18,132 17,860 17,574 17,293 –1.1Sweden 6,440 6,279 6,122 5,969 5,850 5,733 –2.3Switzerland 5,152 5,049 4,948 4,849 4,771 4,695 –1.8United Kingdom 33,730 32,988 32,064 31,102 30,169 29,264 –2.8Other Western Europe1 53,500 52,537 51,381 50,097 48,844 47,623 –2.3Western Europe1 239,317 236,146 231,691 226,320 220,956 215,567 –2.1Eastern Europe2 94,415 93,282 92,069 90,965 89,873 88,794 –1.2Total Europe 333,732 329,428 323,760 317,285 310,829 304,361 –1.8USA 175,520 171,132 166,854 161,848 157,802 153,857 –2.6Japan 58,544 57,080 55,368 53,707 52,364 51,055 –2.7Rest of World 705,735 744,550 780,288 813,841 846,394 873,479 4.4World 1,273,531 1,302,190 1,326,270 1,346,680 1,367,389 1,382,752 1.7

ADSL lines 2005 2006 2007 2008 2009 2010 CAGR % 2005–2010

Denmark 825 998 1,108 1,158 1,204 1,246 8.6Finland 1,020 1,260 1,423 1,523 1,592 1,631 9.8France 8,915 11,411 13,408 14,414 15,134 15,816 12.1Germany 10,344 14,068 17,022 19,405 21,152 22,632 17.0Italy 6,388 8,241 9,889 11,372 12,509 13,510 16.2Norway 817 989 1,087 1,169 1,257 1,326 10.2Spain 3,867 5,124 6,251 7,314 8,155 8,807 17.9Sweden 1,243 1,678 2,047 2,344 2,508 2,621 16.1Switzerland 1,088 1,398 1,552 1,653 1,744 1,822 10.9United Kingdom 7,258 10,887 12,574 13,832 14,800 15,466 16.3Other Western Europe1 5,915 7,689 8,920 9,811 10,498 11,023 13.3Western Europe1 47,680 63,742 75,282 83,995 90,553 95,901 15.0Eastern Europe2 3,116 5,173 7,500 9,750 11,700 13,455 34.0Total Europe 50,796 68,915 82,782 93,745 102,253 109,356 16.6USA 19,525 23,821 27,274 30,684 34,059 36,784 13.5Japan 13,990 14,800 12,800 10,500 7,500 5,500 –17.0Rest of World 54,247 64,554 75,528 84,969 91,341 96,822 12.3World 138,558 172,089 198,384 219,897 235,153 248,462 12.4

Main linesTelephone lines connectingthe subscriber’s terminal equipment to the public switched network and havinga dedicated port in the telephone exchange equipment (including ISDN Bchannels, Centrex lines and cable telephony lines,without cellular mobile)

Table 94Main lines, thousands

Source: EITO Task Force1 Includes also Turkey2 Geographical demarcation

Table 95 ADSL lines, thousands

ADSL lines Asynchronous broadband Internet access via twisted pair telephony


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Mobile subscriptions 2005 2006 2007 2008 2009 2010 CAGR % 2005–2010

Denmark 5,461 5,761 5,992 6,190 6,344 6,471 3.5Finland 5,213 5,369 5,476 5,582 5,682 5,773 2.1France 46,704 48,105 49,308 50,541 51,653 52,686 2.4Germany 79,200 84,586 88,392 91,044 93,047 94,722 3.6Italy 69,032 72,208 74,157 76,159 77,302 78,461 2.6Norway 4,990 5,090 5,166 5,233 5,301 5,354 1.4Spain 41,454 44,126 45,803 47,086 48,027 48,748 3.3Sweden 10,101 10,455 10,789 11,091 11,369 11,596 2.8Switzerland 6,805 7,091 7,304 7,457 7,561 7,637 2.3United Kingdom 65,792 67,964 69,459 70,709 71,770 72,631 2.0Other Western Europe1 101,084 106,946 111,224 114,895 117,767 120,240 3.5Western Europe1 435,836 457,700 473,070 485,986 495,823 504,319 3.0Eastern Europe2 267,627 326,504 368,950 394,777 410,568 418,779 9.4Total Europe 703,462 784,205 842,020 880,762 906,390 923,098 5.6USA 205,852 223,143 238,763 252,373 263,730 272,960 5.8Japan 91,982 95,753 98,817 101,400 103,732 105,807 2.8Rest of World 1,216,687 1,581,693 1,898,032 2,182,737 2,422,838 2,592,436 16.3World 2,217,983 2,684,794 3,077,632 3,417,272 3,696,690 3,894,301 11.9

Table 96Cable modemsubscriptions, thousands


Table 97Mobile subscriptions, thousands

Mobile subscriptions(digital and analogue)Analogue and digital cellular mobile radio subscriptionsincluding pre-paid


Cable modem subscriptions 2005 2006 2007 2008 2009 2010 CAGR %

2005–2010

Denmark 385 530 560 585 605 625 10.2Finland 146 165 170 175 180 185 4.8France 514 540 555 570 580 590 2.8Germany 240 500 1,000 1,600 2,200 2,800 63.5Italy 0 0 0 0 0 0 0.0Norway 149 185 220 250 265 280 13.4Spain 1,154 1,500 1,875 2,063 2,269 2,496 16.7Sweden 292 317 340 365 390 410 7.0Switzerland 619 743 780 815 870 930 8.5United Kingdom 2,600 3,200 3,600 3,900 4,150 4,400 11.1Other Western Europe1 3,520 4,000 4,400 4,800 5,200 5,600 9.7Western Europe1 9,619 11,680 13,500 15,123 16,709 18,316 13.7Eastern Europe2 1,600 2,400 3,200 3,800 4,300 4,800 24.6Total Europe 11,219 14,080 16,700 18,923 21,009 23,116 15.6USA 25,220 29,003 32,193 34,769 36,855 38,329 8.7Japan 3,250 3,650 4,000 4,350 4,700 5,000 9.0Rest of World 11,923 13,419 14,798 16,268 16,926 17,399 7.9World 51,612 60,152 67,692 74,310 79,490 83,844 10.2

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Internet users 2005 2006 2007 2008 2009 2010 CAGR % 2005–2010

Denmark 4,035 4,156 4,239 4,282 4,325 4,368 1.6Finland 3,699 3,914 4,099 4,246 4,382 4,491 4.0France 30,415 32,972 35,492 37,897 39,867 41,462 6.4Germany 47,031 49,618 51,602 53,408 55,171 56,550 3.8Italy 31,250 33,750 36,113 38,280 40,194 42,203 6.2Norway 3,213 3,342 3,442 3,545 3,616 3,688 2.8Spain 16,510 17,555 18,601 19,570 20,289 20,898 4.8Sweden 6,760 6,915 7,082 7,242 7,394 7,542 2.2Switzerland 4,402 4,607 4,815 5,005 5,181 5,337 3.9United Kingdom 40,054 41,581 42,997 44,720 46,120 47,273 3.4Other Western Europe1 44,233 46,514 48,916 51,252 53,341 54,941 4.4Western Europe1 231,602 244,923 257,399 269,446 279,879 288,753 4.5Eastern Europe2 47,033 56,979 67,263 77,144 86,705 94,508 15.0Total Europe 278,635 301,901 324,663 346,590 366,584 383,261 6.6USA 208,899 223,522 236,933 248,780 258,731 266,493 5.0Japan 76,990 80,220 84,545 88,845 92,040 94,801 4.2Rest of World 473,714 529,250 583,236 643,293 704,005 756,805 9.8World 1,038,238 1,134,893 1,229,376 1,327,507 1,421,359 1,501,360 7.7


Table 98Internet users(wire-based), thousands

Internet users (wire-based) The number of wirebased users includes all users ofthe Internet (Web) regardless of their age or whether they have an own account or use one elsewhere.Not included in this number are mobile users andintranetonly users.

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14. Definitions

The statistical section of the EITO is based on a set of definitions and methodologies agreed between the EITO Task Force and IDC, and on the European Union standards for trade statistics. All definitions are outlined below.

It should be noted that totals and percentages of the data presented in the statistical section of the EITO may not add up due to rounding.

Geographic coverage

The heading European Union (EU) refers to Austria, Belgium/Luxembourg, Bulgaria, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, the Repub-lic of Ireland, Italy, Latvia, Lithuania, the Neth-erlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the UK.

The heading EU 15 refers to Austria, Bel-gium/Luxembourg, Denmark, Finland, France, Germany, Greece, the Republic of Ireland, Italy, the Netherlands, Portugal, Spain, Sweden and the UK.

Other Europe represents data on Norway and Switzerland.

Europe includes the countries of the Euro-pean Union as well as Norway and Switzerland.

Nordic countries include Denmark, Finland, Norway and Sweden.

Gross Domestic Product (GDP)

GDP is defined as the sum of gross value added of all resident producer units plus that part of taxes, less subsidies, on products which is not included in the valuation of output. It should be noted that this edition of the EITO presents revised ratios of IT, ICT, and Telecommunica-tions to GDP that are not comparable to his-

torical data presented in previous versions of the publication. In particular, underlying GDP data (at current prices and current exchange rates) has been updated according to the latest OECD main economic indicators available (December 2006).

Information Technology (IT)

For the purposes of this study information technology refers to the combined industries of hardware for office machines, data processing equipment, data communications equipment (including LAN hardware, packet switching and routing equipment and other data communica-tions equipment), software and services.

Telecommunications (TLC)

For the purposes of this study telecommuni-cations refer to carrier services, end-user com-munications equipment, PBX (Private Branch eXchange) and key systems, circuit switching equipment, cellular mobile radio infrastructure, transmission and other network equipment.

Information and Communications Technologies (ICT)

For the purposes of this study Information and Communications Technologies refer to information technology plus telecommunica-tions equipment and telecommunications serv-ices.

Market value

All market values for all the years of the historical and the forecast period are given in Euro. For countries not participating in the European Monetary Union, data were converted from national currencies at 2005 exchange rates against the Euro. Trade data are reported in cur-rent Euro.

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Domestic markets

Domestic market value ref lects revenues paid by the final domestic customer to primary ven-dors and service providers either directly or via distribution channels.

Unit shipments is the unit measure of hard-ware product sales by vendors or by all distribu-tion channels to end users.

Market segmentation

ICT technologies and services are grouped in four segments:

– ICT equipment (including computer hard-ware, end-user communications equipment, office equipment, and datacom and network equipment);

– software products;

– IT services;

– carrier services.

For comparison with past editions, the two categories total IT and total telecommunications are also provided. Total IT is the sum of com-puter hardware, office equipment, LAN (Local Area Network) hardware, packet switching and routing equipment, other data communications, software products, and IT services. Total telecom-munications include the following segments: end-user communications equipment, PBX and key systems, circuit switching equipment, cel-lular mobile radio infrastructure, transmission, other network equipment, and carrier services. It should be borne in mind, however, that due to the ongoing convergence process, the distinction between IT and telecommunications markets is becoming increasingly blurred, especially in the area of datacom and network equipment.

14.1. ICT equipment

14.1.1. Computer hardware

Server systems include Central Processing Units (CPUs) and basic peripherals (e. g. data stor-age devices, terminals, memory and peripherals), as well as new systems added to the installed base. Multiprocessor configurations are counted as single systems. Server systems value is report-ed in the two major components of server and add-ons. Server systems is a classification used to group all computer systems except personal computers and workstations. Servers designate servers or hosts as sold in their initial config-uration, with frame or cabinet and all cables, processors (including replacement or upgrade processors), initial memory and memory embed-ded in replacement or upgrade processors, initial storage, bundled communications boards, and bundled operating systems software.

Server systems include:

– High-end servers costing more than US $ 500,000;

– Mid-range servers costing more than US $ 25,000 and less than US $ 500,000;

– Volume servers costing less than US $ 25,000.

– Other server hardware includes:

– Add-on storage representing any storage devices shipped for use on a high-end, mid-range-, or volume server subsequent to the acquisition and installation of the server. Storage includes disc systems and tape. Fibre channel infrastructure (switch-es and hubs) storage is no longer included in this segment.

– Printers: all printers primarily associated with hosts or exclusively with a server.

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– Other server add-ons: primarily terminals (interactive non-programmable display devices) and memory upgrades acquired separately from an initial system ship-ment or processor upgrade.

Personal Computers (PCs) are general-purpose, single-user machines that are microprocessor-based, capable of supporting attached periph-erals and can be programmed in a high level language. Board-level products are excluded. For microprocessor-based systems that can support more than one user, the distinction between a small-scale system and a personal computer is based on the system’s most common configura-tion. If a system is designed as a server or is multi-micro-processor-based, it is classified as a small-scale system.

– Portables: portable and transportable machines are included in this category, but electronic organisers (such as the Psion Organiser products) are not considered. Subcategories acknowledged include AC portables, bat-tery-operated laptops, notebooks and sub-notebooks. Small hand-held products such as high-end organisers and palmtops are exclud-ed from the portable definition.

– Desktops: desktop and tower machines are included in this category, but dedicated game machines (such as Nintendo) are not included. This category also includes personal work-stations combining Windows NT platforms, the economics of PCs, and emphasis on net-worked business/professional applications, with equivalent or slightly greater functional-ity than that of PCs.

Printers and Multi-Function Peripherals (MFPs): Printers include models designed to be attached to PCs, not sold with the systems. These include dot matrix printers, thermal/thermal transfer printers, non-impact page printers, inkjet print-ers, and colour printers. MFPs are devices that

are either directly connected to a computer workstation or indirectly connected via a net-work. They have two or more of the following functions: copying, faxing, printing, and scan-ning.

Other computer hardware: includes worksta-tions and other add-ons.

– Workstations: include all traditional work-stations. Personal workstations (based on Windows NT platforms) are included in the PC segment. Traditional single-user workstations have Unix or Open VMS operating systems usually bundled by the hardware manufacturer, with an empha-sis on technical, graphics application seg-ments and higher levels of functionality in many areas (graphics performance, f loating point, memory, disc storage).

– Other add-ons represents expenditure on hardware products not normally acquired in a typical initial purchase and not included in other categories. It includes memory upgrades, replacement or upgrade monitors and keyboards, and various board-level enhancements for ter-minal emulation, facsimile transmission, graphics enhancement, and sound pro-duction. PC storage is not included in this category. Storage is counted completely in other server hardware, as the distinc-tion between server and PC storage has become artificial and does not ref lect the offering in the market.

It should be noted that whilst the above seg-mentation holds for EU 15 countries, Norway, and Switzerland, data for all other European countries shows workstations as a separate cat-egory, with printers and Multi-Function Periph-erals (MFPs) and other add-ons included in the Add-ons perimeter.

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14.1.2. End-user communications equipment

Includes all the equipment installed at tele-communications users’ premises.

Mobile telephone sets include mobile terminal devices – using analogue, GSM (Global System for Mobile communications), CDMA (Code Division Multiple Access), WCDMA (Wide-band CDMA), TDMA (Time Division Multiple Access), and TD-SCDMA (Time Division Syn-chronous CDMA) technologies.

Other end-user communications equipment: includes telephone sets and other terminal equipment.

– Telephone sets include corded and cord-less phones (analogue, DECT [Digital Enhanced Cordless Telecommunications] and other digital). They are connected to a fixed network. Mobile terminal devices are not included.

– Other terminal equipment includes private domestic and business equipment not otherwise considered above. This includes fax machines, answering machines, audio conferencing, and video conferencing.

14.1.3. Office equipment

Office equipment includes:

Copiers: personal, digital, and colour copiers.

Other office equipment includes:

– typewriters: mechanical, electric and elec-tronic typewriters;

– calculators: professional desktop, pocket and hand-held models;

– duplicating equipment (offsets, ink duplica-tors), cash registers and point-of-sale sys-tems, document filing (microfilm, WORM [Write Once, Read Many] optical discs), other products (franking, addressing, labelling machines, mail handling systems, etc.).

14.1.4. Datacom and network equipment

Datacom and network equipment includes LAN hardware, PBX and key systems, packet switch-ing and routing equipment, circuit switching equipment, cellular mobile radio infrastructure, transmission, other data communications and other network equipment.

PBXs and key systems: private telecommuni-cations switches used for switching incoming and outgoing calls. IP PBX is included in this market.

Packet switching and routing equipment includes packet switch nodes and core routers, e. g. WAN (Wide Area Network) equipment for ATM (Asynchronous Transfer Mode), Frame Relay, X.25, Core Router, Access Concentrators, Dig-ital Subscriber Line Access Multiplexers (DS-LAMs).

– Wide Area Network (WAN) switches perform switching of either variable-length frames (Frame Relay) over primarily narrowband links, or switching of fixed-length cells (ATM) over primarily broadband links. This category includes both WAN switches used at the edge of the network, and core switches that are primarily placed in the backbone networks to provide fast trunking.

– ATM access devices provide WAN connectivity and traffic concentration (data only or voice and data) over ATM through an ATM fab-ric, that is, they perform ATM segmentation and reassembly (SAR) of WAN traffic. The primary functionality is concentration, not routing or switching.

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– Frame Relay Access Devices (FRADs) are usu-ally deployed as a CPE (Customer Premise Equipment) device for WAN access with frame relay as the WAN protocol. They per-form the protocol conversion and aggrega-tion of traffic and feed into a frame relay switch in a frame relay backbone network.

Excluded from this segment are routers and LAN switches with frame relay WAN inter-faces whose main role is routing or switch-ing. These devices are included in the LAN switch or router market segments.

– Core routers are devices that are primarily used in service providers’ networks and pro-vide for both traditional multi-protocol rout-ing and more specialised high-performance IP routing (e. g. gigabit routers and terabit routers that scale to Gbps or Tbps, respec-tively).

– Access concentrators are used at the edge of an enterprise network or service provider (most-ly Internet service provider) network. They terminate client-to-network connections initiated by individual dial-in connections and concentrate this traffic onto high-speed trunk connections. Modems are included in the revenue if they are part of the basic chas-sis; external modems contained in modem banks are excluded.

– Digital Subscriber Line Access Multiplexers (DSLAMs) are used by service providers at the point where the copper twisted pair termi-nates in their network. They terminate client DSL (Digital Subscriber Line) connections and concentrate this traffic onto high-speed trunk connections. Network side modems for xDSL are included; CPE modems are not included in this category.

Circuit switching equipment: local and junction switches, trunk switches, telex switches in a net-work provider environment. Intelligent networks and network management systems, as well as softswitches and media gateways to connect the TDM network to the IP/data networks, are also included.

Cellular mobile radio infrastructure: all types of equipment and systems used by Mobile Net-work Operators (MNOs) in the build-up of their mobile telecommunications networks. Basically, this includes the CO switch that interlinks to the fixed networks as well as the mobile radio infrastructure with its base stations. The respec-tive wire line and wireless links to the switch are part of the transmission market.

Transmission: multiplexers, cross connects, line terminals in Plesiochronous Digital Hier-archy (PDH), Synchronous Digital Hierarchy (SDH) and Dense Wave Division Multiplexing (DWDM) technologies for long haul, metro and mobile networks. Wireless transmission (e. g. microwave radio and fixed wireless access) and optical networks are also included.

Other data-communications and network equip-ment: includes LAN hardware, other data-com-munications and network equipment.

– LAN hardware is restricted to the equipment for multi-user systems, PCs, or workstations required to implement a local area network. It does not include software (e. g. specialised network operation systems) or servers, which are counted in their respective software and system categories. For this publication, LAN connections that come bundled with a sys-tem and/or integrated on the motherboard (e. g. Ethernet in workstations) are excluded to avoid double counting with the value of systems shipments.

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The LAN hardware category includes:

– LAN interfaces (LAN cards, workstation network interfaces and multi-user inter-faces): value is normally assigned on a per-node basis and includes both new networks and nodes shipped into existing LANs.

– Intelligent LAN concentrators: are hardware devices that act as central points for star wiring for the nodes attached to the LAN and additionally provide network man-agement functionality over the physical layer.

– Terminal servers which provide terminal connectivity to the LAN.

– LAN hubs.

– Internet work equipment includes bridges and routers.

– Other data communications equipment is limited expressly to hardware and to the following categories, of which it is the sum: remote access servers/communication servers, ana-logue modems, ISDN terminal adapters, TDM equipment. Broadband technology infrastructure is also included in this seg-ment. It comprises three key components: xDSL, cable modems, and fixed wireless CPEs.

– Remote access servers or communication serv-ers provide client-to-LAN connections to telecommuters, mobile workers or other single users not directly connected to a LAN.

– Modems tracked are restricted to analogue and short-haul modems, divided into dial-up and leased line segments by speed (ranging from 1,200 bps to 56.6 kbps).

– Integrated Services Digital Network (ISDN) terminal adapters: this includes all kinds of ISDN Basic Rate Interface (BRI) ter-minal adapters.

– Cable modems include all two-way-capable modems that are used to provide packet switched services over CaTV networks.

– Multiplexers are devices used to multiplex telecommunications circuits, using time-division and statistical time-division tech-nology. The following market segments are tracked: time-division multiplexers, point-to-point T-1 TDMs, networking T-1 TDMs, T-3 multi-plexers (aggregates of 28 DS-1 circuits), and statistical TDMs; not addressed are coaxial or frequency divi-sion multiplexers or digital access cross-connect systems.

– DSL is a high-bandwidth (broadband), local loop technology for connecting business or residential subscribers to the Internet.

– Fixed wireless includes specific technolo-gies, including Local Multipoint Distribu-tion Service (LMDS) and Multichannel Multipoint Distribution Service (MMDS), which are considered to be part of the wireless local loop.

– Other network equipment: automatic call dis-tribution equipment. Software and services related to automatic call distribution equip-ment are considered in this category if bun-dled.

It should be noted that whilst the above seg-mentation holds for EU 15 countries, Norway, and Switzerland, for all other European coun-tries data for LAN hardware is singled out, whilst PBX, key systems, circuit switching equipment, and transmission equipment are aggregated into a sin-gle market.

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The above computer, office, and telecommu-nications equipment definitions refer to what the EITO Task Force classifies as general-purpose products. This equipment can be used for a vari-ety of applications in a variety of industries.

In addition to these general-purpose prod-ucts, there is also a wide range of application-specific devices. These include, but are not lim-ited to: retail point-of-sale systems, automatic teller machines, credit authorisation terminals, smart-card readers, factory data collection sys-tems, numerical controllers for manufactur-ing equipment, cheque processing equipment, computer-assisted publishing systems, and spe-cialised systems for the military, aerospace and other industries. Taken together these markets are significant. They are, however, not consid-ered in the EITO figures.

Bundled software applications, network man-agement and equipment-related services are included in the equipment figures.

Readers should keep these definition issues in mind when working with this volume and other statistical sources. Figures from IT com-panies, industry research firms and institutions, trade associations, and governments may well include a mix of general-purpose and applica-tion-specific equipment, complicating attempts to make direct comparisons with the published EITO figures.

14.2. Software products

Software products are commercially available packaged programmes for sale or lease from sys-tems services and Independent Software Ven-dors (ISVs). Value includes the packaged soft-ware fees plus related non-consulting revenue, such as fees for maintenance and/or support.

The software products category includes licence fees partially earmarked for software maintenance, services, and/or support. Other forms of software support would be counted in the support services category. This definition does not include consulting or system integra-tion revenue or specially designed application software solutions added by turnkey systems houses (including VARs [Value Added Resel-lers]) to systems acquired from a hardware man-ufacturer or other third party.

The primary categories are systems software, and application solutions.

Systems software includes system infrastruc-ture software and application tools.

– System infrastructure software includes system management software, network management, security software, storage software, server-ware, networking software, and system-level software.

– Application tools include information and data management software, application design and construction tools, application lifecycle man-agement, application deployment platforms, middleware, other development tools, and information access and delivery tools. Exam-ples include database engines, 4GL, AMD (Analysis, Modelling and Design) and 3GL.

Application software includes consumer, com-mercial, industrial, and technical programmes and code sets designed to automate specific sets of business processes in an industry or busi-ness function, to make groups or individuals in organisations more productive, or to support entertainment, education, or data processing in personal activity. The packaged application mar-

256


ket includes the consumer, content, collabora-tion, and enterprise applications sub-segments. The enterprise applications market, in turn, is made up of the back-office, engineering, and Customer Relationship Management (CRM) applications markets.

14.3. IT services

The IT services market is segmented in two distinct markets for the EU 15, Norway, and Switzerland, aggregated into one single market for the other European countries.

Professional services include consulting, imple-mentation and operations management services.

– Consulting: encompasses a broad array of IT-related planning and design activities that assist clients in making IT-related decisions on business direction or information technol-ogy. IT-related business consulting includes corporate strategy assistance, process improvement, capacity planning, best prac-tices, business process re-engineering, and change management services for business. Not included are consulting involving tax, audit, benefits, financial, and/or engineering issues. IT consulting includes information systems strategy assistance, information sys-tem and network planning, architectural and supplier assessments, product consulting and technical designs for information technology, and maintenance planning.

– Implementation: comprises all activities direct-ly involved with the creation of technical and business IT solutions, specifically with pro-curing, configuring, installing, developing, moving, testing and managing information technology. Implementation services also include all activities involved with custom application development and work performed

on packaged applications. Training and edu-cation is also included in this segment. It includes activities required for the transmis-sion of new behaviours, skills or actions that can be used to begin performing job-specific tasks or improve performance in IT-related functions.

– Operations management: involves taking responsibility for managing components of a client’s IT infrastructure. Specific activities include help-desk services, asset manage-ment services, systems management, network management, software update management, facilities management, back-up and archiving and business recovery services.

Support services: include all activities involved with ensuring that hardware, software and net-working products are performing properly as a service to clients. Activities include all mainte-nance contracts for hardware, software and net-working products, as well as services, such as telephone support to resolve problems for clients and help with workarounds. Services in this cat-egory appear as bundled packages of other serv-ices or stand-alone.

14.4. Carrier services

Fixed voice telephone services: this segment includes carrier service revenues for residential, business, national and international voice servic-es. It includes services used primarily to transport or enhance voice communications via the circuit switched telephone network (fax machine traffic is included in fixed voice services). It includes local and long-distance calling, fixed-to-mobile; fixed charges (line rentals and connection fees), and revenue from enhanced services, such as call forwarding, caller identification, informa-tion services, free call, shared cost call services, premium call and MABEZ-services.

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Fixed data services: include services that can be used to transport data via fixed lines. Increasingly, data technologies are allowing for voice and data to travel via the same network and/or technologies. For example, IP technol-ogy is increasingly used to transport voice. In such cases, the voice portion is not separated from the data communications revenue – both are included in the data revenue. Fixed data serv-ices include X.25, Frame Relay, ATM, IP-VPN, Broadband, Leased Lines, Internet access and VoIP services. The cost of subscription to DSL is included here even though it uses the PSTN line.

Mobile telephone services: this segment includes cellular/Personal Communications Services (PCS), Specialized Mobile Radio (SMR), mobile data networks, and mobile satellite services. It includes voice and data and enhanced services, such as location-based services. Mobile data services include SMS and mobile Internet data services.

CaTV services: include revenues from basic CaTV subscriber services providing transmis-sion improvement and/or added broadcast chan-nels, plus revenues from auxiliary CaTV services (such as pay-TV, security services, or shopping) when provided via a separate CaTV network. This includes revenues from any operator, pub-lic or private. Cable modem services are counted within fixed data services.

14.5. Performance measures

14.5.1. Trade statistics

All trade statistics are presented in current Euro and are based on official European Union data. All conventions common in the presenta-tion of such statistics have been observed. For a full treatment of this complex area readers are referred to the publications of the Customs Cooperation Council and Eurostat. Data have been selected according to standard sub-head-ings of the Combined Nomenclature as listed on the next page.

The reported areas are: intra-EU (imports/exports occurring between a reporting coun-try and a trading partner that are both within the EU), extra-EU (imports/exports occurring between one reporting/trading country in the European Union and one reporting/trading part-ner outside the EU).

Values of imports are generally stated at customs value or by reference to the concept of customs value (cif ); exports are stated at the value of the goods at the place and time that they leave the statistical area of the exporting Member State (fob). The focus of the analysis is on reporting countries in the European Union.

Please note: the descriptions have been abbreviated. Product codes have been stated to indicate the level at which data were collected for the present publication. Thus, 84.69 should be considered to include all lower sub-head-ings below 84.69. Readers interested in the full details of the trade classification are referred to the publications listed on the next page.

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References

Explanatory Notes to the Combined Nomen-clature of the European Union, published by the Office for the Official Publications for the Euro-pean Commission.

Explanatory Notes to the Harmonised Sys-tem Nomenclature, published by the Customs Cooperation Council.

14.5.2. Industry leader’s market share

Market share statistics are based on aggre-gations of IDC research, to illustrate structural issues within the market whilst at the same time preserving confidentiality.

14.5.3. Industry concentration

As for the industry leader’s market share, industry concentration is an aggregate market share statistic.

14.5.4. Inflation

All market value figures are expressed in nominal terms.

List of import/export codes used to value IT and telecommunications hardware trade

84.69 automatic typewriters and word-processing machines

84.70 calculators: calculating machines, accounting machines, cash registers, postage franking machines, ticket-issuing machines and similar machines, incorporating a calculating device

84.43.12 offset printing machinery, sheet fed, office type, sheet size ≤ 22 x 36 cm

84.71 DP equipment: automatic data processing machines and units thereof; optical readers, machines for transcribing data onto data media in coded form, and machines for processing data

84.72 “other” office equipment: printers, hectograph or stencil duplicating machines, addressing machines, automatic banknote dispensers, coin-sorting machines, coin-counting (or wrapping) machines, pencil sharpening machines, perforating or stapling machines

84.73 parts for use with the machines of sub-headings 84.69–84.72

90.09 photocopiers

85.17 equipment used for line telephony/ telegraphy: telephone sets, appara-tus for carrier-current line systems, telegraphy apparatus, faxes, weather map plotters

85.20.20 telephone answering machines incorporating a sound device

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14.5.5. Exchange rates

Since the 2000 edition of EITO the general rule has been to use the Euro as the currency for all value data for all years of the historical and the forecast period.

For EU member countries not participating in the European Monetary Union (e. g. Den-mark, Sweden, the United Kingdom and the new EU member countries) as well as for Nor-way and Switzerland, conversion from national currencies to Euro has been carried out using the average exchange rates of local currencies to the Euro for 2005. The exchange rates used for all markets are based upon the averages of daily rates for the individual currencies on the Paris money markets, as reported by the OECD.

Due to the characteristics of the local mar-kets, research for the new EU members has been carried out in a different fashion to that used for an established market. In this case valuations continue to be made relative to a set of initial US dollar values for equivalent EU 15 products. These reference values are then discounted by a variable amount that ref lects the systems age. Finally, data are converted into Euro using the appropriate US dollar/Euro exchange rate.

For all countries 2005 constant exchange rates are adopted throughout the historical and forecast period.

2003 2004 2005

Denmark 7.42 7.44 7.45

Norway 7.99 8.37 8.00

Sweden 9.12 9.13 9.28

Switzerland 1.52 1.54 1.55

UK 0.69 0.68 0.68

US 1.13 1.24 1.24

Japan 130.84 134.37 136.77 Source: OECD

Local commercial rates

Bulgaria (Lev) 1.95 1.96 1.95

Czech Republic (Korunas) 31.89 31.95 29.84

Estonia (Kroons) 15.65 15.65 15.65

Hungary (Forints) 253.92 252.11 248.54

Latvia (Lats) 0.64 0.67 0.70

Lithuania (Litas) 3.45 3.45 3.45

Poland (Zloties) 4.40 4.53 4.03

Romania (Leu) 38,588.05 41,540.09 3.59*

Slovak Republic (Korunas) 41.54 40.11 38.65

Slovenia (Tolars) 237.79 242.92 240.41

*new Leu

Euro exchange rates(Units per Euro)

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Alphabetical index

3G (3rd Generation) 16, 49, 51, 53, 55, 57, 70, 71, 78

7th Framework Programme (FP7) 13

ADSL (Asymmetric Digital Subscriber Line) 246

AM (Application Management) 31, 34, 74f

Application – A. Management (see AM) – A. software 220–229, 255f

Asymmetric Digital Subscriber Line (see ADSL)

ATM (Asynchronous Transfer Mode) 252

Audio – A. home systems 161, 163, 169–175 – A. systems 161, 168 – Home a. formats 163

Austria – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 204 – IT/GDP 79f – IT hardware shipments 231 – IT market value 197, 204 – IT penetration 79 – IT spending per capita 79ff – TLC market value 198, 204

B2B (Business-to-Business) 22, 24, 92f, 100f, 118, 150, 152 – Internet commerce 24f

B2C (Business-to-Consumer) 22, 24, 92f, 101, 118, 150 – Internet commerce 24f

B2G (Business-to-Govern- ment) 22, 92f, 101, 118, 152

Baltic States (see also Estonia, Latvia, Lithuania) – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 222, 224, 225 – IT/GDP 79f – IT hardware shipments 235f – IT market value 197, 222, 224f – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 222, 224f

Bandwidth 69, 70f, 254

Banking 73, 78, 82

Belgium/Luxembourg – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 205 – IT/GDP 79f – IT hardware shipments 231 – IT market value 197, 205 – IT penetration 79

– IT spending per capita 79ff – TLC market value 198, 205

BI (Business Intelligence) 52, 73

BPM (Business Performance Management) 73

Broadband – B. services 18f, 76 – B. subscribers 53

Bulgaria – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 220 – IT/GDP 79f – IT hardware shipments 235 – IT market trends 64 – IT market value 197, 220 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 220

Business – B. Intelligence (see BI) – B. models 17ff, 77, 153 – B. Performance Manage- ment (see BPM) – B.-to-Business (see B2B) – B.-to-Consumer (see B2C) – B.-to-Government (see B2G)

Cable modem subscriptions 247

CAGR (Compound Annual Growth Rate) 22, 24f, 194, 246ff

B

A

C

261

Carrier services 44f, 49, 51, 53, 55, 57, 59, 61, 63, 76, 190ff, 200–229, 256

Cathode Ray Tube TV (see CRT TV)

CaTV (Cable TV) services 76, 200–229, 257

CDMA (Code Division Multiple Access) 252

CE (Consumer Electronics) 18, 159–175, 196

Cellular mobile infrastructure 70

Code Division Multiple Access (see CDMA)

Communications equipment 44f, 48, 50, 54, 56, 68, 190, 194, 200–229, 252f

Compound Annual Growth Rate (see CAGR)

Computer hardware 44, 52, 54, 60, 62, 64f, 68, 190, 194, 200–229, 250

Computerised Physician Order Entry (see CPOE)

Consulting 75, 256

Consumer Electronics (see CE)

Convergence – Digital c. 13, 16, 18, 154f – Fixed mobile c. 26, 31, 78, 153 – ICT c. 21, 25 – Networks and IT c. 27f – User and device c. 27f – Voice, data, media content c. 25

CPOE (Computerised Physician Order Entry) 140f

CRT TV (Cathode Ray Tube TV) 160, 164, 175

Czech Republic – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 58f – ICT market value 199, 221 – IT/GDP 79f – IT hardware shipments 235 – IT market value 197, 221 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 221

DAB (Digital Audio Broadcasting) 161

Datacom and network equipment 44f, 69, 71f, 190, 194, 200–229, 252

Definition(s) 21f, 31f, 39, 93, 175, 249

Denmark – ADSL lines 246 – Cable modem subscriptions 247 – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 206 – Internet users 248 – IT/GDP 79f – IT hardware shipments 231 – IT market value 197, 206 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Mobile subscriptions 247 – TLC market value 198, 206

Dense Wavelength Division Multiplexing (see DWDM)

Digital – D. Audio Broadcasting (see DAB) – D. camera 163, 168 – D. convergence 13, 16, 18, 154f – D. Personal Video Player (see DPVP) – D. still camera 166, 169–175 – D. Subscriber Line (see DSL) – D. Versatile Disk (see DVD) – D. Video Broadcasting- Handhelds (see DVB-H) – D. Video Broadcasting- Terrestrial (see DVB-T) – D. Video Cassettes (see DVC)

DPVP (Digital Personal Video Player) 161, 165f, 169–175

DSL (Digital Subscriber Line) 16f, 51, 71, 254 (see also ADSL)

DSLAM (Digital Subscriber Line Access Multiplexer) 253

DVB-H (Digital Video Broadcasting-Handhelds) 159

DVB-T (Digital Video Broadcasting-Terrestrial) 161, 165

DVC (Digital Video Cassettes) 167

DVD (Digital Versatile Disk) 169–175 – D. market 161, 163, 165 – D. player 161, 163ff, 175 – D. recorder 163ff, 167, 175 – High Definition D. (see HD-DVD)

D

262

DWDM (Dense Wavelength Division Multiplexing) 253

E-business – Definition of e. 22, 93 – E. activity 90f, 102, 107, 110, 118, 124, 135, 155f – E. adoption 96, 107f, 121, 122, 134, 143ff, 156 – E-Business W@tch 90, 96, 112, 116, 142, 147, 150, 152, 155f, 158 – E. Scoreboard 94f – E. sector studies 96 – E. Survey 2006 101, 103, 109f, 114, 129, 131, 135, 137f, 140f, 143f, 147, 156f – E. technologies 121, 124, 131, 154 – Sector perspectives on e. activity 90–158

E-commerce 92f, 116f

E-design 130

E-economy 21–43

E-interactions 22, 93

E-invoicing 98f, 152

E-procurement 99, 110, 112ff, 135, 138

E-skills 109

E-transactions 22, 93

Economic background 185ff

EDGE (Enhanced Data GSM Environment) 19, 68

EDI (Electronic Data Interchange) 98

Electronic – E. business (see e-business) – E. commerce (see e-commerce)

– E. Data Interchange (see EDI) – E. interaction (see e-interaction) – E. invoicing (see e-invoicing) – E. Patients Records (see EPR) – E. procurement (see e-procurement) – E. skills (see e-skills) – E. transaction (see e-transaction)

End-user communications equipment 44f, 50, 54, 56, 68, 200–229, 252

Enhanced Data GSM Environment (see EDGE)

Enterprise – E. applications 30, 62, 91, 256 – E. Resource Planning (see ERP)

EPR (Electronic Patients Records) 142

ERP (Enterprise Resource Planning) 38, 61, 72, 97f, 102, 110ff, 129, 155

Estonia – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 222 – IT/GDP 79f – IT hardware shipments 235 – IT market value 197, 222 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 222

Ethernet 71f

ETPs (European Technology Platforms) 13

EU (European Union) – EU Commission 13, 15, 39, 90 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 201 – IT/GDP 79f – IT hardware shipments 230 – IT market value 197, 201 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 201 – Trade in ICT hardware 238

EU 15 – Economic background 185ff – High technology patents 35 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 202 – IT/GDP 79f – IT hardware shipments 230 – IT market value 197, 202 – IT penetration 79 – IT spending per capita 79ff – R&D expenditure 35 – TLC market value 198, 202

EU 15 plus Norway and Switzerland (see Western Europe)

EU 25 – High technology patents 35 – R&D expenditure 35 – Trade by country 85 – Trade in ICT hardware 238

Euro exchange rates 259

Europe as a consumption area 79–85

European e-economy 21–43

European Technology Platforms (see ETPs)

E

263

F&B (see Food and Beverages)

FDI (see Foreign Direct Investment)

Financial Perspective plan 37

Finland – ADSL lines 246 – Cable modem subscriptions 247 – Economic background 185ff – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 207 – Internet users 248 – IT/GDP 79f – IT hardware shipments 231 – IT market value 197, 207 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Mobile subscriptions 247 – TLC market value 198, 207

Fixed – F. data services 51, 53, 55, 57, 64, 77f, 200–229, 257 – F. Mobile Convergence (see FMC) – F. voice telephone services 49, 53, 57, 61, 64, 76f, 200–229, 256

Flat TV 165, 167

FMC (Fixed Mobile Convergence) 26f, 29, 31

Food and Beverages (F&B) 96–109 – Drivers and inhibitors of e-business 107f – E-business activity 96–101 – E-invoicing 98 – E-marketing and sales 100

– E-procurement 99 – ERP (Enterprise Resource Planning) 97 – Internal process automation 102 – Mobile applications 105 – Online orders 101 – PLM (Product Lifecycle Management) 103 – Policy implications 109 – RFID (Radio Frequency Identif ication) 105f – SCM (Supply Chain Management) 103 – Sector profile 96

Foreign Direct Investment (FDI) 62, 64

FP7 (see 7th Framework Programme)

France – ADSL lines 246 – Cable modem subscriptions 247 – CE market 160ff, 170 – Economic background 185f – ICT and digital CE market 196 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 48f – ICT market value 199, 208 – Internet commerce 25 – Internet users 248 – IT/GDP 79f – IT hardware shipments 232 – IT market value 197, 208 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Market structures and penetration of ICT 242 – Mobile subscriptions 247

– R&D expenditure 35 – TLC market value 198, 208 – Trade in ICT hardware 238 – Web users 22ff

Game consoles 166, 168, 169–175

GDP (Gross Domestic Product) 44–58, 79ff, 185ff, 242–245

Germany – ADSL lines 246 – Cable modem subscriptions 247 – CE market 162ff, 171 – Economic background 185f – ICT and digital CE market 196 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 50f – ICT market value 199, 209 – Internet commerce 24 – Internet users 248 – IT/GDP 79f – IT hardware shipments 232 – IT market value 197, 209 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Market structures and penetration of ICT 242 – Mobile subscriptions 247 – R&D expenditure 35 – TLC market value 198, 209 – Trade in ICT hardware 239 – Web users 22ff

Global Positioning System (see GPS)

Global System for Mobile communications (see GSM)

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264

Government 19, 39, 63, 72, 165

GPS (Global Positioning System) 159ff

Greece – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 210 – IT/GDP 79f – IT hardware shipments 232 – IT market value 197, 210 – IT penetration 79 – IT spending per capita 79ff – TLC market value 198, 210

Gross Domestic Product (see GDP)

GSM (Global System for Mobile communications) 68, 70, 81

Hardware – Computer h. 44, 52, 54, 60, 62, 64f, 68, 190, 194, 200–229, 250 – H. market 50, 52, 60 – IT h. shipments 230ff – LAN h. 220–229, 254 – Trade in ICT h. 238ff

HD-DVD (High Definition Digital Versatile Disk) 163, 167, 168

Healthcare 72, 81

High Speed Data Packet Access (see HSDPA)

HIS (Hospital Information Systems) 139ff

Hospital sector 135–146 – Computerised Physician Order Entry (see CPOE) – Drivers and inhibitors of e-business 143ff – E-business activity 135f – Electronic Patient Record (see EPR) – Hospital Information Systems (see HIS) – Online procurement and online booking 138 – Picture Archiving System (see PACS) – Policy implications 146 – Radiology Information System (see RIS) – Sector profile 135ff

HSDPA (High Speed Data Packet Access) 51, 53, 55, 68

Hungary – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 60 – ICT market value 199, 223 – IT/GDP 79f – IT hardware shipments 235 – IT market value 197, 223 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 223

i2010 20

ICT (Information and Com- munications Technology) – ICT adoption by industry 81–84 – ICT convergence 21, 25 – ICT expenditure as % of GDP 245 – ICT expenditure per capita 245

– ICT market size and structure 44f – ICT market value 199–229 – ICT skills 21, 38f, 126 – ICT trade f lows 237–240 – ICT trends by country 46–64 – ICT trends by product segment 65–78 – International ICT markets 189–195 – Market structures and penetration of ICT 241ff – R&D ICT 35–38 – Trade in ICT hardware 238–240

Innovation 12f, 26, 28, 90, 92, 103, 109, 123, 150, 153, 166

Integrated Services Digital Network lines (see ISDN)

Intellectual Property Rights (see IPR)

Internet – I. commerce 21, 24f (see also B2B, B2C, e-commerce, and e-business) – I. users 22, 248

Interoperability 136f, 142, 146

Investment 12ff, 47, 142, 146, 151

IP (Internet Protocol) telephony 28, 30, 69

IPR (Intellectual Property Rights) 13, 19

Ireland – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64

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265

–ICTmarketvalue199,211–IT/GDP79f–IThardwareshipments232–ITmarketvalue197,211–ITpenetration79–ITspendingpercapita79ff–TLCmarketvalue198,211

ISDN(IntegratedServices DigitalNetwork)lines254

IT(InformationTechnology)–ITexpenditureas%of GDP243–ITexpenditurepercapita243–IT/GDPandITpercapita 79f–IThardwareshipments230–ITmarketbycountry197–ITpenetration79–ITservices17,49,51,53,55, 57,59,61,63,74–76,200–229, 256–ITspendingpercapita79ff

Italy–ADSLlines246–Cablemodemsubscriptions 247–CEmarket164f,172–Economicbackground185f–ICTanddigitalCEmarket 196–ICT/IT/TLCexpenditureas %ofGDP243ff–ICT/IT/TLCexpenditure percapita243ff–ICTmarkettrends52f–ICTmarketvalue199,212–Internetcommerce25–Internetusers248–IT/GDP79ff–IThardwareshipments233–ITmarketvalue197,212–ITpenetration79–ITspendingpercapita79ff–Mainlines246

–Marketstructuresand penetrationofICT242–Mobilesubscriptions247–R&Dexpenditure35–TLCmarketvalue198,212–TradeinICThardware239–Webusers22ff

Japan–ADSLlines246–Cablemodemsubscriptions 247–Economicbackground 185–188–ICT/IT/TLCexpenditureas %ofGDP243ff–ICT/IT/TLCexpenditure percapita243ff–ICTmarket189–193–Internetusers248–IT/GDP79ff–ITpenetration79–ITspendingpercapita79ff–Mainlines246–Mobilesubscriptions247

JTI(JointTechnology Initiatives)13,20

LAN(LocalAreaNetwork) 69,71f,125 (seealsoWLAN)–LANcards230–236–LANhardware220–229, 253f–LANswitches71f

Latvia–ICT/IT/TLCexpenditureas %ofGDP243ff–ICT/IT/TLCexpenditure percapita243ff–ICTmarkettrends64–ICTmarketvalue199,224–IT/GDP79ff–IThardwareshipments235

–ITmarketvalue197,224–ITpenetration79–ITspendingpercapita79f–TLCmarketvalue198,224

LCDTV(Liquid-Crystal DisplayTelevision)67,160, 163f,167,169–175

Lithuania–ICT/IT/TLCexpenditureas %ofGDP243ff–ICT/IT/TLCexpenditure percapita243ff–ICTmarkettrends64–ICTmarketvalue199,225–IT/GDP79ff–IThardwareshipments236–ITmarketvalue197,225–ITpenetration79–ITspendingpercapita79f–TLCmarketvalue198,225

LocalAreaNetwork (seeLAN)

Luxembourg(seealso Belgium/Luxembourg)–Economicbackground185f–ICT/IT/TLCexpenditureas %ofGDP243ff–ICT/IT/TLCexpenditure percapita243ff–ICTmarketvalue199,205–IT/GDP79ff–IThardwareshipments231–ITmarketvalue197,205–ITpenetration79–ITspendingpercapita79ff–TLCmarketvalue198,205

Mainlines246

Market(s)–CEm.inWesternEurope 159–175–ICTanddigitalCEm.196–ICTm.inEurope44–85

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– International ICT m. 189–195– M. structures and penetration of ICT 241–245

Methodology 156ff, 175, 180

MFPs (Multi-Function Peripherals) 44, 54, 64, 67, 202–219, 230–236, 251

Mobile – M. applications 91, 105ff– M. business 105– M. subscriptions 247– M. telephone services 78, 200–229, 257– M. telephone sets 68, 200–229, 252– M. Virtual Network Operator (see MVNO)

MP3 161, 164–168, 169–174

Multi-Function Peripherals (see MFPs)

MVNO (Mobile Virtual Network Operator) 29, 51

Netherlands – Economic background 185f– ICT/IT/TLC expenditure as % of GDP 243ff– ICT/IT/TLC expenditure per capita 243ff– ICT market trends 64– ICT market value 199, 213– IT/GDP 79ff– IT hardware shipments 233– IT market value 197, 213– IT penetration 79– IT spending per capita 79ff– TLC market value 198, 213

Nordic countries (see also Denmark, Finland, Norway, Sweden)– ICT market trends 64

– IT penetration 79– Web users 22ff

Norway – ADSL lines 246– Cable modem subscriptions 247– Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff– ICT/IT/TLC expenditure per capita 243ff– ICT market trends 64– ICT market value 199, 214– Internet users 248– IT/GDP 79ff– IT hardware shipments 233– IT market value 197, 214– IT penetration 79– IT spending per capita 79ff– Main lines 246– Mobile subscriptions 247– TLC market value 198, 214

Office equipment 68f, 200–229, 252, 258

Online – O. booking 138f– O. content market 18– O. cooperation and coordination 130– O. ordering 101, 113ff, 117f, 138– O. procurement 138

Open Source Systems (see OSS)

Operations management 256

OSS (Open Source Systems) 91

Outsourcing 49, 51, 53, 55, 57, 59, 74f, 126f

P2P (Peer-to-Peer) 16, 18, 69

PACS (Picture Archiving System) 140f

PBX (Private Branch eXchange) 25f, 69, 72, 202–229, 252

PCs (Personal Computers) 251– Number of PCs per 100 population 79– PC market 48, 50, 56, 58, 60, 62, 65ff, 200–229– PC shipments 230–236

Peer-to-Peer (see P2P)

Personal Computers (see PCs)

Picture Archiving System (see PACS)

Plasma – P. display (P. TV) 169–175– P. screen(s) 164

PLM (Product Lifecycle Management) 103

Poland– ICT/IT/TLC expenditure as % of GDP 243ff– ICT/IT/TLC expenditure per capita 243ff– ICT market trends 62f– ICT market value 199, 226– IT/GDP 79ff– IT hardware shipments 236– IT market value 197, 226– IT penetration 79– IT spending per capita 79f– TLC market value 198, 226

Portable(s) 202–219, 251

Portugal – Economic background 185f– ICT/IT/TLC expenditure as % of GDP 243ff

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267

– ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 215 – IT/GDP 79ff – IT hardware shipments 233 – IT market value 197, 215 – IT penetration 79 – IT spending per capita 79ff – TLC market value 198, 215

Printers 67, 202–219, 230–236, 250f

Private Branch eXchange (see PBX)

Procurement 148 – E-p. 99f, 112ff – Online p. 138

Product Lifecycle Management (see PLM)

Public sector 81, 151f

R&D (Research & Development) 20, 35–38

Radio Frequency Identif ication (see RFID)

Radiology Information System (see RIS)

Regulation 14, 70, 77f

Research & Development (see R&D)

Return On Investment (see ROI)

RFID (Radio Frequency Identif ication) 91, 105ff

RIS (Radiology Information System) 141

ROI (Return On Investment) 28, 57, 61, 124

Romania – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 227 – IT/GDP 79ff – IT hardware shipments 236 – IT market value 197, 227 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 227

SaaS (Software as a Service) 28, 31, 33f, 75

SCM (Supply Chain Management) 73, 96, 103f

Servers/server systems 200–229, 250f

Service-Oriented Architecture (see SOA)

Services – Carrier s. 49, 51, 53, 55, 57, 59, 61, 63, 76, 200–229, 256f – Fixed data s. 51, 53, 55, 57, 77f, 200–229, 257 – Fixed voice telephone s. 49, 53, 57, 61, 63, 76f, 200–229, 256 – IT s. 49, 51, 53, 55, 57, 59, 61, 63f, 74f, 126f, 200–229, 256 – Mobile telephone s. 59, 61, 78, 200–229, 257

SIP (Session Initiation Protocol) 29

Skills – E-skills 109 – ICT s. 38–42, 126 – S. gap 41f

Slovakia – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 228 – IT/GDP 79ff – IT hardware shipments 236 – IT market value 197, 228 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 228

Slovenia – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 229 – IT/GDP 79ff – IT hardware shipments 236 – IT market value 197, 229 – IT penetration 79 – IT spending per capita 79f – TLC market value 198, 229

Small and Medium-sized Enterprise (see SME)

Small Office – Home Office (see SOHO)

SME (Small and Medium- sized Enterprise) 34, 63, 67, 69

SOA (Service-Oriented Architecture) 31–34, 74

Software 49f, 52ff, 56f, 58f, 61ff, 72ff, 97, 103, 112, 241 – Accounting s. 112, 129 – Application s. 220–229, 255f – S. as a Service (see SaaS) – S. on demand 32 – S. products 72ff, 200–229, 255f

R

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– System s. 73, 220–229, 255 – Transformation of the s. industry 31–34

SOHO (Small Office – Home Office) 69f

Spain – ADSL lines 246 – Cable modem subscriptions 247 – CE market 165f, 173 – Economic background 185f – ICT and digital CE market 196 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 54f – ICT market value 199, 216 – Internet commerce 25 – Internet users 248 – IT/GDP 79ff – IT hardware shipments 234 – IT market value 197, 216 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Market structures and penetration of ICT 242 – Mobile subscriptions 247 – R&D expenditure 35 – TLC market value 198, 216 – Trade in ICT hardware 240 – Web users 22ff

Statistical outlook 180–259

Supply Chain Management (see SCM)

Sweden – ADSL lines 246 – Cable modem subscriptions 247 – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff

– ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 217 – Internet users 248 – IT/GDP 79ff – IT hardware shipments 234 – IT market value 197, 217 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Mobile subscriptions 247 – TLC market value 198, 217

Switzerland – ADSL lines 246 – Cable modem subscriptions 247 – Economic background 185f – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market trends 64 – ICT market value 199, 218 – Internet users 248 – IT/GDP 79ff – IT hardware shipments 234 – IT market value 197, 218 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Mobile subscriptions 247 – TLC market value 198, 218

System software 73, 220–229, 255

Telecommunications (TLC) 123–135 – T. expenditure as % of GDP 244 – T. expenditure per capita 244 – T. markets 44ff, 64, 198 – T. market value 198, 200–229 – T. sector – drivers and inhibitors of e-business 133f

– T. sector – e-business activity 123–135 – T. sector – e-marketing and sales 131ff – T. sector – policy implications 134f – T. sector – profile 123f

TLC (see Telecommuni- cations)

Tourism 109–123 – Dis-intermediation 118f – Drivers and inhibitors of e-business 121f – Dynamic packaging 119f – E-business activity 110–118 – E-marketing and sales 114–118 – E-procurement 112ff – ERP (Enterprise Resource Planning) 112 – Online orders/reservations 115ff – Policy implications 123 – Re-intermediation 119 – Sector profile 109f

Trade – T. in ICT hardware 238ff – T. in the EU 84f – T. statistics 257f

Transmission and switching 70, 200–219

UK (United Kingdom) – ADSL lines 246 – Cable modem subscriptions 247 – CE market 167f, 174 – Economic background 185f – ICT and digital CE market 196 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff

T

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– ICT market trends 56f – ICT market value 199, 219 – Internet commerce 25 – Internet users 248 – IT/GDP 79ff – IT hardware shipments 234 – IT market value 197, 219 – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Market structures and penetration of ICT 243 – Mobile subscriptions 247 – R&D expenditure 35 – TLC market value 198, 219 – Trade in ICT hardware 240 – Web users 22ff

UMA (Unlicensed Mobile Access) 29

UMTS (Universal Mobile Telecommunications System) 23, 51, 53, 70, 81

United Kingdom (UK)

United States (see US)

Universal Mobile Telecommunications System (see UMTS)

Unlicensed Mobile Access (see UMA)

US (United States) – ADSL lines 246 – Cable modem subscriptions 247 – Economic background 185–188 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – Internet users 248 – IT/GDP 79ff – IT penetration 79 – IT spending per capita 79ff – Main lines 246 – Mobile subscriptions 247

Value – V. chain 94, 112f, 118f, 130 – V. system 94, 130, 155f

VCRs (Video Cassette Recorders) 164, 169–175

Video – Digital Personal V. Players (see DPVP) – Digital V. Broadcasting- Handhelds (see DVB-H) – Digital V. Broadcasting- Terrestrial (see DVB-T) – Digital V. Cassettes (see DVC) – V. Cassette Recorders (see VCRs)

VoIP (Voice over IP) 25, 27, 29, 68f, 77, 91, 153

WAN (Wide Area Network) 25, 252f

WCDMA (Wideband Code Division Multiple Access) 68, 70, 252

Web – W. 2.0 18 – W. services 32f, 91, 142 – W. users 21–24

Western Europe (see also EU 15 plus Norway and Switzerland) – ADSL lines 246 – Cable modem subscriptions 247 – CE market 159–175 – European e-economy 21–43 – ICT/IT/TLC expenditure as % of GDP 243ff – ICT/IT/TLC expenditure per capita 243ff – ICT market value 199, 203 – Internet commerce 24f

– Internet users 248 – IT hardware shipments 230 – IT market by country 197 – IT market growth rates 193 – Main lines 246 – Mobile subscriptions 247 – TLC market by country 198 – Web users 22ff

Wide Area Network (see WAN)

Wideband CDMA (see WCDMA)

Wi-Fi (Wireless Fidelity) 29, 72, 78, 105

Wireless – W. Fidelity (see Wi-Fi) – W. Local Area Network (see WLAN) – W. technologies 105

WLAN (Wireless Local Area Network) 23, 26, 125

World – ADSL lines 246 – Cable modem subscriptions 247 – ICT market by product 190f – ICT market growth trends 190 – ICT market product proportions by region 192 – ICT market regional proportions by product 192 – ICT markets 16, 45, 189–193 – Internet hosts 195 – Internet users 248 – IT market growth trends 189 – Main lines 246 – Mobile subscriptions 247 – TLC market growth trends 189

V

W

Previous editions

Copies still available. Apply to EITO members or sponsors.

Order addresses on front or back cover page.

1993Information technology standardisation

The European software and services marketplace

Environmental achievement in information technology

1996Towards the Information Society: new network services and applications

The ICT market in Europe’s banking and financial services

The evolution of ICT distribution channels in Europe

1999The E-commerce market in Europe

The ICT market in Central and Eastern Europe

The ICT market in the Mediterranean basin

2000The impact of E-commerce on five vertical sectors

The future of telecommunications 2000-2005

The adoption of ICT-related products by the European consumer public




M I l l E n n I u M E d I T I O n


2003ICT security and the business environment

Social shaping of UMTS – Preparing the 3G customer

The adoption of E-business by European enterprises – Uptake and economic impact on sectors


2004Convergence and the digital world


The impacts of ICT on economic growth – an overview


1994Information technology markets of Eastern Europe

Mobile computing and communication in Europe: towards a digital wireless world

The information technology market in Europe’s public administrations

1997The future of the Internet

Electronic commerce over the Internet

1995The European information infrastructure and the convergence of information technology, telecommunications and media

The home and the small office/home office markets for IT in Europe – the importance of information highways

Mobile computing and communications in Europe: towards a digital wireless world

1998ICT for European homes: devices, services and applications

The Euro: impact on information technology

The convergence of voice and data communications

Telework: status, development and issues

2001ICT skills in Western Europe

Mobile E-commerce – market perspectives

The evolution of ICT E-business services

The impact of E-commerce on five vertical sectors

Measuring the Information Society – the use of the Internet by the European consumer

2002Entering the UMTS era – mobile applications for pocket devices and services

The impact of ICT on sustainable development

E-government and the business environment

The impact of the E-economy on European enterprises: Economic analysis and policy implications







10 T h E d I T I O n

2005The online content market and distribution in Western Europe

The CE market in Western EuropeEuropean Information Technology

Observatory 2005

2006The digital broadband value-added services industry and markets in Europe: Peer-to-Peer (P2P) networks and markets



European Information Technology Observatory – EITO

Deutsche MesseMessegelände, 30521 Hanover, GermanyPhone: +49 - 5 11- 89 33 - 100, fax: +49 - 5 11 - 89 33 - 102Internet: http://www.cebit.de

IFEMA – SIMO TCIParque Ferial Juan Carlos I, 28067 Madrid, SpainPhone: +34 - 91 - 7 22 - 50 00, fax: +34 - 91 - 7 22 - 58 07Internet: http://www.simo.ifema.es

Bitkom Servicegesellschaft mbHAlbrechtstrasse 10, 10117 Berlin, GermanyPhone: +49 - 30 - 2 75 76 - 0, fax: +49 - 30 - 2 75 76 - 1 51Internet: http://www.bitkom-service.org

The leading business-to-business trade fair for IT, Media and Communications

Messe München GmbH Messegelände, 81823 Munich, GermanyPhone: +49 - 89 - 9 49 - 2 03 61, fax: +49 - 89 - 9 49 - 2 03 69 Internet: http://www.systems.de

Telecom Italia S.p.A.Direzione Generale Corso d’Italia 41, 00198 Rome, ItalyPhone: +39 - 06 - 36 88 - 1, fax: +39 - 06 - 36 88 25 41Internet: http://www.telecomitalia.it

KPMG Deutsche Treuhand-Gesellschaft Aktiengesellschaft WirtschaftsprüfungsgesellschaftGanghoferstrasse 29, 80339 Munich, GermanyPhone: +49 - 89 - 92 82 - 12 63, fax: +49 - 89 - 92 82 - 2 12 63Internet: http://www.kpmg.de

Fujitsu Siemens Computers GmbHDomagkstrasse 28, 80807 Munich, GermanyPhone: +49 - 89 - 32 22 - 44 58, fax: +49 - 89 - 32 22 - 44 15Internet: http://www.fujitsu-siemens.com


European CommissionEnterprise DG, Information Society and Media DGRue de la Loi 200, 1049 Brussels, BelgiumPhone: +32 - 2 - 2 99 11 11, fax: +32 - 2 - 2 95 01 38Internet: http://ec.europa.eu

OECDDirectorate for Science, Technology and Industry2 rue André Pascal, 75775 Paris Cedex 16, FrancePhone: +33 - 1 - 45 24 - 82 00, fax: +33 - 1 - 45 24 - 85 00Internet: http://www.oecd.org

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AlmavivA Via Luigi Rizzo 22, 00136 Rome, Italy Phone: +39 - 06 - 3 99 31, fax: +39 - 06 - 39 93 - 54 06 Internet: http://www.almavivaitalia.it

ANIE Federazione Via Gattamelata 34, 20149 Milan, Italy Phone: +39 - 02 - 3 26 41, fax: +39 - 02 - 3 26 42 12 Internet: http://www.anie.it

Federation of Innovative and Technological Services Via Barberini 11, 00187 Rome, ItalyPhone: +39 - 06 - 42 14 01, fax: +39 - 06 - 42 14 04 44 Internet: http://www.confindustriasi.it

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Euro

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ISSN 0947-4862

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EITO2007