EITO2007

European Information Technology
Observatory 2007

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ISSN 0947-4862
European Information Technology Observatory EITO
Deutsche Messe
Messegelnde, 30521 Hanover, Germany
Phone: +49 - 5 11- 89 33 - 100, fax: +49 - 5 11 - 89 33 - 102
Internet: http://www.cebit.de
IFEMA SIMO TCI
Parque Ferial Juan Carlos I, 28067 Madrid, Spain
Phone: +34 - 91 - 7 22 - 50 00, fax: +34 - 91 - 7 22 - 58 07
Internet: http://www.simo.ifema.es
Bitkom Servicegesellschaft mbH
Albrechtstrasse 10, 10117 Berlin, Germany
Phone: +49 - 30 - 2 75 76 - 0, fax: +49 - 30 - 2 75 76 - 1 51
Internet: http://www.bitkom-service.org
The leading business-to-business trade
fair for IT, Media and Communications
Messe Mnchen GmbH
Messegelnde, 81823 Munich, Germany
Phone: +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 dItalia 41, 00198 Rome, Italy
Phone: +39 - 06 - 36 88 - 1, fax: +39 - 06 - 36 88 25 41
Internet: http://www.telecomitalia.it
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprfungsgesellschaft
Ganghoferstrasse 29, 80339 Munich, Germany
Phone: +49 - 89 - 92 82 - 12 63, fax: +49 - 89 - 92 82 - 2 12 63
Internet: http://www.kpmg.de
Fujitsu Siemens Computers GmbH
Domagkstrasse 28, 80807 Munich, Germany
Phone: +49 - 89 - 32 22 - 44 58, fax: +49 - 89 - 32 22 - 44 15
Internet: http://www.fujitsu-siemens.com
The worlds leading ICT event
European Commission
Enterprise DG, Information Society and Media DG
Rue de la Loi 200, 1049 Brussels, Belgium
Phone: +32 - 2 - 2 99 11 11, fax: +32 - 2 - 2 95 01 38
Internet: http://ec.europa.eu
OECD
Directorate for Science, Technology and Industry
2 rue Andr Pascal, 75775 Paris Cedex 16, France
Phone: +33 - 1 - 45 24 - 82 00, fax: +33 - 1 - 45 24 - 85 00
Internet: 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, Italy
Phone: +39 - 06 - 42 14 01, fax: +39 - 06 - 42 14 04 44
Internet: http://www.conf industriasi.it
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, standardisa-
tion 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, EITOs
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
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
Publisher
European Information Technology Observatory
(EITO) European Economic Interest Grouping
(EEIG)
Register of companies Charlottenburg
HRA 36057 B
Registered office: Berlin
Branch office:
Hahnstrasse 70, 6058 Frankfurt am Main,
Germany
Phone: +49 / 69 / 4 4 16- 0
Fax: +49 / 69 / 4 4 16-16
Internet: http://www.eito.com
EITO founding members
CeBIT, Hanover
SIMO, Madrid
Bitkom Servicegesellschaft mbH, Berlin
EITO sponsors
Systems, Munich
Telecom Italia, Rome
KPMG, Munich
Fujitsu Siemens Computers, Munich
AlmavivA, Rome
Federation of Innovative and Technological
Services, Rome
ANIE Federazione, Milan
With the support of
European Commission, DG Enterprise and
DG Information Society and Media, Brussels
OECD, Directorate for Science, Technology
and Industry, Paris
Chair
Bruno Lamborghini
Honorary Chair
Enore Deotto
Vice-Chairs
Santiago Quiroga
Bernhard Rohleder
Managing Director
Carola Peter
Assistant
Angela Fauerbach
EITO Task Force
Imprint
EuropeanInformationTechnologyObservatory2007
Enrico Barella
Werner Benkel
Claude Boiziot
Marco Bozzetti
Jean-Claude Burgelman
Antonio Cimorra
John Curtis
John Dryden
Mar Duque
Holger Eggs
Alfred Eiblmeier
Andrea Gavosto
Andrej Kasper
Mats Marcusson
Concetta Perone
Axel Pols
Anton Seitz
Lucilla Sioli
Roberto Triola
Charles Ward
Sacha Wunsch-Vincent
3
Copyright 2007
(EITO) European Economic Interest Grouping
(EEIG) for all parts
and
International Data Corporation (IDC) for
Part One: The evolution of the European e-economy
Part One: The ICT market in Europe
Part Three: Statistical outlook
e-Business W@tch for
Part Two: Sector perspectives on e-business activity
in industries producing and using ICT
Gf K for
Part Two: The CE market in Western Europe
Copyright note
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LEiTHNER intelligente Medienproduktionen
ISSN
ISSN 0947-486
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 Europes digital challenge
By Bruno Lamborghini, Chair of the EITO 16
The evolution of the European e-economy
1. Generalindicatorsofthee-economy 21
11 Internet users 22
12 Internet commerce 2
2. Focusonspecificissues 25
21 ICT convergence 25
22 The transformation of the software industry 31
23 R&D ICT 35
2 ICT skills 38
3. EuropeanICTbusinessarena 3
5
The ICT market in Europe
1. ICTmarketsizeandstructure
2. ICTtrendsbycountry 6
21 France 8
22 Germany 50
23 Italy 52
2 Spain 5
25 United Kingdom 56
26 Czech Republic 58
27 Hungary 60
28 Poland 62
29 Other countries 6
3. ICTtrendsbyproductsegment 65
31 Computer hardware 65
32 End-user communications equipment 68
33 Telephone sets and other terminal equipment 68
3 Mobile telephone sets 68
35 Office equipment 68
36 Datacom and network equipment 69
37 PBX and key systems 69
38 Packet switching and routing equipment 70
39 Transmission and switching 70
310 Cellular mobile infrastructure 70
311 Other datacom and network equipment 71
312 Software products 72
313 IT services 7
31 Carrier services 76
315 Fixed voice telephone services 76
316 Fixed data services 77
317 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
Acknowledgement 90
1. Introduction 90
11 The revival of e-business 90
12 A conceptual framework for e-business measurement 92
13 The e-Business Scoreboard 2006 9
2. E-businesssectorstudies 96
21 Food and beverages 96
211 Sector profile 96
212 E-business activity in 2006 96
213 Current trends in ICT use and e-business 102
21 Drivers and inhibitors of e-business 107
215 Policy implications 109
22 Tourism 109
23 Telecommunications 123
2 The hospital sector 135
Part Two
7
3. Conclusionsandoutlook 17
31 ICT impact on firms 17
32 Scenario for the evolution of e-business until 2010 151
321 The end of ICT scepticism and a new role for information management 151
322 Further digitisation of business processes large firms and public sector to lead 151
323 ICT to change the business a longer-term scenario 152
32 VoIP from cost savings to process innovation 153
325 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 160
21 France 160
22 Germany 162
23 Italy 16
2 Spain 165
25 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 21
13. Appendix 26
14. Definitions 29
11 ICT equipment 250
111 Computer hardware 250
112 End-user communications equipment 252
113 Office equipment 252
11 Datacom and network equipment 252
12 Software products 255
13 IT services 256
1 Carrier services 256
15 Performance measures 257
151 Trade statistics 257
152 Industry leaders market share 258
153 Industry concentration 258
15 Inf lation 258
155 Exchange rates 259
Alphabetical index 260
Part Three
Part One
12
European Information Technology Observatory EI TO 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 US
1
. 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.
The need for an internal market in ICT
for investment and innovation
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 editions report on the 2006 findings
of the e-Business W@tch
2
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 Europes
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 Reding
European Commissioner for
Information Society and Media
1
Van Ark, B. and Inklaar,
R. (2005), Catching up or
getting stuck? Europes
trouble to exploit ICTs
productivity potential,
Research Memorandum
GD-79, Groningen Growth
and Development Centre
2
www.ebusiness-watch.org
13
Part One EI TO 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
Europes 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 Europes 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
Europes 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 EI TO 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 worlds 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 Europes digital challenge
The Internets 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 Lamborghini
Chair of the EITO
17
Speeding up Europes digital challenge Part One EI TO 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.
Europes will to face the global
challenge
The European Union is moving in the same
direction taken by the worlds 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
20062007, 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 fat 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. Friedmans 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 worlds 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 20012003, when the average growth
rate was 2 %, following the double-digit growth
rates of 1112 % in the years 19982000. 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 Europes digital challenge Part One EI TO 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 20072013. 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-economy Part One EI TO 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.Generalindicators
ofthee-economy
In an increasingly globalised and competi-
tive environment, European companies under-
stand that they need to innovate. Nevertheless,
Europes 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 todays European e-economy, with
particular reference to the evolution of Internet
usage and adoption.
TheevolutionoftheEuropeane-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 buyers 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.Internetusers
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 %
20062010
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, 20062010
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 %, 20062010
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.
0 350 50 100 150 200 250 300
38 2010
2006
51
56
70
31
44
20
24
22
29
43
53
44
57
254
326
France
Germany
Italy
Nordic
countries
Spain
UK
Other
Europe
EU 15 plus
Norway and
Switzerland
Figure 1
Web users by country,
comparison 2006 and
2010, million users
24
1.2.Internetcommerce
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.
0 100 20 40 60 80
62.2
82.2
67.8
84.9
53.8
75.6
81.3
96.0
55.5
72.2
71.2
85.7
64.7
82.4
64.5
82.2
France
Germany
Italy
Nordic
countries
Spain
UK
Other
Europe
EU 15 plus
Norway and
Switzerland
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
25
2.Focusonspecifcissues
2.1.ICTconvergence
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 todays 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.
Voiceanddataandmediacontent
convergencesolutions
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 %
20062010
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 users location.
With this service, the users 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.
Fixedandmobileconvergencesolutions
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 3
Convergence: 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 conf erencing/collaboration
Managed services
Utility computing
Virtual services
Pay-per-use options
SaaS
N
e
t
w
o
r
k
s

a
n
d

I
T
V
o
i
c
e

a
n
d

d
a
t
a

a
n
d

m
e
d
i
a

c
o
n
t
e
n
t
F
i
x
e
d

a
n
d

m
o
b
i
l
e
U
s
e
r

a
n
d

d
e
v
i
c
e
s
27
Opportunitiesandchallenges
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.
NetworksandITconvergencesolutions
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.
Useranddeviceconvergencesolutions
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.
28
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
Consumer Business
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.
Howthescenarioisevolving
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
Dont 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.Thetransformationofthe
softwareindustry
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 customers 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.
32
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 todays 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, 2006 Source: IDC European vertical market survey, 2006
Figure 7
EU 15 plus Norway
and Switzerland, level of
understanding of SOA
by employee company
size (scale 15:
1 = no understanding;
5 = detailed understand-
ing)
2.2 2.4 2.5 2.7
500+ employees
100499 employees
2099 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&DICT
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 Commissions
strong support to R&D (see The Financial
Perspective plan);
TheFinancialPerspectiveplan
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.ICTskills
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 organisations 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.
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
organisations 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
0
Informal training Learning-by-doing Self-study
with aid
Training 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
0
More than three years ago One to three years ago Three months to a year ago Last 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.EuropeanICTbusinessarena
Figure 11
EU 15 plus Norway
and Switzerland,
ICT business arena,
2005, billion
Telecom
(321)
Distribution
(119)
Office
(8)
Consumer electronics
(95)
Marketing and advertising
(240)
Media and
publishing
(254)
Computer systems and services
(292)
Total value = % 1,329 billion
S
e
r
v
i
c
e
s

P
r
o
d
u
c
t
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:
films, 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 1
European* Information
and Communications
Technology (ICT)
market, 2006, billion**
2006
Value
% of
ICT
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 Europe Part One EI TO 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, Japans
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,
20052007, billion
Table 3 (right)
Worldwide ICT market
breakdown calculated
on market values,
20052007, billion
Figure 2 (right)
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 %
2006
Value
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
** RoW = Rest of World
2006
Value
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
** RoW = Rest of World
46
2. ICT trends by country
Table 4
European IT market
by country: percentage
breakdown and growth
calculated on market
values, 20062008,
billion
Table 5
European telecom-
munications market
breakdown and growth
calculated on market
values, 20062008,
billion
2006
Value
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.
2006
Value
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 3
EU 15 GDP, investment,
IT and TLC market
actual growth and
forecasts, 20042007,
in %
Figure 4
European 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 %
Total value =
324 billion
2005/04 2006/05 2007/06 2008/07
10
5
0
5
2.8
3.3
2.0
1.5
4.5
IT
Telecom
GDP (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 5
France
ICT market, 20052008,
billion
2005
160.0
140.0
80.0
60.0
40.0
20.0
0
2006 2007 2008
94.5
96.7
99.9
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 6
France
ICT market by segment,
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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 10.0 9.0 7.0 5.0
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 7
Germany
billion
2005
160.0
140.0
120.0
60.0
40.0
20.0
0
2006 2007 2008
131.8
133.8
136.0
138.7
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 incumbents 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 O
2
Germa-
ny are also investing in HSDPA networks.
Figure 8
Germany
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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
1.0 0.0
0.2
0.3
0.0
0.4
0.4
0.0
0.5
0.0
0.3
9.0 7.0 5.0 3.0
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, Italys 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 9
Italy
billion
2005
160.0
140.0
80.0
60.0
40.0
20.0
0
2006 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, Italys 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 10
Italy
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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 10.0 9.0 7.0 5.0
0.7
0.7
0.8
54
2.4. Spain
Spains 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 11
Spain
billion
2005
160.0
140.0
80.0
60.0
40.0
20.0
0
2006 2007 2008
43.0
45.0
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 Spains 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 12
Spain
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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
9.0 7.0 5.0
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 13
United Kingdom
billion
2005
160.0
140.0
80.0
60.0
40.0
20.0
0
2006 2007 2008
120.0
123.7
127.3
130.8
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 14
United Kingdom
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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
58
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 15
Czech Republic
billion
2005
20.0
16.0
8.0
6.0
4.0
2.0
0
2006 2007 2008
6.3
6.9
8.4
6.4
12.5
9.2 7.5
8.0
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 16
Czech Republic
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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
18.0 15.0 24.0 21.0
0.2
60
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 countrys 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 17
Hungary
billion
2005
20.0
16.0
8.0
6.0
4.0
2.0
0
2006 2007 2008
5.8
6.1
5.0
4.4
5.8
5.4
6.4
6.7
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 18
Hungary
20072008, growth in %
Computer
hardware
Carrier services
End-user
communications
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
18.0 15.0 24.0 21.0
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 19
Poland
billion
2005
20.0
16.0
8.0
6.0
4.0
2.0
0
2006 2007 2008
14.4
15.9
7.7
7.0
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 investment
among large companies and public-sector
organisations in upgrading their IT infra-
structure are driving increased spending in
areas such as IT security, and network and
systemsmanagement.
IT services
SpendingonITservicesisgrowingdynami-
cally.Thefinancialservices,telecommunica-
tions and government sectors are the most
activecustomersforITservicesproviders.
Financialinstitutionsareinvestingintoolsto
address security and manage data, spurring
demand for data processing services. They
arealsoincreasinglyinterestedinfront-office
systems, with investments in implementing
CRMande-banking.
Governmentsectorspendingisbeingdriven
byongoingreformsandaccesstoEUstruc-
tural funds. With a focus often on expand-
ingtheirbasicITinfrastructure,government
institutionsarenowmajorusersofhardware
supportandinstallationandnetworkintegra-
tionservices.
TheSMEmarketforITservicesisbeginning
todevelopasaresultofvendorsinitiativesto
offerproductsandservicesdesignedforthis
customersegment.
Carrier services
Despite relatively low mobile penetration,
mobilesubstitutionoffixedtrafficisbegin-
ningtooccurandhencethemarketshowed
asimilarpatterntootherCentralEuropean
countries in that fixed voice services con-
tractedinvalue.
Spendingonmobilevoiceservicesincreased
by over 17% in 2006. Subscriber numbers
continue to increase, with faster growth in
pre-paid subscribers indicating the relative
immaturityofthemarket.Besidessubscrip-
tion fees, increased spending is also being
drivenbyShortMessageService(SMS)and,
increasingly,mobiledataservices.
Figure 20
Poland
20072008, growth in %
Computer
hardware
Carrierservices
End-user
communications
equipment
Off ice
equipment
TotalICT
equipment
Software
products
ITservices
Datacom
andnetwork
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
18.0 15.0 24.0 21.0 0.0
0.6
0.6
64
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.
65
3. ICT trends by product
segment
3.1. Computer hardware
Overall, Europes 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 note-
book PCs accounting for a general recovery of
the market in 2007 (1.3 %). The negative per-
formance of Europes 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 21
EU ICT market value
growth by product
segments in %,
20062007
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1.0
2.0
Computer
hardware
Total ICT End-user
communications
equipment
Off ice
equipment
Software Services Carrier services
2007/2006
2006/2005
Datacom
and network
equipment
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
1.7
1.4
2.7
Figure 22
EU 15 plus Norway
and Switzerland
personal computer
market, unit shipments,
20042006
40,000,000
35,000,000
30,000,000
25,000,000
20,000,000
15,000,000
10,000,000
5,000,000
0
2004 2005 2006
PowerPC Others 8th Generation (IA64) 7th Generation < 1 GHz
7th Generation 1 GHz 6th Generation < 1 GHz 6th 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.
68
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.
70
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.
71
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 Lines (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.
72
Networkvendorsarecontinuouslyexpanding
their Gigabit Ethernet LAN switch product
portfolio.
ThegrowthintheGigabitEthernetsegment
istoalargeextentattheexpenseofFastEther-
netportshipmentsandrevenues.Thatiswhythe
stronggrowthinGigabitEthernetshipmentshas
onlyalimitedimpactonthetotalLANswitch
forecast.Anotherimportanttrendthatishaving
a major impact on the European LAN switch
market is that organisations across Europe are
replacingtheirtraditionalTDMPBXvoicesys-
temswithIP-basedPBXtelephonesystems.
As a result of these trends, the other data-
comandnetworkequipmentsegmentregistered
a growth of 4.4% in 2006 and is projected to
growby3.0%in2007.
3.12. Software products
Forecasts for software spending are posi-
tiveandcontinuetostaywellabovetheaverage
rate for the overall IT market. In 2006 growth
for software products was at 6.3% with system
softwarespendinggrowingevenfasterat6.6%,
while spending for application software will be
characterised by a slightly lower growth rate
(5.7% in 2006). In 2007 trends will be similar
with system software growing at a faster pace
thanapplicationsoftware.
Within the application solution software
area,someneedsareattractingspecialattention.
Inthiscontextthemostrelevanttrendsare:
TheERPmarketisexpectedtoperformquite
brightlythroughout2006and2007.Vendors
areshowinggoodresultsachievedthanksto
continuous demand for both upgrades and
new installations. Growth is driven mainly
by investments from different product cat-
egories such as financials, human capital
Adopting Planning
during2006
Planning
during2007
Planninglater
inthefuture
Noplans Dontknow
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
73
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.
74
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-
75
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.
76
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 %,
20062007
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
4
Fixed voice
telephone services
Fixed data
services
Mobile telephone
services
2006/2005
2007/2006
CaTV
services
2.5 3.1
9.4
6.8
4.4
3.8
3.4
2.4
77
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 users single provider
for voice, video, and data services. Increasingly
this bundle will also include mobile services.
For years, broadband access has been synony-
78
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 operators 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.
79
4. Europe as a consumption area
4.1. ICT penetration
IT spending/
GDP
i n %
IT spending
per capita
i n
Number of
PCs per 100
population
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 7
IT penetration
by country, 2005
80
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
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2
.
7
4
2
.
7
5
2
.
8
1
2
.
8
2
3
.
2
9
3
.
2
7
3
.
1
1
2
.
9
3
1
.
1
2
1
.
5
5
1
.
7
5
3
.
3
0
2
.
5
2
1
.
8
1
1
.
4
2
3
.
8
5
3
.
7
4
3
.
5
7
1
.
9
5
3
.
0
1
2
.
8
8
2
.
4
5
2
.
2
9
1
.
6
6
2
.
3
6
1
.
9
0
2
.
3
4
2
.
1
4
3
.
2
8
3
.
4
7
81
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 infrastructures 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 26
IT spending/GDP
versus per capita GDP
in the EU 15, Norway,
Switzerland, the US and
Japan, 2005
G
D
P

p
e
r

c
a
p
i
t
a

(
)
60,000
50,000
40,000
30,000
20,000
10,000
0
0.0 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
A
B/L
DK
SF
F
D
IR
I
N
P
E
S
CH
UK
NL
EU 15
US
J
82
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.
G
r
o
w
t
h

r
a
t
e

i
n

%
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
Education
Wholesale
Insurance
Other f inance
Retail
Local
government
Central
government
Business
services
Communications
Process
manufacturing*
Discrete
manufacturing**
Banking
83
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-
84
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 28
EU 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 52,444 153,679
Export 88,896 5, 385 5,933 1,036 17,196 118,447
Trade balance 5, 589 4, 546 5, 391 4,729 35, 248 35, 233
France Import 10,968 70 662 327 2, 524 14,552
Export 3,852 164 323 42 1,457 5,840
Trade balance 7,116 94 338 285 1,068 8,712
Germany Import 13,105 196 1, 522 2, 351 11,410 28, 584
Export 15, 506 1,722 806 179 3,419 21,631
Trade balance 2,401 1, 525 716 2,172 7,992 6,953
Italy Import 6,694 30 244 81 941 7,990
Export 1,478 78 199 10 297 2,062
Trade balance 5, 215 48 45 71 644 5,928
Spain Import 5,649 10 126 53 518 6, 356
Export 970 19 52 2 170 1, 214
Trade balance 4,679 10 74 51 347 5,142
UK Import 12,421 77 2, 255 558 6,683 21,994
Export 9, 588 744 1, 306 134 2,688 14,460
Trade 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, 525
Export 9,886 713 1,124 135 7, 339 19,196
Trade balance 1,649 407 796 236 945 1, 329
France Import 1,110 20 120 12 514 1,776
Export 892 62 67 7 795 1,823
Trade balance 218 42 53 5 281 47
Germany Import 1, 335 66 232 120 866 2,618
Export 1, 315 138 214 28 1,454 3,149
Trade balance 20 72 18 92 588 531
Italy Import 899 19 92 36 534 1, 580
Export 621 30 32 3 537 1, 224
Trade balance 277 11 60 33 3 356
Spain Import 1,197 11 50 5 328 1, 592
Export 243 10 41 2 171 467
Trade balance 954 1 9 4 158 1,125
UK Import 2, 593 43 715 48 1,640 5,039
Export 1, 547 140 199 13 845 2,745
Trade 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
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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), Rambll 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.
Competitivepressureasthemaindriver
inrecentyears
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 EI TO 2007 Sector perspectives on e-business activity
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).
Enablingtechnologieshavematured
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 pervasive
1
. 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 companies
2
. 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.
Transactionsande-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-
ful
3
: 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 def ining
and measuring electronic
commerce, in order to
compile def initions of
electronic commerce
which are policy relevant
and statistically feasible.
By 2000, work of the
Group had resulted in
def initions for electronic
commerce transactions.
93
Part Two EI TO 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
thefocusonbusinessprocesses
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 WPIIS
4
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 be-
tween 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-businessandthecompanysvaluechain
For structuring and mapping business pro-
cesses, Michael Porters 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 firms 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
Part Two EI TO 2007
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
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 beverages
7
2.1.1. Sector profile
Definitionandcharacteristics
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.
Sizeoftheindustry
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 EUs 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 sectors 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
Part Two EI TO 2007
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.
ImportanceofERPsystemsfore-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 (19 employees) 11 54 4 6
Small (1049 employees) 19 71 17 13
Medium (50249 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
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.
Deploymentofe-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-invoicing
60
50
40
30
20
10
0
All ten sectors
(EU 10)
18
19
22
Total Food
(EU 10)
20
25 25
Micro
(1 9 employees)
8
11
14
Small
(10 49 employees)
12
11
15
Medium
(50 249 employees)
17
22
24
Large
(250 + employees)
36
45
54
Send e-invoices to public sector
Send e-invoices to private sector
Receive e-invoices
99
Part Two EI TO 2007
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 sectors large
companies (the main suppliers of organised dis-
tribution) reported receiving e-invoices.
E-procurement
Managingthesupplychain
ofperishablegoods
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-procurementactivity
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
Base (100 %)
Firms using
computers
Firms placing
orders online
Firms placing
orders online
Firms using
computers
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 sectors 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
Use specific ICT
solutions for e-selling
Base (100 %)
Firms using
computers
Firms accepting
orders online
Firms accepting
orders online
Firms using
computers
N (for sector, EU 10) 775 212 212 775
101
Part Two EI TO 2007
Onlineordersfromcustomers
Taking into account the previous considera-
tions, the percentage of firms from the F&B
industry in the EU 10 which said that they en-
able 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)
accepting orders online
(without dont know).
N (for sector, EU 10) = 209.
Weighting: in % of f irms.
Questionnaire reference: F8
Figure 4
Main location
of customers that order
online
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)
All ten sectors
(EU 10)
Mainly
international
Mainly
national
Mainly
regional
100
0
20
40
60
80
30
38
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-artapplications
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 companys 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.
103
Part Two EI TO 2007
ProductLifecycleManagement(PLM):
anewapproachtoproductdevelopment
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.
SCMsystemswidelyused
inlargeF&Bfirms
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 companys 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.
Organisationalandtechnologicalchallenges
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
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
0
All ten sectors
(EU 10)
Use SCM ICT system linked with suppliers
16
12
Large
(250 + employees)
50
33
Medium
(50 249 employees)
19
15
Small
(10 49 employees)
11
5
Micro
(1 9 employees)
11
1
Total Food and
beverages (EU 10)
21
14
105
Part Two EI TO 2007
Mobile applications
Mobile applications and Wi-Fi systems
8
,
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 PDAs
9
, 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.
Wirelesspeople
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 devices
10
.
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
RFIDnotyetwidelydeployed
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.
RFIDuseforfoodsafety
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
using computers.
Questionnaire reference:
A4a
Figure 6
RFID usage
0 2 4 6
Food and beverages (EU 10)
Micro
(19 employees)
Small
(1049 employees)
Medium
(50249 employees)
Large
(250 + employees)
All ten sectors (EU 10)
0
2
5
1
2
3
107
Part Two EI TO 2007
regarding the product and processing, includ-
ing traceability and location of goods. During
the delivery phase, RFID may be used to verify
the senders 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.
Driversandbarriersforadoption
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
Driversofe-businessadoption
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.
Barrierstoe-businessadoption
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 ebusiness
adoption as perceived
by companies
Base (100 %): companies saying that ebusiness does not play
a role in their operations.
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 sizebands are in % of enterprises from the
sizeband.
Company too small
250+ employees
50249 employees
1049 employees
19 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
50249 employees
1049 employees
19 employees
Food (EU 10)
0 20 40 60 80 100
250+ employees
50249 employees
1049 employees
19 employees
Food (EU 10)
0 20 40 60 80 100
250+ employees
50249 employees
1049 employees
19 employees
Food (EU 10)
0 20 40 60 80 100
250+ employees
50249 employees
1049 employees
19 employees
Food (EU 10)
0 20 40 60 80 100
250+ employees
50249 employees
1049 employees
19 employees
Food (EU 10)
0 20 40 60 80 100
250+ employees
50249 employees
1049 employees
19 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
Part Two EI TO 2007
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 reasons
11
. 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. Tourism
12
2. 2.1. Sector profile
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
55.155.4), 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.
report is available at www.
ebusiness-watch.org.
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.
Sizeoftheindustry
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 (19 employees)
and small enterprises (1049 employees) together
constitute 99 % of companies in the tourism sec-
tor. This results in a labour market where SMEs
contribute about 79 % of employment.
2. 2. 2. E-business activity in 2006
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
Part Two EI TO 2007
the companys 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.
Table 5
Use of ICT systems
integration
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
Base (100 %)
Firms using
computers
Firms not using
an ERP system
Firms using
computers
Firms using
computers
N (for sector, EU 10) 725 622 725 725
112
AdoptionofERPsystems,special
accountingsoftwareandsystemsfor
documentmanagement
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 hotels 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 Gstemeldung).
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
Managementofprocurementinacomplex
andfragmentedvaluechain
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 ones system with
113
Part Two EI TO 2007
suppliers, for instance by making bookings at a
suppliers or partners 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-procurementactivity
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 125 % 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
Base (100 %)
Firms using
computers
Firms placing
orders online
Firms placing
orders online
Firms using
computers
N (for sector, EU 10) 725 418 418 725
Table 6
Companies ordering
supply goods online
114
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 125 %
of orders online
Receive more than
Use specific ICT
solutions for e-selling
Tourism (EU 10) 49 68 32 28
Base (100 %)
Firms using
computers
Firms accepting
orders online
Firms accepting
orders online
Firms using
computers
N (for sector, EU 10) 725 339 339 725
Table 7
Companies receiving
orders/reservations
from customers online
115
Part Two EI TO 2007
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.
Onlineorders/reservationsfromcustomers
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.
Volumeofonlineorders/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 provi-
ders 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.
116
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 %).
Marketingandsalesprocessessupported
byspecificICTsolutions
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
using specif ic ICT solutions
for marketing/sales.
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
39
34
66
19
60
Receive orders
from customers
Enable customers
to pay online
117
Part Two EI TO 2007
Locationandtypeofcustomers
placingonlineorders
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
*
May not add up due to
rounding.
0
Total Tourism
(EU 10)*
Accommodation sector
Hotel and restaurant
sector
Travel agencies and
tour operators
All ten sectors
(EU 10)
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
118
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.
2. 2. 3. Current trends in ICT use
and e-business
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 hotels 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)
Total Tourism
(EU 10)
All ten sectors
(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
119
Part Two EI TO 2007
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 products
14
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.
Ongoingmarketconsolidation
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
worlds 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.
120
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,barriersandoverallassessment
ofdynamicpackaging
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.
121
Part Two EI TO 2007
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.
Customerself-serviceandbar-coded
boardingpasses
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 passengers home, but also to place
bar codes on the passengers cell phone which
makes a paper document completely obsolete.
2. 2.4. Drivers and inhibitors of e-business
Driversofe-businessadoption
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.
122
0
55 All ten sectors
50249 employees
1049 employees
19 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.
(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
by companies
250+ employees 0
0
30 All ten sectors
50249 employees
1049 employees
19 employees 34
19
30
Tourism 26
20 40 60 80 100
Technology too complicated
250+ employees 0
0
38 All ten sectors
50249 employees
1049 employees
19 employees 45
20
37
Tourism 42
20 40 60 80 100
250+ employees 53
0
24 All ten sectors
50249 employees
1049 employees
19 employees 25
18
30
Tourism 19
20 40 60 80 100
Systems not compatible
250+ employees 0
0
31 All ten sectors
50249 employees
1049 employees
19 employees 29
32
30
Tourism 26
20 40 60 80 100
Security concerns
250+ employees 32
0
22 All ten sectors
50249 employees
1049 employees
19 employees 31
13
28
Tourism 25
20 40 60 80 100
Legal issues
250+ employees 32
0
23 All ten sectors
50249 employees
1049 employees
19 employees 24
17
54
Tourism 21
20 40 60 80 100
250+ employees 0
123
Part Two EI TO 2007
2. 2.5. Policy implications
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 EUs 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 EUs 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. Telecommunications
15
2. 3.1. Sector profile
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).
report is available at
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.
124
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.
Sizeoftheindustry
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.
2. 3. 2. E-business activity in 2006
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.
125
Part Two EI TO 2007
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
Large (250 + employees) 100* 79* 74* 93*
Base (100 %)
Firms using
computers
Firms using
computers
Firms with
Internet access
Firms using
computers
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
~
2550).
** Please read: The average
share of employees with
Internet access in a telco
company is 90 %.
126
ICT skills, outsourcing and investments
DemandforICTskillsand
skillsdevelopment
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.
OutsourcingofICTservices
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 (19 employees) 30 17
Small (1049 employees) 48 36
Medium (50249 employees) 63 55
Large (250 + employees) 83* 65*
All ten sectors (EU 10) 14 13
Micro (19 employees) 12 9
Small (1049 employees) 15 16
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
~
2550).
127
Part Two EI TO 2007
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 (19 employees) 13 21 67
Small (1049 employees) 21 21 89
Medium (50249 employees) 25 9* 90
Large (250 + employees) 41* (**) 93*
All ten sectors (EU 10) 14 5 50
Medium (50249 employees) 21 6 78
Large (250 + employees) 31 6 86
Base (100 %) Firms using computers All firms (excl. dont know) Firms using computers
N (for sector, EU 10) 829 493 829
Table 10
Outsourcing and
spending on ICT
*

observations (N
~
2550).
** Values not displayed
because number of obser-
vations (N) is < 25.
Telecommunication
(EU 10)
All ten sectors
(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
that have outsourced ICT
services.
Questionnaire reference: C2
Figure 12
Outsourcing trend:
percentage of
companies that have
increased/decreased
their outsourcing
activities in 2005
128
ICTinvestments
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-
using computers (excl.
dont know).
Weighting: in % of firms.
Questionnaire reference: C2.
*

Data only indicative due to
low number of observa-
tions (N
~
2550).
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
Medium
(50249 employees)
Large
(250 + employees)*
Small
(1049 employees)
35 6
33 4
62
36 12
3
34 4
All ten sectors
(EU 10)
5
Micro
(19 employees)
Total telco
(EU 10)
129
Part Two EI TO 2007
nal workf lows as well as the collaboration with
business partners, e. g. device manufacturers or
content providers.
Useofsoftwaresystemsforinternal
processintegration
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*
Base (100 %)
Firms using
computers
Firms not using
an ERP system
Firms using
computers
N (for sector, EU 10) 829 637 829
Questionnaire reference D1a D1e D1d
Table 11
Use of ICT systems
integration
*

observations (N
~
2550).
130
UseofICTforcooperativeand
collaborativebusinessprocesses
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
*

observations (N
~
2550).
131
Part Two EI TO 2007
ICTsupportofcustomer-facingactivities
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.
UseofspecificICTsolutionsfor
marketingandsalessupport
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)
* Data only indicative due
to low number of observa-
tions (N
~
2550).
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.
UseofCRMsystemsandintegration
ofICTsystems
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
using specif ic ICT solutions
for marketing / sales.
100
90
80
70
60
50
40
30
20
10
0
Telecommunications (EU 10) All ten sectors (EU 10)
72
78
Publish offers
to customers
Answer calls
for tenders
Launch sales
auctions
67
21
79
37
34
66
19
60
Receive orders
from customers
Enable customers
to pay online
133
Part Two EI TO 2007
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.
2. 3. 3. Drivers and inhibitors of e-business
E-businessdrivers
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
using computers.
Questionnaire reference:
F2, F13b.
*

observations (N
~
2550).
75
60
45
30
15
0
Total telco
(EU 10)
Micro
(19 employees)
Small
(1049 employees)
Large
(250 + employees)*
All ten sectors
(EU 10)
Medium
(50249 employees)
10
5
74
6
55
16
36
11
24
21
7
8
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.
2. 3.4. Policy implications
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
by companies
saying that e-business does
not play a role in their
operations.
0
Lack of reliable
IT suppliers
Company too
small
Technology too
expensive
Technology too
complicated
Security concerns
Legal issues
10 20 30 40 50 60 70
56
68
40
40
35
35
18
26
46
33
31
22
21
33
Telecommunications
All ten sectors
Systems not
compatible
135
Part Two EI TO 2007
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 sector
19
2.4.1. Sector profile
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.
Sizeoftheindustry
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 50250 employees, 20 % had
1049 employees, and a minority of 18 % had
19 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.
2.4. 2. E-business activity in 2006
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 hospitals 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
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.
Weighting:
% of employment.
Questionnaire reference: G6
Figure 17
Problems due to a lack
of interoperability:
hospitals experiencing
difficulties in
40
30
20
10
0
Cataloguing
13
20
Payments
34
25
Invoicing
37
25
Regulatory
aspects
18
16
Logistics
23 23
30
24
Technical
aspects
Procurement
18
25
Hospitals (EU 10)
137
Part Two EI TO 2007
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 (149 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
Onlineprocurement
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 specific
ICT solutions for
e-sourcing
Hospitals (EU 10) 67 71 29 19
Micro/small (149 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.
Onlinebooking
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
Part Two EI TO 2007
10 % of the hospitals surveyed this year (rep-
resenting 7 % of this sectors 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.
2.4. 3. Current trends in ICT use
and e-business
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 125 %
of their bookings
online
Receive more than
25 % of their
bookings online
Use specific
ICT solutions for
e-selling
Hospitals (EU 10) 7 93 7 8
Micro/small (149 employees) 19 10
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.
HISbenefitsandimplementation
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-prescribingandmedicationmanagement
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
Part Two EI TO 2007
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.
RadiologyInformationSystems(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.
HISintegration
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.
ICTsupportingcontinuityofcare
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. 109113. 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. 105115.
143
Part Two EI TO 2007
Changingroleofhospitals
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 patients 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.
2.4.4. Drivers and inhibitors of e-business
E-businessdrivers
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.
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
0
Total hospitals
(EU 10)
Small
(149 employees)
Medium
(50249 employees)
70
67
Large
(250 + employees)
All ten sectors
(EU 10)
70
55
40
37
43
37
34
18
76
45
39
24
71
57
41
40
59
41
Competitors do it Health insurance funds expectations
Supplier expectations Gaining competitive advantage
144
In the other sectors studied this year by the
e-Business W@tch, firms 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-businessinhibitors
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.
145
Part Two EI TO 2007
Figure 19
by hospitals
0
55 All ten sectors
250 + employees
50249 employees
149 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.
Weighting of data for sector and all sectors: % of employment.
For size classes: % of enterprises.
Questionnaire reference: H3
Hospital too small
0
38 All ten sectors
250 + employees
50249 employees
149 employees 61
45
60
20 40 60 80 100
Technology too complicated
0
30 All ten sectors
250 + employees
50249 employees
149 employees 29
15
22
20 40 60 80 100
Systems not compatible
0
24 All ten sectors
250 + employees
50249 employees
149 employees 24
27
29
20 40 60 80 100
Security concerns
0
31 All ten sectors
250 + employees
50249 employees
149 employees 46
67
60
20 40 60 80 100
Legal issues
0
22 All ten sectors
250 + employees
50249 employees
149 employees 38
47
37
20 40 60 80 100
0
23 All ten sectors
250 + employees
50249 employees
149 employees 17
32
36
20 40 60 80 100
146
2.4.5. Policy implications
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.
147
Part Two EI TO 2007
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.
Howcompaniesperceivetheoverall
impactofICTontheiroperations
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
Shipbuilding
Construction
Tourism
Telecoms
Hospitals
Micro (09)
Small (1049)
Medium (50249)
Large (250+)
0 20 40 60 80 100
15 52
23 47
33 48
18 50
19 46
12 40
36 44
37 51
27 49
14 42
18 45
17 55
32 45
17 50
14 37
Total
Figure 20
Perceived overall
importance of e-business
for company operations
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.
148
Wherecompaniesexperienceaninfluence
ofICTontheirbusiness
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
using computers,
ten sectors, EU 10.
data are weighted by
employment and should
be read as enterprises
representing % of
employees.
Figure 21
Perceived
ICT influence on the
companys business
Revenue growth 44 1
Processes efficiency 57 1
Procurement costs 38 3
Product quality 38 2
Productivity
52 2 Customer service
55 2
149
Part Two EI TO 2007
WherecompaniesexpectICTtoinfluence
theirbusinessinthefuture
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 2535 % 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.
using computers,
ten sectors, EU 10.
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 impact Expect 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
150
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.
ICTandinnovation
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 em-
ployment 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.
151
Part Two EI TO 2007
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 pass. 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.
152
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 19952001), 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.
153
Part Two EI TO 2007
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 technologys 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 technologys 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.
154
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.
155
Part Two EI TO 2007
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.
CompaniesinNordiccountriesarebest
connectedwithintheirvaluesystem
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 companys
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
156
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.
Impactofindustrystructure
challengesforcomparisonsbycountry
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).
Populationandsampling
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.
157
Part Two EI TO 2007
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
conducted
NACE 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.
158
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.
Confidenceintervals
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.
Moreinformation
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).
159
The CE market in Western Europe Part Two EI TO 2007
This study has been provided by Gf K 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.
160
Figure 1
TV formats
development in Europe,
billion
25
20
15
10
5
0
2006 2002 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.
161
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.
162
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 Germanys improvement
in 2006 was the countrys 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
million
5,000
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
2006 2002 2003 2005
MP3 digital personal audio
Other digital personal audio
2004
Analogue personal audio
2007
163
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 de-
clined 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
billion
6
5
4
3
2
1
0
2006 2002 2003 2005 2004
Home cinema systems
Audio home systems
Separate Hi-Fi elements
2007
164
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.
165
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
Spains 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.
166
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
million
2,500
2,000
1,500
1,000
500
0
2006 2002 2003 2005
Digital set-top boxes and kits
Analogue set-top boxes and kits
2004 2007
167
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
168
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 groups 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 medias
billion
6
5
4
3
2
1
0
2006 2002 2003 2005 2004
Digital recording media
Analogue recording media
2007
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3. Data tables
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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 Gf K-manufacturers collaboration. Data published for the previous year are as of November, anticipating
Christmas trade. As a result Gf K revises these data the following March, after data for the previous year have been conf irmed.
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 34.0
Advanced 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 16.9
Liquid-crystal display TV 908 2,822 7,799 13,933 18,624 210.8 176.4 78.6 33.7
Rear 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 4.3
Video cassette recorders 8,046 5,344 2,961 1,714 1,067 33.6 44.6 42.1 37.8
Analogue camcorders 645 395 152 41 14 38.8 61.6 73.2 66.5
Digital camcorders 2,916 3,742 4,129 4,246 4,205 28.3 10.3 2.8 1.0
Digital still cameras 16,080 25,365 27,934 27,842 26,624 57.7 10.1 0.3 4.4
Analogue set-top boxes and kits 2,042 1,642 1,760 1,520 1,297 19.6 7.2 13.6 14.6
Digital set-top boxes and kits 5,580 9,880 14,534 17,478 20,326 77.1 47.1 20.3 16.3
Digital 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 11.8
Home cinema systems 3,527 4,455 3,448 2,962 2,741 26.3 22.6 14.1 7.5
Audio home systems 9,024 8,676 7,806 6,721 5,995 3.9 10.0 13.9 10.8
Separate Hi-Fi elements 6,338 5,438 4,745 4,371 4,147 14.2 12.7 7.9 5.1
Game consoles 12,517 11,795 14,245 17,312 19,186 5.8 20.8 21.5 10.8
Analogue recording media 284,848 229,509 172,511 126,056 90,378 19.4 24.8 26.9 28.3
Digital 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
%
Advanced 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 0.7
Liquid-crystal display TV 1,174 3,515 7,995 14,045 17,211 199.5 127.4 75.7 22.5
Rear and front projection TV 1,927 2,001 1,592 1,374 1,278 3.8 20.4 13.7 6.9
Video cassette recorders 1,089 604 299 158 93 44.5 50.5 47.2 41.3
Digital camcorders 2,270 2,256 2,101 1,897 1,722 0.6 6.9 9.7 9.2
Analogue set-top boxes and kits 162 98 91 97 56 39.5 7.1 6.8 42.9
Digital set-top boxes and kits 821 1,193 1,402 1,524 1,797 45.3 17.5 8.7 17.9
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 15.3
Home cinema systems 1,572 1,487 1,181 1,044 958 5.4 20.6 11.6 8.2
Audio home systems 1,777 1,445 1,165 971 803 18.7 19.3 16.7 17.3
Game consoles 2,169 1,761 2,345 3,176 3,808 18.8 33.2 35.4 19.9
All 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 30.3
Digital 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
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France 2003 2004 2005 2006 2007 2004/03
%
2005/04
%
2006/05
%
2007/06
%
Advanced 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 14.2
Liquid-crystal display TV 140 420 1,100 2,250 3,175 200.0 161.9 104.5 41.1
Rear and front projection TV 176 227 212 178 169 29.0 6.6 16.0 5.1
Digital camcorders 500 620 730 770 790 24.0 17.7 5.5 2.6
Digital set-top boxes and kits 222 269 1,241 1,870 2,484 21.2 361.3 50.7 32.8
Home cinema systems 410 570 600 560 520 39.0 5.3 6.7 7.1
Separate Hi-Fi elements 988 869 717 649 607 12.0 17.5 9.6 6.5
Game consoles 2,538 2,346 2,752 3,370 3,555 7.6 17.3 22.5 5.5
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 54.9
Advanced 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 14.8
Digital versatile discs 793 847 875 890 931 6.9 3.3 1.7 4.6
Video cassette recorders 191 100 48 26 14 47.9 52.4 45.0 44.9
Digital still cameras 988 1,172 1,219 1,139 1,035 18.7 4.0 6.5 9.2
Digital set-top boxes and kits 37 36 116 146 178 2.7 221.0 26.4 22.2
Digital multimedia players 241 349 527 533 669 44.4 51.0 1.3 25.4
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 15.9
Audio home systems 354 279 214 177 153 21.2 23.6 17.2 13.6
Game consoles 431 331 454 691 899 23.3 37.2 52.2 30.2
Digital 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
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Germany 2003 2004 2005 2006 2007 2004/03
%
2005/04
%
2006/05
%
2007/06
%
Advanced 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 37.6
Analogue set-top boxes and kits 1,313 850 945 358 250 35.3 11.2 62.1 30.2
Game consoles 2,699 2,460 2,650 2,921 3,360 8.9 7.7 10.2 15.0
Digital 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 43.0
Advanced 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 19.0
Game consoles 389 317 398 487 588 18.3 25.3 22.5 20.7
Digital 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
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Italy 2003 2004 2005 2006 2007 2004/03
%
2005/04
%
2006/05
%
2007/06
%
Advanced TV 232 648 1,535 2,228 2,452 179.4 136.9 45.1 10.1
Plasma display 32 105 200 250 270 228.1 90.5 25.0 8.0
Digital set-top boxes and kits 663 1,775 2,613 2,010 2,530 167.7 47.2 23.1 25.9
audio sets and DPVP 59 433 2,535 3,750 4,000 633.9 485.5 47.9 6.7
Audio home systems 956 1,048 875 732 658 9.6 16.5 16.3 10.1
Game consoles 1,106 1,154 1,545 2,070 2,300 4.3 33.9 34.0 11.1
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 25.7
Advanced 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 4.7
Digital still cameras 356 648 752 576 573 82.1 16.1 23.4 0.6
Game consoles 201 192 233 325 361 4.8 21.8 39.3 11.1
All other categories 707 836 1,056 1,032 1,019 18.3 26.4 2.3 1.2
Total CE 4,559 5,608 6,165 6,126 6,049 23.0 9.9 0.6 1.2
173
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Spain 2003 2004 2005 2006 2007 2004/03
%
2005/04
%
2006/05
%
2007/06
%
Advanced TV 151 391 1,120 1,868 2,501 158.9 186.4 66.8 33.9
Plasma display 25 75 150 195 215 200.0 100.0 30.0 10.3
Liquid-crystal display TV 60 250 900 1,600 2,200 316.7 260.0 77.8 37.5
Digital set-top boxes and kits 124 99 950 2,100 3,050 20.2 859.6 121.1 45.2
audio sets and DPVP 82 1,041 3,077 3,844 4,164 1,169.5 195.6 24.9 8.3
Game consoles 1,800 1,900 2,012 2,270 2,890 5.6 5.9 12.8 27.3
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 42.0
Advanced 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 9.8
Liquid-crystal display TV 84 349 928 1,558 1,936 314.9 166.3 67.9 24.2
Digital still cameras 510 721 732 720 687 41.2 1.6 1.6 4.6
Game consoles 347 304 326 404 549 12.5 7.2 24.0 35.9
All other categories 704 889 997 1,041 1,005 26.4 12.1 4.4 3.5
Total CE 4,465 4,921 5,431 5,902 6,053 10.2 10.4 8.7 2.6
174
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United Kingdom 2003 2004 2005 2006 2007 2004/03
%
2005/04
%
2006/05
%
2007/06
%
Advanced 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 9.4
Video cassette recorders 2,498 1,756 917 490 250 29.7 47.8 46.6 49.0
Separate Hi-Fi elements 1,577 1,272 1,117 1,019 948 19.3 12.2 8.8 7.0
Game consoles 2,690 2,150 3,482 4,600 4,950 20.1 62.0 32.1 7.6
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 57.8
Advanced 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 2.3
Digital versatile discs 894 1,016 1,044 1,079 951 13.6 2.7 3.3 11.8
Digital multimedia players 330 559 1,149 1,405 1,329 69.7 105.4 22.3 5.4
audio sets and DPVP 86 372 1,064 1,363 1,310 334.6 186.3 28.1 3.9
Game consoles 495 350 651 897 1,040 29.2 85.8 37.8 15.9
Digital 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. Defnitions and methodology
The Consumer Electronics market estimates
and forecasts of these tables are based on extra-
polated Gf K retail panels and Gf K 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 Gf K revises these data the follow-
ing March, after data for the previous year have
been confirmed.
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 outlook Part Three EI TO 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
MajorEuropeanICTand
digitalCEmarkets
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 fgures
9 World ICT markets, average annual
growth, 20062008 . . . . . . . 193
10 EU 15 plus Norway and Switzerland
IT market growth rates, 19992008 . . 193
11 European IT market by region, 2006
and market growth, 20062008 . . . 194
12 European ICT market, proportions
by class of business, 2006 and market
growth, 20062008 . . . . . . . 194
13 Worldwide number of Internet hosts,
20002006 . . . . . . . . . . 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 2.4
Belgium 3.9 0.7 1.4 1.0 2.7 1. 5 2.9 2. 3 2.1
Denmark 3. 5 0.7 0. 5 0.7 1.9 3.0 3. 5 2.6 1.6
Finland 5. 3 2. 5 1.6 1.9 3. 3 3.0 5.0 2.8 2.7
France 4.0 1.8 1.1 1.1 2.0 1. 2 2.1 2. 2 2. 3
Germany 3. 5 1.4 0.0 0. 2 0.8 1.1 2.6 1.8 2.1
Greece 4. 5 5.1 3.8 4.8 4.7 3.7 4.0 3.8 3.8
Ireland 9. 2 5.9 6.0 4. 3 4. 3 5. 5 5.1 5.1 4. 5
Italy 3.8 1.7 0. 3 0.1 0.9 0.1 1.8 1.4 1.6
Netherlands 3. 5 1.4 0.1 0. 3 2.0 1. 5 3.0 3.1 3.0
Norway 2.8 2.7 1.1 1.1 3.1 2. 3 2.4 3. 2 2.7
Portugal 3.9 2.0 0.8 1.1 1. 2 0.4 1. 3 1. 5 1.7
Spain 5.0 3.6 2.7 3.0 3. 2 3. 5 3.7 3. 3 3.1
Sweden 4.4 1. 2 2.0 1.8 3. 3 2.7 4. 3 3.6 2.9
Switzerland 3.6 1.0 0. 3 0. 2 2. 3 1.9 3.0 2. 2 2.0
United Kingdom 3.8 2.4 2.1 2.7 3. 3 1.9 2.6 2.6 2.8
EU 15 3.9 1.9 1.1 1.1 2.0 1.6 2.7 2. 3 2.4
US 3.7 0.8 1.6 2. 5 3.9 3. 2 3. 3 2.4 2.7
Japan 2.9 0.4 0.1 1.8 2. 3 2.7 2.8 2.0 2.0
Table 1
Real GDP growth
in %, 20002008
Source: OECD, December 2006 * Estimates and projections
Table 2
Nominal GDP growth
in %, 20002008
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 4.4
Belgium 5.9 2.7 3. 3 2.6 5. 2 3.6 5.0 4. 2 3.8
Denmark 6.6 3. 2 2.8 2.7 4.1 5.9 5. 5 5.0 4. 5
Finland 7.9 5.7 2.9 1. 5 3.9 3.8 5.7 4.0 4. 3
France 5.6 3.8 3. 5 3.0 3.8 3.1 3.9 3.9 4. 2
Germany 2.8 2.6 1.4 0.8 1.6 1.7 3. 3 3. 5 3. 3
Greece 8.0 7.0 7.8 8.4 8. 3 7. 5 7. 3 7.0 7.1
Ireland 15.4 11.7 11. 3 6.9 6. 3 9. 2 8.0 8. 2 7.7
Italy 5.9 4.8 3.7 3. 2 3.8 2. 2 3.9 3. 3 3.7
Netherlands 7. 5 6.7 3.9 2. 5 2.7 3. 2 4. 3 4.0 5.0
Norway 19.1 3.9 0. 5 3.8 8.9 10.9 10. 3 5. 3 6.7
Portugal 7.1 5.8 4.7 1. 5 4.0 3.0 3. 3 3.4 3. 5
Spain 8.7 8.0 7.1 7. 3 7.4 7.8 7. 5 7.0 6.8
Sweden 5.8 3. 2 3.6 3.7 4.6 3.9 5.7 5.8 5.6
Switzerland 4.4 1.7 1.9 1.0 2.9 1.9 3.9 3. 2 3. 3
United Kingdom 5.1 4.6 5. 2 5.9 6.0 4.1 4.9 5. 2 4.9
EU 15 5.4 4. 3 3.7 3.4 4.1 3. 5 4.6 4.4 4. 5
US 5.9 3. 2 3.4 4.7 6.9 6. 3 6. 3 5.0 5.4
Japan 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. 3
Belgium 4. 5 3.1 1.9 2. 3 6.6 4.8 4.4 5.9 4. 2
Denmark 6.4 0. 3 0.6 0. 2 1. 3 8. 5 16.7 6. 5 5. 5
Finland 10. 2 10. 2 6.8 0. 5 2. 5 6.0 3. 3 4. 3 3.9
France 8. 5 3.4 3.1 1. 3 2.4 3. 5 4.4 4. 2 3.4
Germany 8.0 2.6 7.1 0.0 0.7 4. 2 8.0 5.4 3.1
Greece 10. 2 7.9 6. 3 15. 3 7.0 0.8 6. 2 5.8 6.0
Ireland 3.8 10.1 2.9 0. 2 7.6 23.6 6.6 11.9 9.9
Italy 8.0 2.1 5. 3 3.6 1.7 3.1 4. 5 5.4 3.6
Netherlands 1.0 2.9 7.6 1.0 2. 3 2.7 4.6 5.0 0.1
Norway 4.0 4.0 1. 5 2.8 8. 3 12.7 4.4 7. 3 2. 5
Portugal
1
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 4.9
Sweden 8. 2 2.9 7.1 1. 2 3.9 8.9 8.7 6. 2 5. 2
Switzerland 4.8 2.1 2.1 4. 2 5.4 3.7 6.8 5.0 3.1
United Kingdom 4. 5 1. 3 1. 2 2. 2 2. 3 3. 2 4.9 5.7 5.7
EU 15 7.1 1.1 1.7 0. 3 2. 2 3. 2 5.7 5. 2 4.1
US 8.7 4. 2 9. 2 1.0 5.9 6.8 7.6 5. 2 4.4
Japan 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 %,
20002008
Figure 1
Economic developments
in the EU 15, 19902008
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2007
% growth
10
8
6
4
2
0
2
4
6
8
10
12
Real GDP
Nominal GDP
GFCF*
Source: OECD * GFCF Gross Fixed Capital Formation
1
Source: OECD,
December 2005
187
Figure 2
in Japan, 19902008
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2007
% growth
Real GDP
Nominal GDP
GFCF*
15
10
5
0
5
10
15
Figure 3
in the US, 19902008
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2008 2007
% growth
Real GDP
Nominal GDP
GFCF*
15
10
5
0
5
10
15
188
Figure 4
Growth of gross private
non-residential fixed
capital formation
in the EU 15, the US
and Japan, 19902008
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 5
Growth of real gross
domestic product
in the EU 15, the US
and Japan, 19902008
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
% growth
EU 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 def initions 14.5.5.
exchange rates.
Table 5
Worldwide
telecommunications
market growth trends;
market value in
billion at constant
exchange rates.
bi l l ion 2004 2005 2006 2007 2008
Europe 298. 5 313.1 324.4 338.6 354. 5
US 310.0 327.6 347. 2 368. 2 388.9
Japan 123.8 127.6 129. 2 132.1 134. 2
Rest of World 103.6 113.8 126.0 138.9 152.4
Total 835.9 882.1 926.8 977.8 1,030.0
% growth
Europe 3.1 4.9 3.6 4.4 4.7
US 4. 2 5.7 6.0 6.0 5.6
Japan 1.9 3.1 1. 2 2. 3 1.6
Rest of World 4. 5 9.8 10.7 10. 3 9.7
Total 3.5 5.5 5.1 5.5 5.3
% breakdown
Europe 35.7 35. 5 35.0 34.6 34.4
US 37.1 37.1 37. 5 37.7 37.8
Japan 14.8 14. 5 13.9 13. 5 13.0
Rest of World 12.4 12.9 13.6 14. 2 14.8
Total 100.0 100.0 100.0 100.0 100.0
bi l l ion 2004 2005 2006 2007 2008
Europe 336. 2 347.7 355.6 360.9 365.0
US 215.1 221.1 227. 3 233.4 238. 3
Japan 152.8 155.1 157.0 157.4 157. 2
Rest of World 318. 3 344.1 366. 3 385. 3 404.1
Total 1,022.4 1,068.0 1,106.2 1,137.0 1,164.6
% growth
Europe 4.7 3.4 2. 3 1. 5 1.1
US 1. 2 2.8 2.8 2.7 2.1
Japan 2.4 1. 5 1. 2 0. 3 0.1
Rest of World 6.8 8.1 6. 5 5. 2 4.9
Total 4.2 4.5 3.6 2.8 2.4
% breakdown
Europe 32.9 32.6 32.1 31.7 31. 3
US 21.0 20.7 20. 5 20. 5 20. 5
Japan 14.9 14. 5 14. 2 13.8 13. 5
Rest of World 31.1 32. 2 33.1 33.9 34.7
Total 100.0 100.0 100.0 100.0 100.0
7. International ICT markets
190
Figure 6
by 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
growth trends;
market value in
billion at constant
exchange rates.
bi l l ion 2004 2005 2006 2007 2008
Europe 634.7 660.9 680.0 699. 5 719. 5
US 525.1 548.8 574.4 601. 5 627.1
Japan 276.6 282.7 286. 2 289. 5 291.4
Rest of World 421.9 457.8 492. 3 524. 2 556. 5
Total 1,858.3 1,950.2 2,032.9 2,114.7 2,194.5
% growth
Europe 4.0 4.1 2.9 2.9 2.9
US 2.9 4. 5 4.7 4.7 4. 3
Japan 2. 2 2. 2 1. 2 1. 2 0.7
Rest of World 6. 2 8. 5 7. 5 6. 5 6. 2
Total 3.9 4.9 4.2 4.0 3.8
% breakdown
Europe 34. 2 33.9 33.4 33.1 32.8
US 28. 3 28.1 28. 3 28.4 28.6
Japan 14.9 14. 5 14.1 13.7 13. 3
Rest of World 22.7 23. 5 24. 2 24.8 25.4
Total 100.0 100.0 100.0 100.0 100.0
Source: EITO in co-operation with IDC
191
Table 7
Worldwide ICT markets
by product, 2006 and
2008,
billion at constant
2005 exchanges rates*
exchange rates.
2006 EU
Other
Europe
US Japan
Rest of
World
World
ICT equipment 156.4 7.7 127. 5 99.0 161.1 551.7
Sof t ware 71. 5 4.1 89.9 22.7 18.6 206.8
IT ser vices 132.4 7.9 160. 5 50.1 46.1 396.9
Carrier ser vices 288.9 11.0 196.6 114.4 266.4 877.4
Total 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 98.6 190.7 599.4
Sof t ware 81. 2 4.7 105.6 24. 5 22. 5 238. 5
IT ser vices 147. 2 8.8 177.4 53.7 55.1 442. 2
Carrier ser vices 296.0 11.0 204.7 114.6 288. 2 914.6
Total 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. 2
Software 6. 5 6.8 8.4 3.9 9.8 7.4
IT services 5.4 5.4 5.1 3. 5 9.4 5. 5
Carrier services 1. 2 0.1 2.0 0.1 4.0 2.1
TotalICT 2.9 2.8 4.5 0.9 6.3 3.9
Table 8
Worldwide ICT markets
by product,
% average annual
growth by value,
20062008
192
Figure 8
World 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 10
EU 15 plus Norway
and Switzerland
IT market growth rates
in %, 19992008
Figure 9
World ICT markets,
average annual growth
in %, 20062008
5.0
4.0
3.0
2.0
1.0
0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
8.0
9.0
10.0
11.0
12.0
13.0
1999/98
10.8
12.1
1.0
1.9
3.4
4.4 4.5
4.2
3.3
2.6
2000/99 2001/00 2002/01 2003/02 2004/03 2005/04 2006/05 2008/07 2007/06
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
IT
Telecom
Total
194
Figure 12
European ICT market,
proportions
by class of business,
2006 and market
growth, 20062008

Figure 11
European IT market
by region, 2006
and market growth,
20062008
Other Europe** 5 %
ITmarketproportions,2006
Top 5*
71 %
Other EU***
24 %
ITmarketgrowth,CAGR20062008
%
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
Total value = 324 billion
Computer hardware
12 %
ICTmarketproportions,2006
Software
11 %
Carrier services
44 %
ICTmarketgrowth,CAGR20062008
%
Office
equipment
End-user commu-
nications equipment
Carrier
services
Computer
hardware
Software
Datacom and
network equipment
IT services
Datacom and
network equipment
6 %
IT services
21 %
Office equipment
1 %
End-user
communications
equipment
4 %
Total value = 680 billion
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 of
Internet hosts, millions,
20002006
Source: Internet Software Consortium (www.isc.org/)
439
93
110
126
147
162
172
209
233
285
318
353
395
Jul 06 Jan 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
196
United Ki ngdom 2004 2005 2006 2007 2005/04
%
2006/05
%
2007/06
%
Total IT 60.7 64.1 66. 3 69.7 5. 5 3.6 5.0
Total telecommunications 54. 3 55.9 57. 3 57.6 3.0 2.6 0. 5
Total ICT* 115.0 120.0 123.7 127. 3 4.4 3.1 2.9
Total digital CE** 7.4 9.8 12.0 13.1 32.1 22. 5 9.4
TotalICTanddigitalCE 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
%
Total IT 50. 5 53. 3 54.9 57.4 5.4 3.1 4.6
Total telecommunications 40.4 41. 3 41.8 42. 5 2. 2 1. 2 1.7
Total ICT* 90.9 94. 5 96.7 99.9 4.0 2. 3 3. 3
Total digital CE** 6.0 6.8 8.1 8.6 13.7 18.8 7. 2
* May not add up
due to rounding.
** Source: EITO in
co-operation with Gf K
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. 5
Total telecommunications 64.8 66.1 66. 2 66.0 1.9 0. 2 - 0. 3
Total ICT* 128.6 131.8 133.8 136.0 2. 5 1. 5 1.6
Total digital CE** 6.9 8.7 10.1 10.7 26.0 16. 2 6. 5
Table 10
Germany,
ICT and digital CE
Italy 2004 2005 2006 2007 2005/04
%
2006/05
%
2007/06
%
Total IT 24.6 24.9 25. 2 25.8 1.0 1. 5 2.1
Total telecommunications 42.7 44. 2 45. 2 46.0 3.6 2.1 1.9
Total ICT* 67. 3 69.1 70.4 71.8 2.7 1.9 2.0
Total digital CE** 3.7 4.6 4.7 4.8 24. 5 2.8 2. 2
Table 11
Italy,
ICT and digital CE
Spai n 2004 2005 2006 2007 2005/04
%
2006/05
%
2007/06
%
Total IT 11.9 12.9 13.7 14. 5 8. 2 6. 2 6.1
Total telecommunications 28. 3 30.1 31. 3 31.9 6.6 4.0 1.7
Total ICT* 40. 2 43.0 45.0 46.4 7.1 4.6 3.1
Total digital CE** 3. 3 4.1 4.8 5.1 26.0 15. 5 6.1
Table 12
Spain,
ICT and digital CE
Table 13
United Kingdom,
ICT and digital CE
8. Major European ICT and digital CE markets
* May not add up
due to rounding.
** Source: EITO in
* May not add up
due to rounding.
** Source: EITO in
* May not add up
due to rounding.
** Source: EITO in
* May not add up
due to rounding.
** Source: EITO in
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
Belgium/
Luxembourg 9,600 9,741 9,762 9,880 9,998 1.5 0.2 1.2 1.2
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
EU 15 + Norway
and Switzerland 312,358 321,380 326,966 330,362 332,928 2.9 1.7 1.0 0.8
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
Belgium/
Luxembourg 17,714 18,159 18,496 19,071 19,691 2.5 1.9 3.1 3.3
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
EU 15 + Norway
and Switzerland 600,000 621,655 637,020 653,305 670,296 3.6 2.5 2.6 2.6
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 1.1
T
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n
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
equipment 7,308 7,222 7,119 7,029 6,948 1.2 1.4 1.3 1.1
Copiers 4,226 4,306 4,373 4,429 4,472 1.9 1.6 1.3 1.0
equipment and transmission 11,009 10,967 10,951 10,986 10,972 0.4 0.2 0.3 0.1
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
T
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* 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
equipment 6,738 6,665 6,574 6,488 6,413 1.1 1.4 1.3 1.2
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
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
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l
i
o
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
equipment 7,017 6,947 6,857 6,774 6,701 1.0 1.3 1.2 1.1
Copiers 4,250 4,336 4,410 4,478 4,535 2.0 1.7 1.6 1.3
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
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l
i
o
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
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
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
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
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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
Mobile telephone sets 832 837 816 922 1,018 0.5 2.5 13.0 10.4
equipment 227 226 224 222 221 0.8 0.7 0.8 0.6
Copiers 138 137 135 134 134 1.0 1.5 0.4 0.3
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
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
T
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2
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,

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l
i
o
n
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
equipment 84 82 80 78 77 2.6 1.9 2.1 1.7
Copiers 101 106 110 113 116 5.2 3.6 3.2 2.6
Transmission 214 222 228 235 241 3.6 2.8 3.1 2.5
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
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
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l
i
o
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
equipment 65 64 64 64 63 1.2 0.4 0.5 0.4
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
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
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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
equipment 1,239 1,205 1,179 1,151 1,129 2.7 2.2 2.4 1.9
Copiers 885 909 925 946 963 2.7 1.8 2.3 1.8
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
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
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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
equipment 1,302 1,237 1,169 1,100 1,036 5.0 5.5 5.9 5.8
Copiers 810 810 826 826 826 0.0 2.0 0.0 0.0
Transmission 590 614 626 632 639 4.0 2.0 1.0 1.0
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
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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
equipment 141 149 157 166 173 6.0 5.1 5.6 4.5
Copiers 48 49 49 50 50 2.3 0.9 1.4 1.1
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
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,

m
i
l
l
i
o
n
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
Computer hardware 909 950 998 1,017 1,049 4.5 5.0 1.9 3.2
equipment 57 60 63 67 70 5.5 5.1 5.7 4.5
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
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m
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l
i
o
n
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
equipment 869 844 808 776 751 2.8 4.2 4.0 3.2
Copiers 534 535 534 535 536 0.2 0.1 0.2 0.1
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
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
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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
equipment 243 249 253 259 263 2.3 1.9 2.1 1.7
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
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m
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l
i
o
n
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
equipment 79 80 80 81 81 0.9 0.8 0.8 0.7
Copiers 89 92 93 94 95 2.5 1.3 1.4 1.1
Transmission 137 142 147 152 156 4.1 3.2 3.6 2.9
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
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
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m
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l
i
o
n
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
equipment 157 161 165 169 173 2.6 2.3 2.6 2.1
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
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m
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l
i
o
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
equipment 673 665 659 652 647 1.3 0.9 1.0 0.8
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
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v
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,

m
i
l
l
i
o
n
217
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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
equipment 332 331 331 331 330 0.3 0.1 0.1 0.1
Copiers 112 118 123 128 132 5.0 4.1 4.0 3.2
Transmission 129 131 134 136 138 2.0 1.6 1.8 1.4
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
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
equipment 200 202 203 205 207 1.0 0.8 0.9 0.7
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
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
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m
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n
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
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
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
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
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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
equipment 16 16 15 15 14 2.6 2.3 1.1 3.5
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
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
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,

m
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i
o
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
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
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
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
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,

m
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l
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o
n
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
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
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
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o
n
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
equipment 37 37 37 37 37 0.4 1.3 1.0 0.8
Copiers 39 37 37 37 37 4.1 0.5 0.0 1.4
LAN hardware 50 60 65 66 67 19.5 7.9 2.2 1.9
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
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,

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o
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
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
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
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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
equipment 17 16 16 16 16 1.5 0.1 0.6 2.1
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
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
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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
equipment 344 333 322 317 315 3.0 3.3 1.5 0.8
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
LAN hardware 90 96 97 99 100 7.0 1.3 2.0 0.7
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
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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
equipment 75 73 72 72 71 1.6 1.2 0.5 1.9
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
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
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
T
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C
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e
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v
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e
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m
i
l
l
i
o
n
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
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
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
T
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5

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C
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,

m
i
l
l
i
o
n
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
equipment 12 12 12 12 12 0.6 0.6 0.3 1.2
Copiers 7 7 7 7 7 4.1 2.1 1.6 3.3
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
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
T
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e

4
6

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m
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l
i
o
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 4.3
Workstations 47,468 38,032 26,726 21,630 20,471 19.9 29.7 19.1 5.4
PCs 43,708,414 51,324,592 55,359,236 60,666,179 66,178,405 17.4 7.9 9.6 9.1
Printers/MFPs 34,084,683 37,056,584 37,817,228 38,522,191 39,075,955 8.7 2.1 1.9 1.4
LAN 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 4.5
Workstations 45,890 36,371 24,531 20,080 18,920 20.7 32.6 18.1 5.8
PCs 41,734,116 49,001,678 53,014,369 58,226,366 63,559,512 17.4 8.2 9.8 9.2
Printers/MFPs 32,777,758 35,604,863 36,330,593 37,005,039 37,527,343 8.6 2.0 1.9 1.4
LAN 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 4.4
Workstations 44,855 35,297 23,623 19,273 18,179 21.3 33.1 18.4 5.7
PCs 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 14.0
Desktop 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 0.8
LAN 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
units
Table 47
Europe
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 4.1
Workstations 46,433 36,958 25,818 20,823 19,730 20.4 30.1 19.3 5.2
PCs 40,350,810 46,957,761 50,242,350 55,106,860 60,088,579 16.4 7.0 9.7 9.0
Portable 15,112,033 19,823,064 23,838,623 27,932,985 31,775,669 31.2 20.3 17.2 13.8
Desktop 25,238,777 27,134,697 26,403,727 27,173,875 28,312,910 7.5 2.7 2.9 4.2
Printers/MFPs 31,158,355 33,624,634 34,015,271 34,448,053 34,756,135 7.9 1.2 1.3 0.9
LAN cards 37,033,597 46,038,047 58,434,350 71,484,945 82,565,423 24.3 26.9 22.3 15.5
Table 50
EU 15 plus Norway and
Switzerland
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 7.3
Workstations 249 165 173 173 141 33.7 4.8 0.0 18.5
PCs 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 15.0
Desktop 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 2.0
LAN 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 15.4
Workstations 872 412 310 288 295 52.8 24.8 7.1 2.4
PCs 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 17.8
Desktop 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 1.1
LAN 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 1.2
Workstations 192 121 103 114 86 37.0 14.9 10.7 24.6
PCs 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 3.0
Desktop 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 1.7
LAN cards 585,105 725,862 919,971 1,122,678 1,292,283 24.1 26.7 22.0 15.1
Table 53
Denmark
units
Table 52
Belgium/Luxembourg
units
Table 51
Austria
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 5.1
Workstations 431 301 129 141 74 30.2 57.1 9.3 47.5
PCs 680,753 841,611 865,601 891,261 934,700 23.6 2.9 3.0 4.9
Portable 255,237 387,679 445,094 494,761 532,300 51.9 14.8 11.2 7.6
Desktop 425,516 453,932 420,507 396,500 402,400 6.7 7.4 5.7 1.5
Printers/MFPs 392,543 398,448 409,657 411,557 410,618 1.5 2.8 0.5 0.2
LAN cards 447,521 541,403 695,504 846,856 973,042 21.0 28.5 21.8 14.9
Table 54
Finland
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 4.5
Workstations 9,384 9,181 7,029 5,375 6,213 2.2 23.4 23.5 15.6
PCs 6,736,971 8,103,535 8,748,054 9,699,658 10,589,047 20.3 8.0 10.9 9.2
Portable 2,301,876 3,025,305 3,685,779 4,397,380 5,044,920 31.4 21.8 19.3 14.7
Desktop 4,435,095 5,078,230 5,062,275 5,302,278 5,544,127 14.5 0.3 4.7 4.6
Printers/MFPs 4,989,391 5,357,532 5,468,456 5,591,557 5,670,949 7.4 2.1 2.3 1.4
LAN cards 4,103,194 5,027,479 6,375,408 8,053,177 9,531,264 22.5 26.8 26.3 18.4
Table 55
France
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 3.3
Workstations 16,024 12,228 8,798 7,223 6,265 23.7 28.1 17.9 13.3
PCs 8,352,413 9,091,467 9,236,588 9,995,558 11,016,752 8.8 1.6 8.2 10.2
Portable 3,271,431 3,893,841 4,380,815 5,041,478 5,843,147 19.0 12.5 15.1 15.9
Desktop 5,080,982 5,197,626 4,855,773 4,954,080 5,173,605 2.3 6.6 2.0 4.4
Printers/MFPs 7,137,936 7,732,926 7,749,584 7,779,826 7,783,754 8.3 0.2 0.4 0.1
LAN cards 10,822,313 13,141,221 16,624,384 20,199,170 23,269,115 21.4 26.5 21.5 15.2
Table 56
Germany
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 4.3
Workstations 168 68 37 39 31 59.5 45.6 5.4 20.5
PCs 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 19.5
Desktop 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 1.9
LAN cards 191,490 257,327 365,713 487,123 601,950 34.4 42.1 33.2 23.6
Table 57
Greece
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 10.5
Workstations 58 98 60 37 68 69.0 38.8 38.3 83.8
PCs 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 15.6
Desktop 359,785 404,208 441,636 497,329 526,580 12.3 9.3 12.6 5.9
Printers/MFPs 273,351 293,581 311,961 319,699 326,011 7.4 6.3 2.5 2.0
LAN cards 68,048 90,108 107,596 131,497 151,541 32.4 19.4 22.2 15.2
Table 58
Ireland
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 5.8
Workstations 527 420 241 198 286 20.3 42.6 17.8 44.4
PCs 744,739 935,115 1,011,876 994,810 1,025,100 25.6 8.2 1.7 3.0
Portable 353,073 503,585 624,236 639,710 665,600 42.6 24.0 2.5 4.0
Desktop 391,666 431,530 387,640 355,100 359,500 10.2 10.2 8.4 1.2
Printers/MFPs 505,098 579,646 582,109 588,015 594,930 14.8 0.4 1.0 1.2
LAN cards 587,251 742,875 904,682 1,104,870 1,272,570 26.5 21.8 22.1 15.2
Table 61
Norway
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 2.9
Workstations 2,269 1,793 654 479 309 21.0 63.5 26.8 35.5
PCs 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 25.0
Desktop 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 0.3
LAN 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
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 3.2
Workstations 2,169 1,677 1,149 1,153 542 22.7 31.5 0.3 53.0
PCs 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 9.2
Desktop 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 0.3
LAN 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
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 12.0
Workstations 131 136 90 74 58 3.8 33.8 17.8 21.6
PCs 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 9.4
Desktop 361,948 353,857 322,318 338,678 338,690 2.2 8.9 5.1 0.0
Printers/MFPs 569,344 633,046 653,227 672,782 686,571 11.2 3.2 3.0 2.0
LAN cards 232,795 292,683 388,498 500,193 601,230 25.7 32.7 28.8 20.2
Table 62
Portugal
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 2.4
Workstations 1,051 1,241 1,954 1,352 1,265 18.1 57.5 30.8 6.4
PCs 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 14.1
Desktop 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 2.6
LAN 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
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 2.0
Workstations 4,067 2,709 1,429 1,156 1,064 33.4 47.2 19.1 8.0
PCs 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 8.7
Desktop 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 2.0
LAN 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
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 9.2
Workstations 1,375 1,723 1,475 1,239 1,214 25.3 14.4 16.0 2.0
PCs 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 12.9
Desktop 1,696,900 2,052,178 2,207,742 2,336,155 2,380,353 20.9 7.6 5.8 1.9
Printers/MFPs 2,559,944 2,776,087 2,885,767 2,957,600 3,013,431 8.4 4.0 2.5 1.9
LAN cards 1,160,596 1,461,676 1,960,576 2,472,143 2,921,693 25.9 34.1 26.1 18.2
Table 63
Spain
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 2.6
Workstations 7,466 4,685 2,187 1,782 1,819 37.2 53.3 18.5 2.1
PCs 8,471,000 9,606,775 10,157,945 11,566,047 12,595,259 13.4 5.7 13.9 8.9
Portable 2,877,699 3,795,826 4,561,211 5,610,683 6,397,429 31.9 20.2 23.0 14.0
Desktop 5,593,301 5,810,949 5,596,734 5,955,364 6,197,830 3.9 3.7 6.4 4.1
Printers/MFPs 5,652,370 6,283,502 6,319,982 6,413,274 6,488,186 11.2 0.6 1.5 1.2
LAN cards 11,498,336 14,528,090 18,427,655 22,307,472 25,511,764 26.3 26.8 21.1 14.4
Table 66
United Kingdom
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 14.9
Workstations 33 24 19 12 11 27.3 20.8 36.8 8.3
PCs 122,997 197,682 200,104 248,849 277,863 60.7 1.2 24.4 11.7
Printers/MFPs 109,474 137,701 141,164 158,400 172,105 25.8 2.5 12.2 8.7
LAN cards 47,178 53,895 60,362 67,183 73,230 14.2 12.0 11.3 9.0
Table 67
Bulgaria
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 12.6
Workstations 32 18 13 8 6 43.8 27.8 38.5 25.0
PCs 99,695 126,311 140,916 154,199 165,510 26.7 11.6 9.4 7.3
Printers/MFPs 42,564 46,656 51,919 55,512 58,374 9.6 11.3 6.9 5.2
LAN cards 42,495 45,200 47,550 49,690 51,727 6.4 5.2 4.5 4.1
Table 69
Estonia
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 3.1
Workstations 340 321 287 299 283 5.6 10.6 4.2 5.4
PCs 491,310 600,516 679,350 752,067 821,266 22.2 13.1 10.7 9.2
Printers/MFPs 465,680 515,992 550,539 578,896 604,145 10.8 6.7 5.2 4.4
LAN cards 316,553 341,244 358,989 376,938 391,262 7.8 5.2 5.0 3.8
Table 68
Czech Republic
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 4.0
Workstations 138 181 114 115 101 31.2 37.0 0.9 12.2
PCs 372,533 435,113 475,578 527,496 570,268 16.8 9.3 10.9 8.1
Printers/MFPs 384,629 424,068 471,201 509,984 544,234 10.3 11.1 8.2 6.7
LAN cards 245,756 267,874 291,179 315,347 334,899 9.0 8.7 8.3 6.2
Table 70
Hungary
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 20.3
Workstations 18 24 15 4 4 33.3 37.5 73.3 0.0
PCs 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
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 2.4
Workstations 201 328 312 215 192 63.2 4.9 31.1 10.7
PCs 1,306,369 1,779,875 2,191,074 2,248,635 2,400,947 36.2 23.1 2.6 6.8
Printers/MFPs 1,156,044 1,328,148 1,502,272 1,602,999 1,709,638 14.9 13.1 6.7 6.7
LAN 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
units
Lithuania 2004 2005 2006 2007 2008 2005/04
%
2006/05
%
2007/06
%
2008/07
%
Servers 2,562 3,055 3,602 4,288 5,208 19.2 17.9 19.0 21.5
Workstations 41 7 5 3 2 82.9 28.6 40.0 33.3
PCs 108,823 167,248 206,241 229,556 269,260 53.7 23.3 11.3 17.3
Printers/MFPs 111,193 146,826 164,738 175,320 184,072 32.0 12.2 6.4 5.0
LAN cards 48,543 54,003 59,619 65,045 71,159 11.2 10.4 9.1 9.4
Table 72
Lithuania
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 1.7
Workstations 81 55 59 56 52 32.1 7.3 5.1 7.1
PCs 144,204 153,840 166,718 160,895 169,313 6.7 8.4 3.5 5.2
Printers/MFPs 116,870 127,856 135,630 143,193 149,814 9.4 6.1 5.6 4.6
LAN cards 72,023 80,125 88,378 95,448 100,889 11.2 10.3 8.0 5.7
Table 76
Slovenia
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 13.3
Workstations 94 68 50 63 59 27.7 26.5 26.0 6.3
PCs 204,594 213,525 246,326 279,405 313,201 4.4 15.4 13.4 12.1
Printers/MFPs 167,348 205,899 226,875 242,455 257,546 23.0 10.2 6.9 6.2
LAN cards 96,623 102,530 110,527 119,480 128,441 6.1 7.8 8.1 7.5
Table 75
Slovakia
units
Romania 2004 2005 2006 2007 2008 2005/04
%
2006/05
%
2007/06
%
2008/07
%
Servers 8,976 12,976 13,401 17,591 20,081 44.6 3.3 31.3 14.2
Workstations 57 48 34 32 31 15.8 29.2 5.9 3.1
PCs 430,254 595,292 682,293 803,337 927,459 38.4 14.6 17.7 15.5
Printers/MFPs 311,942 407,122 455,558 497,754 523,859 30.5 11.9 9.3 5.2
LAN cards 143,247 165,000 187,110 211,434 237,864 15.2 13.4 13.0 12.5
Table 74
Romania
units
237
11. ICT trade fows
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-
sions 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.
238
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 77
EU*
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 78
France
thousand
239
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
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
thousand
240
Table 81
Spain
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
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
241
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.
242
Table 83
France
Market structures and
penetration of ICT
France 2003 2004 2005
Industry leaders 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 () 827 847 888
ICT market versus GDP 5.54 % 5.47 % 5.51 %
Per capita ICT expenditure () 1,486 1,523 1,577
Germany 2003 2004 2005
Software 10.1 % 11.3 % 11.8 %
Services 14.3 % 14.6 % 14.1 %
Table 84
Germany
penetration of ICT
Table 85
Italy
penetration of ICT
Italy 2003 2004 2005
Software 15.4 % 17.3 % 18.6 %
Services 14.4 % 14.2 % 15.8 %
Spain 2003 2004 2005
Software 14.2 % 15.4 % 16.2 %
Services 13.5 % 15.3 % 16.0 %
Per capita ICT expenditure () 944 1,017 1,088
Table 86
Spain
penetration of ICT
243
United Kingdom 2003 2004 2005
Software 12.1 % 13.2 % 13.4 %
Services 14.8 % 13.7 % 13.6 %
Per capita IT expenditure () 987 1,017 1,070
Table 87
United Kingdom
penetration of ICT
Table 88 (left)
Per capita
IT expenditure,
Table 89 (right)
IT expenditure
as % of GDP
2003 2004 2005 2006
Austria 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 291 302 326 345
Sweden 1,199 1,192 1,246 1,277
UK 987 1,017 1,070 1,104
Bulgaria 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 15 703 717 747 770
Norway 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 2006
Austria 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
244
Table 90 (left)
Per capita
telecommunications
expenditure,
Table 91 (right)
Telecommunications
expenditure
as % of GDP
2003 2004 2005 2006
Austria 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 757 785 800 801
Greece 533 552 569 585
Ireland 940 972 984 990
Italy 709 740 766 781
Netherlands 930 952 970 984
Portugal 585 611 634 643
Spain 653 716 762 791
Sweden 1,115 1,156 1,170 1,196
UK 879 909 934 955
Bulgaria 134 176 193 210
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 642 672 694 709
EU 15 762 792 814 826
Norway 860 890 895 899
Switzerland 1,166 1,200 1,219 1,227
EU 15 plus Norway
and Switzerland 771 801 822 835
Europe 652 681 704 718
US 737 740 755 769
Japan 1,172 1,197 1,214 1,228
2003 2004 2005 2006
Austria 3.20 3.17 3.11 3.04
Denmark 3.05 3.03 2.94 2.82
Finland 3.06 3.00 2.95 2.83
France 2.46 2.43 2.41 2.34
Germany 2.89 2.93 2.94 2.85
Greece 3.64 3.48 3.34 3.20
Ireland 2.66 2.58 2.42 2.28
Italy 3.06 3.07 3.11 3.06
Netherlands 3.13 3.14 3.12 3.05
Portugal 4.30 4.31 4.35 4.29
Spain 3.30 3.36 3.32 3.21
Sweden 3.68 3.66 3.62 3.51
UK 3.26 3.12 3.11 3.04
Bulgaria 5.80 6.70 6.93 7.11
Czech Republic 4.02 3.91 4.22 4.39
Estonia 6.06 6.38 6.72 6.80
Hungary 4.73 4.87 4.93 4.99
Latvia 6.21 6.80 7.37 7.55
Lithuania 3.82 4.77 4.85 4.96
Poland 4.42 4.59 4.83 5.04
Romania 4.19 5.06 5.80 6.25
Slovakia 4.19 4.02 4.17 4.25
Slovenia 3.07 3.20 3.51 3.57
EU 3.10 3.09 3.09 3.03
EU 15 3.03 3.01 3.00 2.92
Norway 1.97 1.96 1.71 1.56
Switzerland 2.96 3.02 3.03 2.95
EU 15 plus Norway
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
245
Table 92 (left)
Per capita
ICT expenditure,
Table 93 (right)
ICT expenditure
as % of GDP
2003 2004 2005 2006
Austria 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 832 864 898 915
Spain 944 1,017 1,088 1,136
Sweden 2,314 2,348 2,416 2,473
UK 1,865 1,925 2,003 2,059
Bulgaria 168 215 247 268
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 1,344
EU 15 1,465 1,510 1,561 1,597
Norway 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 1,374
US 1,769 1,807 1,873 1,943
Japan 2,126 2,167 2,212 2,238
2003 2004 2005 2006
Austria 6.06 5.97 5.92 5.80
Denmark 6.40 6.35 6.23 6.03
Finland 6.34 6.26 6.22 6.03
France 5.54 5.47 5.51 5.43
Germany 5.81 5.82 5.87 5.76
Greece 4.86 4.63 4.45 4.29
Ireland 4.28 4.19 3.96 3.79
Italy 4.89 4.84 4.86 4.77
Netherlands 6.43 6.40 6.41 6.36
Portugal 6.12 6.09 6.16 6.10
Spain 4.77 4.77 4.74 4.61
Sweden 7.64 7.43 7.47 7.25
UK 6.93 6.62 6.68 6.57
Bulgaria 7.23 8.22 8.88 9.07
Czech Republic 6.71 6.67 7.23 7.58
Estonia 8.36 9.11 9.61 9.66
Hungary 6.82 7.24 7.38 7.48
Latvia 8.11 8.91 9.66 9.89
Lithuania 5.12 6.28 6.52 6.72
Poland 6.09 6.52 7.18 7.62
Romania 5.45 6.66 7.70 8.38
Slovakia 6.24 6.16 6.51 6.73
Slovenia 5.00 5.29 5.65 5.75
EU 5.85 5.79 5.83 5.74
EU 15 5.83 5.74 5.75 5.64
Norway 4.73 4.74 4.23 3.93
Switzerland 6.80 6.70 6.77 6.64
EU 15 plus Norway
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
246
13. Appendix
Main lines 2005 2006 2007 2008 2009 2010
CAGR %
20052010
Denmark 3,420 3, 300 3,168 3,042 2,935 2,832 3.7
Finland 2,135 2,050 1,972 1,897 1,830 1,766 3.7
France 33,600 32,928 32, 269 31,463 30,676 29,909 2. 3
Germany 55,050 55, 325 55,049 54, 223 53, 301 52, 235 1.0
Italy 25,815 25, 247 24,489 23,755 22,971 22, 213 3.0
Norway 2,160 2,128 2,096 2,064 2,033 2,003 1. 5
Spain 18, 315 18, 315 18,132 17,860 17, 574 17, 293 1.1
Sweden 6,440 6, 279 6,122 5,969 5,850 5,733 2. 3
Switzerland 5,152 5,049 4,948 4,849 4,771 4,695 1.8
United Kingdom 33,730 32,988 32,064 31,102 30,169 29, 264 2.8
Other Western Europe
1
53, 500 52, 537 51, 381 50,097 48,844 47,623 2. 3
Western Europe
1
239,317 236,146 231,691 226,320 220,956 215,567 2.1
Eastern Europe
2
94,415 93,282 92,069 90,965 89,873 88,794 1.2
Total Europe 333,732 329,428 323,760 317,285 310,829 304,361 1.8
USA 175, 520 171,132 166,854 161,848 157,802 153,857 2.6
Japan 58, 544 57,080 55, 368 53,707 52, 364 51,055 2.7
Rest of World 705,735 744,550 780,288 813,841 846,394 873,479 4.4
World 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 %
20052010
Denmark 825 998 1,108 1,158 1, 204 1, 246 8.6
Finland 1,020 1, 260 1,423 1, 523 1, 592 1,631 9.8
France 8,915 11,411 13,408 14,414 15,134 15,816 12.1
Germany 10, 344 14,068 17,022 19,405 21,152 22,632 17.0
Italy 6, 388 8, 241 9,889 11, 372 12, 509 13, 510 16. 2
Norway 817 989 1,087 1,169 1, 257 1, 326 10. 2
Spain 3,867 5,124 6, 251 7, 314 8,155 8,807 17.9
Sweden 1, 243 1,678 2,047 2, 344 2, 508 2,621 16.1
Switzerland 1,088 1, 398 1, 552 1,653 1,744 1,822 10.9
United Kingdom 7, 258 10,887 12, 574 13,832 14,800 15,466 16. 3
1
5,915 7,689 8,920 9,811 10,498 11,023 13. 3
Western Europe
1
47,680 63,742 75,282 83,995 90,553 95,901 15.0
Eastern Europe
2
3,116 5,173 7,500 9,750 11,700 13,455 34.0
Total Europe 50,796 68,915 82,782 93,745 102,253 109,356 16.6
USA 19, 525 23,821 27, 274 30,684 34,059 36,784 13. 5
Japan 13,990 14,800 12,800 10, 500 7, 500 5, 500 17.0
Rest of World 54,247 64,554 75,528 84,969 91,341 96,822 12.3
World 138,558 172,089 198,384 219,897 235,153 248,462 12.4
Main lines
Telephone lines connecting
the subscribers terminal
equipment to the public
switched network and having
a dedicated port in the tele
phone exchange equip
ment (including ISDN B
channels, Centrex lines and
cable telephony lines,
without cellular mobile)
Table 94
Main lines, thousands
Source: EITO Task Force
1
Includes also Turkey
2
Geographical demarcation
Table 95
ADSL lines, thousands
ADSL lines
Asynchronous broadband
Internet access via twisted
pair telephony
1
2
247
Mobile subscriptions 2005 2006 2007 2008 2009 2010
CAGR %
20052010
Denmark 5,461 5,761 5,992 6,190 6, 344 6,471 3. 5
Finland 5, 213 5, 369 5,476 5, 582 5,682 5,773 2.1
France 46,704 48,105 49, 308 50, 541 51,653 52,686 2.4
Germany 79, 200 84, 586 88, 392 91,044 93,047 94,722 3.6
Italy 69,032 72, 208 74,157 76,159 77, 302 78,461 2.6
Norway 4,990 5,090 5,166 5, 233 5, 301 5, 354 1.4
Spain 41,454 44,126 45,803 47,086 48,027 48,748 3. 3
Sweden 10,101 10,455 10,789 11,091 11, 369 11, 596 2.8
Switzerland 6,805 7,091 7, 304 7,457 7, 561 7,637 2. 3
United Kingdom 65,792 67,964 69,459 70,709 71,770 72,631 2.0
1
101,084 106,946 111, 224 114,895 117,767 120, 240 3. 5
Western Europe
1
435,836 457,700 473,070 485,986 495,823 504,319 3.0
Eastern Europe
2
267,627 326,504 368,950 394,777 410,568 418,779 9.4
Total Europe 703,462 784,205 842,020 880,762 906,390 923,098 5.6
USA 205,852 223,143 238,763 252, 373 263,730 272,960 5.8
Japan 91,982 95,753 98,817 101,400 103,732 105,807 2.8
Rest of World 1,216,687 1,581,693 1,898,032 2,182,737 2,422,838 2,592,436 16.3
World 2,217,983 2,684,794 3,077,632 3,417,272 3,696,690 3,894,301 11.9
Table 96
Cable modem
subscriptions, thousands
1
2
Table 97
Mobile subscriptions,
thousands
Mobile subscriptions
(digital and analogue)
Analogue and digital cellular
mobile radio subscriptions
including pre-paid
1
2
Cable modem
subscriptions
2005 2006 2007 2008 2009 2010
CAGR %
20052010
Denmark 385 530 560 585 605 625 10. 2
Finland 146 165 170 175 180 185 4.8
France 514 540 555 570 580 590 2.8
Germany 240 500 1,000 1,600 2, 200 2,800 63. 5
Italy 0 0 0 0 0 0 0.0
Norway 149 185 220 250 265 280 13.4
Spain 1,154 1, 500 1,875 2,063 2, 269 2,496 16.7
Sweden 292 317 340 365 390 410 7.0
Switzerland 619 743 780 815 870 930 8. 5
United Kingdom 2,600 3, 200 3,600 3,900 4,150 4,400 11.1
1
3, 520 4,000 4,400 4,800 5, 200 5,600 9.7
Western Europe
1
9,619 11,680 13,500 15,123 16,709 18,316 13.7
Eastern Europe
2
1,600 2,400 3,200 3,800 4,300 4,800 24.6
Total Europe 11,219 14,080 16,700 18,923 21,009 23,116 15.6
USA 25, 220 29,003 32,193 34,769 36,855 38, 329 8.7
Japan 3, 250 3,650 4,000 4, 350 4,700 5,000 9.0
Rest of World 11,923 13,419 14,798 16,268 16,926 17,399 7.9
World 51,612 60,152 67,692 74,310 79,490 83,844 10.2
248
Internet users 2005 2006 2007 2008 2009 2010
CAGR %
20052010
Denmark 4,035 4,156 4, 239 4, 282 4, 325 4, 368 1.6
Finland 3,699 3,914 4,099 4, 246 4, 382 4,491 4.0
France 30,415 32,972 35,492 37,897 39,867 41,462 6.4
Germany 47,031 49,618 51,602 53,408 55,171 56, 550 3.8
Italy 31, 250 33,750 36,113 38, 280 40,194 42, 203 6. 2
Norway 3, 213 3, 342 3,442 3, 545 3,616 3,688 2.8
Spain 16, 510 17, 555 18,601 19, 570 20, 289 20,898 4.8
Sweden 6,760 6,915 7,082 7, 242 7, 394 7, 542 2. 2
Switzerland 4,402 4,607 4,815 5,005 5,181 5, 337 3.9
United Kingdom 40,054 41, 581 42,997 44,720 46,120 47, 273 3.4
1
44, 233 46, 514 48,916 51, 252 53, 341 54,941 4.4
Western Europe
1
231,602 244,923 257,399 269,446 279,879 288,753 4.5
Eastern Europe
2
47,033 56,979 67,263 77,144 86,705 94,508 15.0
Total Europe 278,635 301,901 324,663 346,590 366,584 383,261 6.6
USA 208,899 223, 522 236,933 248,780 258,731 266,493 5.0
Japan 76,990 80, 220 84, 545 88,845 92,040 94,801 4. 2
Rest of World 473,714 529,250 583,236 643,293 704,005 756,805 9.8
World 1,038,238 1,134,893 1,229,376 1,327,507 1,421,359 1,501,360 7.7
1
2
Table 98
Internet users
(wire-based), thousands
Internet users (wire-based)
The number of wirebased
users includes all users of
the 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 and
intranetonly users.
249
14. Defnitions
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.
250
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.
251
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 systems 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.
252
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.
253
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.
254
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.
255
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 clients 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.
257
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.
258
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 leaders 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 leaders 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 84.6984.72
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
259
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)
260
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 220229, 255f
Asymmetric Digital Subscriber
Line (see ADSL)
ATM (Asynchronous Transfer
Mode) 252
Audio
A. home systems 161, 163,
169175
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
B2G (Business-to-Govern-
ment) 22, 92f, 101, 118, 152
Baltic States (see also Estonia,
Latvia, Lithuania)
% of GDP 243ff
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
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT penetration 79
BI (Business Intelligence)
52, 73
BPM (Business Performance
Management) 73
Broadband
B. services 18f, 76
B. subscribers 53
Bulgaria
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT market trends 64
IT penetration 79
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, 200229, 256
Cathode Ray Tube TV
(see CRT TV)
CaTV (Cable TV) services 76,
200229, 257
CDMA (Code Division
Multiple Access) 252
CE (Consumer Electronics)
18, 159175, 196
Cellular mobile infrastructure
70
Code Division Multiple
Access (see CDMA)
Communications equipment
44f, 48, 50, 54, 56, 68, 190,
194, 200229, 252f
Compound Annual Growth
Rate (see CAGR)
Computer hardware 44, 52,
54, 60, 62, 64f, 68, 190, 194,
200229, 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
% of GDP 243ff
per capita 243ff
ICT market trends 58f
IT/GDP 79f
IT penetration 79
DAB (Digital Audio
Broadcasting) 161
Datacom and network
equipment 44f, 69, 71f, 190,
194, 200229, 252
Definition(s) 21f, 31f, 39, 93,
175, 249
Denmark
ADSL lines 246
247
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79f
IT penetration 79
Main lines 246
Mobile subscriptions 247
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, 169175
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,
169175
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)
169175
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 90158
E-commerce 92f, 116f
E-design 130
E-economy 2143
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, 200229, 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
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT penetration 79
Ethernet 71f
ETPs (European Technology
Platforms) 13
EU (European Union)
EU Commission 13, 15, 39,
90
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT penetration 79
Trade in ICT hardware 238
EU 15
High technology patents 35
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT penetration 79
R&D expenditure 35
Switzerland
(see Western Europe)
EU 25
High technology patents 35
R&D expenditure 35
Trade by country 85
Euro exchange rates 259
Europe as a consumption area
7985
European e-economy 2143
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
247
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79f
IT penetration 79
Main lines 246
Fixed
F. data services 51, 53, 55, 57,
64, 77f, 200229, 257
F. Mobile Convergence
(see FMC)
F. voice telephone services
49, 53, 57, 61, 64, 76f,
200229, 256
Flat TV 165, 167
FMC (Fixed Mobile
Convergence) 26f, 29, 31
Food and Beverages (F&B)
96109
Drivers and inhibitors of
e-business 107f
E-business activity 96101
E-invoicing 98
E-marketing and sales 100
E-procurement 99
Planning) 97
Internal process automation
102
Mobile applications 105
Online orders 101
PLM (Product Lifecycle
Management) 103
Policy implications 109
RFID (Radio Frequency
Identification) 105f
SCM (Supply Chain
Management) 103
Sector profile 96
Foreign Direct Investment
(FDI) 62, 64
FP7 (see 7th Framework
Programme)
France
ADSL lines 246
247
CE market 160ff, 170
ICT and digital CE market
196
% of GDP 243ff
per capita 243ff
Internet commerce 25
Internet users 248
IT/GDP 79f
IT penetration 79
Main lines 246
penetration of ICT 242
R&D expenditure 35
Web users 22ff
Game consoles 166, 168,
169175
GDP (Gross Domestic
Product) 4458, 79ff, 185ff,
242245
Germany
ADSL lines 246
247
CE market 162ff, 171
196
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79f
IT penetration 79
Main lines 246
R&D expenditure 35
Web users 22ff
Global Positioning System
(see GPS)
Global System for Mobile
communications (see GSM)
F
G
264
Government 19, 39, 63, 72, 165
GPS (Global Positioning
System) 159ff
Greece
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT penetration 79
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,
200229, 250
H. market 50, 52, 60
IT h. shipments 230ff
LAN h. 220229, 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 135146
Computerised Physician
Order Entry (see CPOE)
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)
System (see RIS)
Sector profile 135ff
HSDPA (High Speed Data
Packet Access) 51, 53, 55, 68
Hungary
% of GDP 243ff
per capita 243ff
IT/GDP 79f
IT penetration 79
i2010 20
ICT (Information and Com-
munications Technology)
ICT adoption by industry
8184
ICT convergence 21, 25
ICT expenditure as % of
GDP 245
ICT expenditure per capita
245
ICT market size and
structure 44f
ICT market value 199229
ICT skills 21, 38f, 126
ICT trade f lows 237240
ICT trends by country
4664
ICT trends by product
segment 6578
International ICT markets
189195
penetration of ICT 241ff
R&D ICT 3538
Trade in ICT hardware
238240
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-com-
merce, 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
% of GDP 243ff
per capita 243ff
H
I
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
ITmarketbycountry197
ITpenetration79
ITservices17,49,51,53,55,
57,59,61,63,7476,200229,
256
Italy
ADSLlines246
Cablemodemsubscriptions
247
CEmarket164f,172
Economicbackground185f
ICTanddigitalCEmarket
196
ICT/IT/TLCexpenditureas
%ofGDP243ff
ICT/IT/TLCexpenditure
percapita243ff
ICTmarkettrends52f
Internetcommerce25
Internetusers248
IT/GDP79ff
ITpenetration79
Mainlines246
Marketstructuresand
penetrationofICT242
Mobilesubscriptions247
R&Dexpenditure35
TradeinICThardware239
Webusers22ff
Japan
ADSLlines246
Cablemodemsubscriptions
247
Economicbackground
185188
%ofGDP243ff
percapita243ff
ICTmarket189193
Internetusers248
IT/GDP79ff
ITpenetration79
Mainlines246
Mobilesubscriptions247
JTI(JointTechnology
Initiatives)13,20
LAN(LocalAreaNetwork)
69,71f,125
(seealsoWLAN)
LANcards230236
LANhardware220229,
253f
LANswitches71f
Latvia
%ofGDP243ff
percapita243ff
ICTmarkettrends64
IT/GDP79ff
ITpenetration79
ITspendingpercapita79f
LCDTV(Liquid-Crystal
DisplayTelevision)67,160,
163f,167,169175
Lithuania
%ofGDP243ff
percapita243ff
ICTmarkettrends64
IT/GDP79ff
ITpenetration79
ITspendingpercapita79f
LocalAreaNetwork
(seeLAN)
Luxembourg(seealso
Belgium/Luxembourg)
Economicbackground185f
%ofGDP243ff
percapita243ff
IT/GDP79ff
ITpenetration79
Mainlines246
Market(s)
CEm.inWesternEurope
159175
ICTanddigitalCEm.196
ICTm.inEurope4485
J
L
M
266
International ICT m.
189195
M. structures and
Methodology 156ff, 175, 180
MFPs (Multi-Function
Peripherals) 44, 54, 64, 67,
202219, 230236, 251
Mobile
M. applications 91, 105ff
M. business 105
M. subscriptions 247
M. telephone services 78,
200229, 257
M. telephone sets 68,
200229, 252
M. Virtual Network
Operator (see MVNO)
MP3 161, 164168, 169174
Multi-Function Peripherals
(see MFPs)
MVNO (Mobile Virtual
Network Operator) 29, 51
Netherlands
% of GDP 243ff
per capita 243ff
IT/GDP 79ff
IT penetration 79
Nordic countries (see also
Denmark, Finland, Norway,
Sweden)
IT penetration 79
Web users 22ff
Norway
ADSL lines 246
247
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79ff
IT penetration 79
Main lines 246
Office equipment 68f,
200229, 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,
202229, 252
PCs (Personal Computers) 251
Number of PCs per 100
population 79
PC market 48, 50, 56, 58, 60,
62, 65ff, 200229
PC shipments 230236
Peer-to-Peer (see P2P)
Personal Computers (see PCs)
Picture Archiving System
(see PACS)
Plasma
P. display (P. TV) 169175
P. screen(s) 164
PLM (Product Lifecycle
Management) 103
Poland
% of GDP 243ff
per capita 243ff
IT/GDP 79ff
IT penetration 79
Portable(s) 202219, 251
Portugal
% of GDP 243ff
N
O
P
267
per capita 243ff
IT/GDP 79ff
IT penetration 79
Printers 67, 202219, 230236,
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, 3538
Radio Frequency
Identification (see RFID)
System (see RIS)
Regulation 14, 70, 77f
Research & Development
(see R&D)
Return On Investment
(see ROI)
RFID (Radio Frequency
Identification) 91, 105ff
RIS (Radiology Information
System) 141
ROI (Return On Investment)
28, 57, 61, 124
Romania
% of GDP 243ff
per capita 243ff
IT/GDP 79ff
IT penetration 79
SaaS (Software as a Service)
28, 31, 33f, 75
SCM (Supply Chain
Management) 73, 96, 103f
Servers/server systems
200229, 250f
Service-Oriented Architecture
(see SOA)
Services
Carrier s. 49, 51, 53, 55, 57,
59, 61, 63, 76, 200229, 256f
Fixed data s. 51, 53, 55, 57,
77f, 200229, 257
Fixed voice telephone s. 49,
53, 57, 61, 63, 76f, 200229,
256
IT s. 49, 51, 53, 55, 57, 59,
61, 63f, 74f, 126f, 200229,
256
Mobile telephone s. 59, 61,
78, 200229, 257
SIP (Session Initiation
Protocol) 29
Skills
E-skills 109
ICT s. 3842, 126
S. gap 41f
Slovakia
% of GDP 243ff
per capita 243ff
IT/GDP 79ff
IT penetration 79
Slovenia
% of GDP 243ff
per capita 243ff
IT/GDP 79ff
IT penetration 79
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) 3134, 74
Software 49f, 52ff, 56f, 58f,
61ff, 72ff, 97, 103, 112, 241
Accounting s. 112, 129
Application s. 220229, 255f
S. as a Service (see SaaS)
S. on demand 32
S. products 72ff, 200229,
255f
R
S
268
System s. 73, 220229, 255
Transformation of the
s. industry 3134
SOHO (Small Office
Home Office) 69f
Spain
ADSL lines 246
247
CE market 165f, 173
196
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79ff
IT penetration 79
Main lines 246
R&D expenditure 35
Web users 22ff
Statistical outlook 180259
Supply Chain Management
(see SCM)
Sweden
ADSL lines 246
247
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79ff
IT penetration 79
Main lines 246
Switzerland
ADSL lines 246
247
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79ff
IT penetration 79
Main lines 246
System software 73, 220229,
255
Telecommunications (TLC)
123135
T. expenditure as % of GDP
244
T. expenditure per capita 244
T. markets 44ff, 64, 198
T. market value 198, 200229
T. sector drivers and
inhibitors of e-business 133f
T. sector e-business activity
123135
T. sector e-marketing and
sales 131ff
T. sector policy
implications 134f
T. sector profile 123f
TLC (see Telecommuni-
cations)
Tourism 109123
Dis-intermediation 118f
e-business 121f
Dynamic packaging 119f
E-business activity 110118
114118
E-procurement 112ff
Planning) 112
Online orders/reservations
115ff
Re-intermediation 119
Sector profile 109f
Trade
T. in ICT hardware 238ff
T. in the EU 84f
T. statistics 257f
Transmission and switching
70, 200219
UK (United Kingdom)
ADSL lines 246
247
CE market 167f, 174
196
% of GDP 243ff
per capita 243ff
T
U
269
Internet users 248
IT/GDP 79ff
IT penetration 79
Main lines 246
R&D expenditure 35
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
247
Economic background
185188
% of GDP 243ff
per capita 243ff
Internet users 248
IT/GDP 79ff
IT penetration 79
Main lines 246
Value
V. chain 94, 112f, 118f, 130
V. system 94, 130, 155f
VCRs (Video Cassette
Recorders) 164, 169175
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 2124
Western Europe (see also
Switzerland)
ADSL lines 246
247
CE market 159175
European e-economy 2143
% of GDP 243ff
per capita 243ff
Internet users 248
IT market by country 197
IT market growth rates 193
Main lines 246
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
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,
189193
Internet hosts 195
Internet users 248
IT market growth trends
189
Main lines 246
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.
1993
Information technology
standardisation
The European software
and services marketplace
Environmental achievement
in information technology
1996
Towards the Information Society:
new network services and applications
The ICT market in Europes banking
and financial services
The evolution of ICT distribution
channels in Europe
1999
The E-commerce market
in Europe
The ICT market in Central
and Eastern Europe
The ICT market in
the Mediterranean basin
2000
The 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
Observatory 93
Observatory 96
Observatory 2000
MI l l E nnI uM E dI T I On
Observatory 99
2003
ICT 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
Observatory 2003
2004
Convergence and the digital world
The impacts of ICT on economic
growth an overview
Observatory 2004
1994
Information technology markets of
Eastern Europe
Mobile computing and
communication in Europe:
towards a digital wireless world
The information technology market
in Europes public administrations
1997
The future of the Internet
Electronic commerce
over the Internet
1995
The 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
1998
ICT 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
2001
ICT 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
2002
Entering the UMTS era mobile appli-
cations 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
Observatory 94
Observatory 95
Observatory 97
Observatory 98
Observatory 2001
Observatory 2002
10
T h
E d I T I On
2005
The online content market
and distribution in Western Europe
Observatory 2005
2006
The digital broadband value-added
services industry and markets in Europe:
Peer-to-Peer (P2P) networks and markets
Observatory 2006
European Information Technology Observatory EITO
Deutsche Messe
Messegelnde, 30521 Hanover, Germany
Phone: +49 - 5 11- 89 33 - 100, fax: +49 - 5 11 - 89 33 - 102
Internet: http://www.cebit.de
IFEMA SIMO TCI
Parque Ferial Juan Carlos I, 28067 Madrid, Spain
Phone: +34 - 91 - 7 22 - 50 00, fax: +34 - 91 - 7 22 - 58 07
Internet: http://www.simo.ifema.es
Bitkom Servicegesellschaft mbH
Albrechtstrasse 10, 10117 Berlin, Germany
Phone: +49 - 30 - 2 75 76 - 0, fax: +49 - 30 - 2 75 76 - 1 51
Internet: http://www.bitkom-service.org
The leading business-to-business trade
fair for IT, Media and Communications
Messe Mnchen GmbH
Messegelnde, 81823 Munich, Germany
Phone: +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 dItalia 41, 00198 Rome, Italy
Phone: +39 - 06 - 36 88 - 1, fax: +39 - 06 - 36 88 25 41
Internet: http://www.telecomitalia.it
KPMG Deutsche Treuhand-Gesellschaft
Aktiengesellschaft Wirtschaftsprfungsgesellschaft
Ganghoferstrasse 29, 80339 Munich, Germany
Phone: +49 - 89 - 92 82 - 12 63, fax: +49 - 89 - 92 82 - 2 12 63
Internet: http://www.kpmg.de
Fujitsu Siemens Computers GmbH
Domagkstrasse 28, 80807 Munich, Germany
Phone: +49 - 89 - 32 22 - 44 58, fax: +49 - 89 - 32 22 - 44 15
Internet: http://www.fujitsu-siemens.com
European Commission
Enterprise DG, Information Society and Media DG
Rue de la Loi 200, 1049 Brussels, Belgium
Phone: +32 - 2 - 2 99 11 11, fax: +32 - 2 - 2 95 01 38
Internet: http://ec.europa.eu
OECD
Directorate for Science, Technology and Industry
2 rue Andr Pascal, 75775 Paris Cedex 16, France
Phone: +33 - 1 - 45 24 - 82 00, fax: +33 - 1 - 45 24 - 85 00
Internet: 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
Via Barberini 11, 00187 Rome, Italy
Phone: +39 - 06 - 42 14 01, fax: +39 - 06 - 42 14 04 44
Internet: http://www.conf industriasi.it

Observatory 2007

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ISSN 0947-4862

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