Technology sales to bloom in 2004

Western European and worldwide markets for IT and telecommunications are recovering to healthy rates of growth. The 2004 edition of the European Information Technology Observatory (EITO) estimates that the Western European information technology market will grow 2.4 per cent this year to reach €294bn. Last year, by the same reckoning, the market shrunk 1.2 per cent.

EITO estimates that the Western European telecommunications market will grow 3.8 per cent this year to reach €317bn.

Broadband connections (DSL and cable modem) showed particularly strong growth. The study predicts broadband connections will almost triple to reach 62 million connections by 2007.

EITO says e-government and e-business are driving growth across all aspects of technology spending.

Fragile recovery

However, the study found that there are several constraints inhibiting investment, especially of SMEs. These include a fragile economic recovery, tight budget restrictions and skills shortages.

EITO Chairman Bruno Lamborghini said that "neither the business sector nor the public sectors are at present seizing the full benefits of ICT in Europe. However, ICT is the driver of productivity growth, both on the micro- and on the macro-economic level."

Among European countries, Spain showed the strongest growth in the combined IT and telecommunications market. By contrast, France and Germany continue to perform below par.

Worldwide ICT expenditure is expected to reach €2,160bn in 2004, 4.3per cent up compared to the €2,071bn spent last year. Carrier services account for 42 per cent of the overall market, followed by software and IT services with a combined share of 29 per cent and computer hardware with 15 per cent.

The European market represents 30 per cent of total ICT spending, the US generates 32 per cent of overall sales and Japan has a 12 per cent share.

The fastest-growing regions for IT spending are in Eastern Asia (in particular China) and Central and Eastern Europe. EITO forecasts that the ICT market in Central and Eastern Europe (CEE) will increase by 8.1 per cent in 2004 to €42bn.

"Europe must not lose momentum at the beginning of a new ICT cycle, represented by the emerging digital world, which otherwise will be driven by North America and increasingly by China and Eastern Asia," Lamborghini concluded. ®