[ClickPress, Fri Nov 01 2013] A combination of a weaker economic outlook and a steep decline in notebook sales in favour of low-cost tablets resulted in a minor downgrade to our IT market forecast for Russia in the Q4013 update. However, Russia continues to be one of the fastest growing markets in the region and we forecast IT spending will increase with a CAGR of 8.7% in local currency terms 2013 to 2017. Key drivers of market expansion include rising PC penetration, on the back of the availability of lower cost hardware - especially tablets - investments by enterprises in business software and modernisation of the public sector. The market is also being boosted by Russia's historic entry into the WTO, confirmed in August 2012. WTO membership is expected to boost enterprise modernisation to achieve competitiveness, which will increase spending on hardware and business software applications.
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Headline Expenditure Projections
Computer Hardware Sales: RUB328.1bn in 2012 to RUB343.3bn in 2013, +4.6% in local currency terms. Declining notebook sales and growth in the tablet category being driven by low-cost devices is squeezing growth in sales value, but overall the market is growing and has a bright outlook.
Software Sales: RUB121.9bn in 2012 to RUB139.5bn in 2013, +14.5% in local currency terms. Modernisation initiatives of Russian enterprises behind spending increases as they become more integrated in global markets and supply chains.
IT Services Sales: RUB175.0bn in 2012 to RUB201.0bn in 2013, +14.9% in local currency terms. Outsourcing is a growing market in Russia, drawing on the pool of local skilled labour, while cloud computing services are growing rapidly.
Russia's score is 53.7 out of 100.0 as it climbed one position to sixth in the table. Russia is behind the developed markets and Czech Republic, but ahead of Poland, Hungary and Turkey.
Key Trends & Developments
The latest data on Russia's PC market show that in Q213 sales of tablets continued to increase, rapidly cannibalising sales of notebooks. The growth in sales of tablets has kept the market on track in terms of total shipments, but with consumers predominantly opting for low-cost tablets the transition has stymied increases in overall market value. BMI expects notebook sales to stabilise after the steep fall in unit shipments in 2013, and with PC penetration still low in Russia, there is scope for vendors to capture growth from high end devices such as hybrids and ultra-thin notebooks.
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