PRESS  

 

 Athens 21/01/04
 
6% Growth for the Greek IT market for 2003, and forecasts for 2,5% for 2004, according to preliminary data of Strategic International/K.Kataras SA..

Athens, 21 January 2004 – The Greek IT market growth rate was lower than the forecasts, increasing by 6% according to preliminary data of Strategic International/K.Kataras SA. Software and services, and especially the Greek IT companies were mostly damaged while worse is still to come, as the 2004 forecast predicts a 2,4% increase, and finally “convergence” with the E.U. average.

Growth smaller than expected
2003 did not yield the much wanted boost for the Greek IT market, as a series of factors kept the increase at 6% with M€ 2226,8 while previous year’s forecasts were referring to a double-digit increase. The final data are to be announced by Strategic International in April 2004. The actual upgrade of the market, with a turn towards «intelligent» software and added value services was never realized, therefore a steadily good performance of PC systems sales was the only reason for keeping the total Greek IT size from decreasing, for the first time in 20 years!:
 
Diagram 1
The Greek IT market, 1999 – 2003 (Values in M€)
Source: Strategic International/ K.Kataras SA
 
The main reasons for the slow down of the growth rates are:
  • The uneven economic progress of the country that focuses on a minimal number of companies active on the big 3rd CSF and Olympic Games projects, resulting in a crisis for the majority of companies and especially SME's. A few analyses proclaim that almost 3% of the GDP originates from Brussels and the CSF, while 1% is due to Olympic projects which sum to 4% (i.e. the country's GDP growth in 2003).
  • The economic drowning of SME's in Greece, also as a result of the various tax tactics of the state to cover the huge costs for the Olympic Games.
  • The low absorption rate of 3rd CSF funds.
  • The not serious approach of the big Greek IT companies towards the Athens Stock Exchange, that drove their economic crisis and the transfer of a major market share to the big international value added and efficient players.
  • The "negative convergence" with the European averages of the IT market (e.g. forecast 2,5% for E.U. and Greece for 2004), without the realization of the technological modernization of the country and of the business.
Growth only from PC Sales
After a multi-annual time span, the inactivity of the Greek IT industry led to a reduction in most categories, according to Strategic International’s preliminary data.
  • Personal Systems
    With the first estimates for a 18% increase in sales of Personal Systems, and a 13% increase in market value, the sector was once more, the driver for 2003, in conjunction with the thrust from the adoption of tax control machines.
  • Multi - User Systems
    After two years of improvement, the sector returned to marginal fall of sales for 2003 especially considering the delay of auctioning of 3rd CSF projects.
  • Peripherals
    Continuing rising course with PC's, peripherals have met marginal increase for 2003, supported by the trend of digital media and imaging.
  • Services
    Serious downfall, for the information services market for 2003 in Greece, mainly from the Professional Services sector and not from Support Services.
  • Software
    The segment which was most plagued, with a decrease greater than 12% resulting in major dilemmas for Greek companies.
Shift to the global players
As a consequence of the excessively optimistic thinking of major Greek IT groups in the stock market, along with their failure in innovation, bigger market shares are shifting towards the global players such as IBM, HP, SAP, ORACLE.
The year of 2005 is expected to be the first year where the total production of Greek PC’s will be smaller than 50% of total sales.
In the field of software there still exists the gap between almost absolute penetration of local products to SME’s, which excludes the use of ASP in conjunction with the lack of cheap broadband access. Therefore the resistance of the Greek software industry is strong, but their internal problems are expected to elicit a higher inhibitor from imported competition.
Finally, in the field of services, the model of the small Greek enterprise still prevails, until its intrinsic weaknesses against the model of «Multinational – IT Supermarket» begin to emerge.

Greece against the European Reality
The diminishing of IT growth rates was not evident only in Greece, but also in W. Europe, where the ÅÉÔÏ for example has also revised downwards its forecasts for 2003, of the IT market in W. Europe -0,7% at the end of the year, while at the beginning they were referring to marginal increase.
The analysts of Strategic International SA interpret the fact as a transformation of Greece from a developing, funded country of S. Europe, to another member of the “second line” states of the E.U. that faces the stability and rationalization of N. Europe, without having completed the modernization of its infrastructures.
 
Diagram 2
The IT market in Greece and W. Europe, 2002 - 2005(% Growth Rates)
Source: Strategic International/ K.Kataras SA

The preliminary forecasts of Strategic International/K.Kataras SA for the next two years show a growth rate of 2,5% for 2004 and 1,2% for 2005, for the first time in the last years below the W. Europe average (4,4% for 2005).

Main factors of this negative trend seem to be:
  • The transfer of funds of 3rd CSF from the ineffective IT towards employment and other programs.
  • The over-loaning of SME's.
  • The various election rallies of 2004 and possibly in 2005.
  • The completion of works for the 2004 Olympic games.
  • The mistrust of the IT sector by the banking (financial) organizations.
  • The general negative climate, that is expected to amplify from a current of closing down of IT firms.
  • The prolonged inefficiency of the public sector against the electronic era and digitalization. Despite any minimal substantial initiatives, the situation could be described by the phrase "Too Little, too late".
 

About Strategic International SA (www.strategic.gr)
Strategic International SA (www.strategic.gr) is a consulting firm, founded in 1984, offering quality consultancy services and support to international companies and SME’s, as well as to international organizations and governments to develop successful strategies and implementation plans in today’s Networked Economy. Beside its leading position in Telecommunications and IT in S.E. Europe and E. Mediterranean, the company has also deep knowledge in areas such as: Manufacturing, Health, New Media, High Technology, Economic/ Regional Development, and Science & Technology.

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