Prague, March 14, 2005 -- Initial IDC estimates indicate that spending on information and communications technology in Central and Eastern Europe (Russia, Poland, the Czech Republic, Hungary, Slovakia, and Croatia) will surpass $19 billion in 2004, up 18.4% on the previous year. According to an IDC study, a combination of factors drove investments in IT in the region last year. Continuing economic reforms, privatization, increased foreign direct investment, and greater demand from SMEs and home users for PCs and software all contributed to the growth of the region's IT markets. By 2008, IT spending should top $31.68 billion in the region.

"In 2004, EU accession affected all the vertical markets in the CEE region, as new member states have relatively mature IT markets and offer investors political and economic stability," said Roman Maceska, Senior Research Manager, IDC CEMA. "The single European market will push greater IT spending and infrastructure improvement in the manufacturing, communications, and finance sectors as firms struggle to compete. In the government sector, the implementation of IT solutions will improve efficiency and reduce the size of the administration."

According to preliminary IDC data, the manufacturing sector (process and discrete) will constitute the largest share of IT spending in the CEE region during 2004. The transport, communications, and utilities sectors together will be responsible for the second largest amount of IT spending and the finance sector (including banking, insurance, and other financial services) the third largest. Together, the three sectors are expected to make up more than 55% of IT investments in 2004. In terms of expenditure, other key segments in the CEE region include government administration, agriculture, construction, and mining, and retail/wholesale.

"In addition to the revitalization of manufacturing, the finance sector has taken off in the last few years across the region," says Maceska. "Both verticals are leap-frogging over the intermediate IT solutions found further West, where the presence of legacy systems has hindered faster upgrades over the last ten years. And though IT spending in Central and Eastern Europe still remains largely hardware oriented, the country markets are beginning to shift to a more solution-driven phase, as reforms and privatization are forcing companies to adopt state-of-the-art systems to remain competitive."

The country with the largest population, Russia, accounted for nearly 44% of IT spending in 2003 and is expected to constitute more than 47% of spending in 2004, with the manufacturing, finance, and government sectors leading in terms of IT spending over the next few years. At nearly 22% in 2003 and an estimated 21.1% in 2004, Poland came in second, with the manufacturing, finance, and communications verticals leading spending. The Czech Republic will be the third largest market in 2004 and Hungary the fourth.

"The largest market is also the fastest growing," says Maceska. "In terms of IT investments, verticals in Russia are making new IT investments at nearly twice the rate as in Slovakia, the second fastest-growing market. In Russia, elevated oil prices and greater consumer spending lifted by higher real incomes has helped spur IT acquisition among homes and businesses."

Nevertheless, the rest of the region will also exhibit solid IT market growth. Recent EU accession for the Czech Republic, Hungary, Poland, and Slovakia will continue to stimulate investment in IT as governments and the private sector implement changes to meet regulations and the newly opened international markets. Likewise, preparations for EU accession in Croatia and continuing economic growth in Russia will fuel expanded use of IT. "Governments in particular will do everything from upgrading hardware and putting tax codes and forms online in the short term to building digital libraries and comprehensive enterprise systems in the long term," says Maceska. "Although CEE governments could do more and are still behind those further West, they don't have to deal with the older systems, many of which are bogging down egovernment initiatives."

IDC's Central and Eastern Europe Vertical Markets Forecast and Analysis 2004-2008 provides a detailed overview of IT spending trends and forecasts for 17 vertical markets (or industry sectors) and 16 product categories, including hardware, packaged software, and services in Central and Eastern Europe (Russia, Poland, the Czech Republic, Hungary, Slovakia, and Croatia). With detailed analysis and highlights of major projects in different verticals, the study provides tables detailing IT spending by vertical market for each product category in 2003 and forecasts for 2004-2008. Analysis is based on continuous research, monitoring of end-user IT spending, emerging purchasing patterns, and supply and demand-side research.

For more information, please contact Mikhail Novikov (+7 495 975 00 42) in Russia, Ukraine, or any of the CIS countries; or Tatiana Hinova (+420 221 423 140) from anywhere else.

About IDC: Global Research with Local Content
IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 775 IDC analysts in 50 countries provide local expertise and insights on technology markets. For more than 40 years, business executives and IT managers have relied on our advice to make decisions that contribute to the success of their organizations.

For the Emerging Markets in the CEMA region, IDC retains a coordinated network of offices and agents in Budapest, Vienna, Moscow, Kiev, Minsk, Almaty, Warsaw, Bucharest, Sofia, Zagreb, Ljubljana, Istanbul, Johannesburg, and Tel Aviv, supported by regional research centers in Prague and Dubai.

IDC -- Celebrating 15 Years in Central and Eastern Europe
Since 1990 IDC has been delivering essential intelligence about the ICT markets of Central and Eastern Europe. From a single person in a small office, we've grown into the region's leading IT market research, events, and consulting firm, with analysts stationed in ten CEE countries.

For Central and Eastern Europe and the Middle East and Africa, IDC maintains a coordinated network of offices in 15 countries with regional research centers in Prague, Istanbul, and Dubai. Customers include a wide range of ICT hardware, software, and services suppliers, governments, and members of the financial community.