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Europe's IT sector outpacing telecoms

And growth gap may become a chasm

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The European ICT market is expected to grow by 3.1 per cent to €644bn this year, according to new research.

The forecast was made by the European Information Technology Observatory (EITO), which previously reported that the EU ICT market reached growth of four per cent in 2005.

"An overall positive business climate and improved general economic development together with new digital convergence technologies are favourable for ICT investment", said EITO chair Bruno Lamborghini.

"European ICT markets are continuing to show positive growth."

According to EITO, the information technology market in particular is fuelling growth. It is growing at 3.8 per cent and is worth an estimated €305bn. The telecommunications market is slightly less buoyant with growth of 2.5 per cent, contributing to a total value of €339bn.

The difference in growth between IT and telecommunications may become even greater for 2007 with EITO experts predicting 1.7 per cent growth in telecommunications and a vigorous 4.2 per cent for IT.

Overall, the ICT market in the European Union is expected to increase by 2.9 per cent in 2007, to €663bn, according to the organisation.

Growth leader among the five largest markets in the EU at present is Spain, which is expected to increase its ICT market this year by 5.2 per cent. Then comes Britain, with 3.3 per cent; France with 2.7 per cent; Italy with two per cent and Germany with 1.6 per cent.

Although statistics for Ireland aren't included in EITO's latest update, the organisation's managing director Carola Peter told ENN that the local IT sector will show growth of 8.1 per cent in 2006 - far beyond that of its European neighbours. Nonetheless, growth in this space is expected to slow slightly next year to 5.4 per cent. The telecoms sector, meanwhile, is expected to grow at a rate of 1.3 per cent this year and 1.2 per cent for 2007.

Thus, Germany continues to be the largest market for IT and telecommunications in Europe, closely followed by the United Kingdom.

However, in 2007, the outlook may be slightly different: Germany is estimated to grow by 1.4 per cent, Italy by 2.1 per cent, and the United Kingdom will reach 2.9 per cent. The ICT markets in Spain and France will display the largest growth with 4.5 per cent and 3.1 per cent respectively.

EITO claims the software market in the EU will grow by 6.3 per cent in 2006, fuelled by demand for systems infrastructure and security solutions. Growth in the services sector will increase by 5.3 per cent.

According to the forecast, software and services will continue to grow strongly next year, but the outlook is less favourable for the computer market. EITO claims the server market is shrinking by 0.3 per cent, and turnover in PCs by 1.2 per cent.

For 2007, the computer hardware market in the EU is expected to increase again modestly. Overall, the experts anticipate an EU IT market value of €318bn next year.

In telecommunications, mobile telephone services continue to grow by 3.8 per cent, but fixed voice telephone services will lose 4.3 per cent this year across the European Union.

Lamborghini said the voice services market had reached saturation and was no longer a driver of growth, with companies needing to rely on broadband services, IPTV and fresh online content instead.

Nonetheless, the telecommunications sector is still showing an overall increase of 2.5 per cent which is explained by an enormous increase in demand for internet and data services.

Furthermore, the telecommunications market next year will likely reach a volume of €345bn.

Copyright © 2006, ENN

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