BMI's Executive Summary

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Market Overview

The total size of the Serbia IT market in 2007 was estimated by BMI at US$454mn, up from US$366mn in 2006. The market looks set to continue growing at a rate above the regional average, and BMI forecasts an IT market CAGR of 15% for 2007-2012. By this time the market will have surpassed the US$1bn level. Hardware will continue to dominate total IT spending accounting for around 70% of spending in 2007, with Services accounting for about 20% of spending.

Despite a long-term healthy outlook, BMI's forecast of IT market growth takes into consideration a number of constraints. These include low levels of computer literacy, low computer and internet penetration, lack of capital, and general low income levels. The PC market grew at close to 20% in 2006, however, and a more determined government attitude to information society development and IT infrastructure is likely to provide support for this to continue. State institutions and administrative bodies will continue to be among the largest spenders on computer equipment and services, driven by various government and EU programmes.

Industry Developments

The formation of a new Ministry of Telecoms and Information Society in 2006 points to the high priority placed by the new government on information technology. The most recent statistics released by the Serbian government reveal that Serbia continues to lag behind its regional neighbours in information society development. According to the figures, 40% of Serbians do not have a computer due either to insufficient finances or because they do not need one.

In 2007 the Serbian government announced that US$43mn would be allocated from the National Investment Plan for a project to set up an integrated electronic network covering state organisations. The programme is being designed in accordance with and on the basis of the Strategy for Public Administration Reform and the Action Plan for public information development adopted in 2006.

Competitive Landscape

The Serbian computer market remains highly price sensitive. Less than 20% of computers sold are global brands. The rest are mainly 'white boxes' assembled from Far East components. Unsurprisingly the market is diffuse with overall market leader Hewlett Packard (HP) having only around 10% of the computer market, although its share in the laptop segment is estimated at around 25%.

All the major international software companies are represented in Serbia either directly or using the services of product distributors/developers in order to sell their products. HP has reported a 550% increase in software and services revenue over the past few years, and Oracle has also seen its local sales grow rapidly since reopening its office in 2003. Meanwhile, Microsoft dominates in the operating system segment. The IT services opportunity is also a big draw for vendor direct investment in the country.

Computer Sales

Computer sales were estimated at US$213mn in 2005, but actually grew to US$199mn in 2005 when the sector suffered a setback due to the introduction of an 18% TAV (value added tax.) BMI predicts a 19% CAGR with computer sales including notebooks and accessories reaching US$593mn by 2012. With only around 37% of households having a desktop, and 3.4% a notebook according to the Serbian Statistics Bureau, the market looks set to be dominated by hardware sales for some time to come.

Software

The domestic software market is expected to grow strongly from US$33mn in 2006 to US$128mn by 2012. Serbia lags far behind most regional neighbours in software deployment, but there is a growing awareness among enterprises of the potential benefits of using IT. Banks and insurance companies have been increasing their spending as they attempt to modernise, and manufacturers in many sectors are also investing more. Further market growth will of course depend on the government's efforts in combating piracy, which is still around 69%.

Services

The Serbian IT services market was worth US$73mn in 2006 according to BMI estimates, accounting for around 20% of all IT spending in Serbia in 2006. Spending on services is predicted by BMI to increase to around US$86mn in 2007, and will continue thereafter to expand, as the banking and government sectors in particular invest in the IT that will enable them to compete in a changing environment.

Competitive Landscape for Europe Information Technology: Sample of  
Companies Ranked

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Company profiles, including SWOT (strengths, weaknesses, opportunities and threats) analyses, business activity, leading products and services. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company profiles and SWOT analyses covering competitive positioning; leading products, services and brands; annual sales and share of domestic hardware, software and components markets; headline financials and M&A; pan-regional expansion strategies and strategic partners. Companies covered include:

Network of Information Technology Sources

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BMI's European IT Reports are based on an extensive network of multilateral organisations, government departments, IT industry associations, chambers of commerce and company reports. Information sources include: