Computer Global Market
Insights and Opportunities
Overview: In 2009, the IT market in Serbia, including services, reached an estimated value of around USD 350 million. Hardware comprised 70% of the total market, while software constituted 16.5%, and IT services the remaining 13.5%. Independent experts estimate that IT spending in Serbia dropped by 20% in 2009 due to the global economic downturn. Some recovery and return to 2008 level is expected in 2010.
Serbia's current IT consumption per capita of USD 50 is much lower than in neighboring countries in the region and the IT market in Serbia is still in the process of reconstructing itself along with the entire economy. Major attention is still focused on the development of basic infrastructure with hardware purchases at the core. Once these infrastructure improvements are in place and have a chance to function for some time, attention will begin to shift to IT services and software solutions aimed at maximizing initial investment. As most companies do not have defined IT budgets, cash flow problems and a sluggish economy make IT one of the first areas cut from investment plans.
The emerging and but still immature (in terms of market penetration) PC market offers great growth potential in the long term. Businesses and public administration will continue to improve their basic infrastructure as their IT requirements increase. Moreover, households will seek greater internet access. In 2001, the value of the hardware market in Serbia was USD 120 million and has grown to an estimated USD 350 million in 2009.
The top 10 suppliers dominate a market of about 200 companies. Competition is intense. During the previous decade, computer hardware was imported from Asia. Some of that hardware was poor quality, and many users desired better quality, even at a higher price. In 2004, the government fostered the computer market by abolishing the 20% sales tax. Despite introduction of an 18% VAT on January 1, 2005, this sector achieved growth of around 20% in 2006 and continued in 2007 and 2008 at an average rate of 13%. In 2009, the Government of Serbia decided to reduce VAT for hardware and software to 8%.
Statistical data is not yet reliable for analysis, but experts estimate that U.S. companies had a significant percentage of the total market in 2009 (rough estimates are up to 30%). Hewlett-Packard, IBM, Compaq, Dell, Gateway, Xerox, and Cisco continue to be among the market leaders in Serbia. Toshiba, Siemens and Acer are the main competitors to U.S. equipment suppliers on the SAM computer market, while the main competitors to U.S. companies for peripherals sales are Canon, Epson, and Minolta.
The government, state enterprises, large and small commercial enterprises, and commercial banks are highly receptive to U.S. computer technology. The total number of computers in Serbia is estimated to be 500,000, representing a remarkably low 5% penetration rate. A conservative 10% annual growth is expected over the next couple of years. Growth is expected to come from new market segments like small- and medium-sized enterprises, home users, as well as from continuing needs for computers and peripherals for commercial banks, big infrastructure projects, and further information technology needs of the Government administration. In November 2009, Serbian government officials announced that they will allocate funds from a EUR 200 million loan from EIB in 2010 for the projects in the area of science and technology, as well as for e- government projects. Part of this loan will be earmarked for purchase of hardware and software.
The three most important competitive factors in the Serbia's computer hardware and peripherals market are price, quality, and after sales support.
Opportunities: Best prospects include data communications and network equipment. Best prospect sub-sectors for U.S. suppliers include personal computers, servers, laptops, modems, printers and scanners.
The government and many domestic companies are in the process of introducing computer technology in their operations. Significant funds will be invested in equipment by such firms. Serbia has free trade agreements with most of neighboring countries in the Balkans (CEFTA), with Russia (the only country in the Balkans to have a free trade agreement with Russia), and is negotiating an agreement with Belarus.
Some local experts predict strong spending in the IT security and data protection segments. Spending on IT security is expected to double in the coming three years.
The health-care sector could be of interest for the American IT industry to enter projects financed by international institutions. For example, the World Bank in Serbia approved a USD 13.5 million loan in additional financing for its Serbia Health Project that seeks to help develop a sustainable, performance-oriented healthcare system. The project will finance information technology management for hospitals and the state Health Insurance Fund as well as technical assistance to hospitals, the Fund, and the Health Ministry to support the introduction of a new payment system that would increase their efficiency and productivity.