COMPETITION AND PRICING ISSUES DOMINATE EURO IT INDUSTRY
According to a new report by international marketing consultancy Frost & Sullivan, Profiles of Suppliers to the Information Technology (IT) Industry (Report 3197), the European market for Information Technology, valued at US$177.40 billion in 1995, is expected to show strong growth throughout the coming years.
Frost & Sullivan's research projection expects the European IT market, comprising computer hardware, computer hardware peripheral and add-on equipment, computer software and services, to reach US$261.06 billion by the end of the study period in the year 2002.
The IT market is dominated by the services sector, accounting for 36.5 per cent of the overall market in 1995. Ranking second is the market for hardware, worth 33.0 per cent in the same year, followed by the software market, representing 20.0 per cent of the overall IT market.
Germany is the leading national market in terms of revenues with a 28.2 per cent share in 1995, followed by France and the UK, valued at 16.7 per cent and 16.2 per cent respectively in the same year.
Frost & Sullivan's new report, profiling key suppliers to the IT industry, identifies Compaq, IBM, Apple, NEC and Packard-Bell as the leading companies with the highest market shares in terms of revenues.
The report states that IT developers and manufacturers will have to face decreasing prices and growing competition where cost-effective procedures and customer satisfaction will determine business success.
Successful competitors will need to be aware of end-user requirements and be active in consistently developing new applications.
Maria McFaul, Research Manager at Frost & Sullivan, comments: "The recent world-wide recession has affected the revenue growth rate of almost all IT manufacturers and has increased competition considerably."
"Although most companies have recovered from recession and look forward to growth in the coming years, it is to be expected that competition will intensify further in the European IT market."
Mrs McFaul continues: "In the coming years, the emerging markets for IT products and services will be created in the Central and Eastern European countries. These markets are largely under-developed and untapped. However, there will be increasing competition in the IT market largely from local companies."
IT technology is advancing at high speed. A number of promising technologies are being developed that will probable have significant impact in the IT industry. Research activities range from those aimed at meeting well-defined end-user needs to long-term research.
Strategic alliances, mergers and acquisitions, and joint ventures are prominent in the IT industry. In recent years, a considerable number of acquisitions and mergers of IT companies has been witnessed.
Present concerns of the IT companies lie in the cost containment strategies associated with owning and operating computer hardware.
The combination of the computer industry and the communication industry seems more likely in the future with several communications companies forging alliances with computer and software companies.
Future challenges will dictate resources from both industries to form supergroups capable of solving immense technical and technological problems.
Frost & Sullivan conclude: "The major competitive facts in the European IT industry are product innovation, pricing and client and end-user satisfaction."
Product innovation is the key to the success of IT industry players. With increasing competition from Far East suppliers, the correct timing of the product development and innovation strategy is crucial to the wide acceptance of the product.
This is particularly applicable to software companies which face a bigger problem in piracy and illegal copies being readily available. Piracy of software packages is still observed at variable unacceptable levels in European countries.
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