OverviewThe total size of the Croatian IT market in 2010 is estimated by BMI at around US$1.15bn, up fromUS$1.13bn in 2009. Croatia's IT market is expected to record low single-digit growth in 2010 following acontraction in 2009, as businesses and consumers retrenched due to the recession. Trading conditions willremain challenging for IT vendors, with modest private consumption and investment growth projected.There should still be opportunities in 2010. Lower prices, broadband roll-outs, new entertainment featuresand a greater premium on mobility will be among factors boosting the popularity of notebooks in acountry where household PC penetration remains below 50%. Despite budgetary stresses, the governmentis determined to continue making progress on ICT development and 2009 saw more money pledged for anumber of initiatives. The short-term economic outlook is difficult, but BMI expects IT spending per capita to expand fromUS$252 in 2009 to US$343 in 2014, thanks to revived economic growth from 2010 and continuedconvergence with the EU. With the state still owning a wide range of companies across sectors liketransport, telecoms, oil and gas, media and insurance, the prospects for more rapid IT market growth aredirectly correlated to the success of economic reform. Industry DevelopmentsDespite severe fiscal pressures in 2009, the Croatian government continued to invest in IT as part of itsdrive to improve the competitiveness of Croatia's economy and to narrow the gap with EU countries.Projects rolled out in 2009 included a major healthcare IT system upgrade, part of an initiative launchedwith the 2009 budget, as well as new VAT payment and prosecutorial case-tracking systems.The Croatian government announced in June 2009 that it had launched a HRK55mn upgrade of thenational primary care IT system. The three-phase project covers maintenance, installation andimplementation of new functionalities within the existing Croatian healthcare IT system. The entireproject was scheduled to be complketed by the end of 2010. Another key area for modernisation is e-government, where the National Office for e-Croatia is coordinatinggovernment efforts with technical support and financial assistance from the EU. In 2009, theTax Administration of the Finance Ministry modernised its VAT system with assistance from EU funds.The project was the second completed in this area. Competitive LandscapeHP continued to lead the Croatia computer market in 2009, ahead of local rival M San Grup andTaiwanese notebook giant Acer. Other best selling multinational brands include Lenovo and Dell. Fornotebooks, HP, Acer, Fujitsu-Siemens and M San Grupa are among the leaders. The leading distributorof computers is supplier HG Spot. Gradual increases in mobile and fixed broadband penetration haveincreased the popularity of low-cost portable computers.Microsoft dominates the operating system software segment and benefits from a government software licensing agreement worth around HRK74mn. Across all software segments, global vendors account foraround 40% of revenues, with local vendors taking the rest. SAP is the enterprise application software leader, but the market is quite open, with around 20 companies competing for share.Global and regional IT services vendors were active in Croatia in 2009. IBM enjoyed success in thepublic sector, with wins from the Finance Ministry and the Office of the Chief State Prosecutor.Meanwhile, regional player Hermes SoftLab, now part of the ComTrade group, won a tender to delivera retail e-banking solution for Croatia's BKS Bank, while Polish IT giant Asseco also expanded itspresence following two local company acquisitions. Computer SalesBMI forecasts that the Croatian PC market (including notebooks and accessories) will be worthUS$491mn in 2010, with flat or low single-digit growth compared with 2008. In H109, volume salessuffered a double-digit percentage decline, with negative growth in both desktop and notebook categories.PC sa

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Croatia Information Technology Report 2010
Published on November 2009
Report Summary
Overview
The total size of the Croatian IT market in 2010 is estimated by BMI at around US$1.15bn, up from
US$1.13bn in 2009. Croatia's IT market is expected to record low single-digit growth in 2010 following a
contraction in 2009, as businesses and consumers retrenched due to the recession. Trading conditions will
remain challenging for IT vendors, with modest private consumption and investment growth projected.
There should still be opportunities in 2010. Lower prices, broadband roll-outs, new entertainment features
and a greater premium on mobility will be among factors boosting the popularity of notebooks in a
country where household PC penetration remains below 50%. Despite budgetary stresses, the government
is determined to continue making progress on ICT development and 2009 saw more money pledged for a
number of initiatives.
The short-term economic outlook is difficult, but BMI expects IT spending per capita to expand from
US$252 in 2009 to US$343 in 2014, thanks to revived economic growth from 2010 and continued
convergence with the EU. With the state still owning a wide range of companies across sectors like
transport, telecoms, oil and gas, media and insurance, the prospects for more rapid IT market growth are
directly correlated to the success of economic reform.
Industry Developments
Despite severe fiscal pressures in 2009, the Croatian government continued to invest in IT as part of its
drive to improve the competitiveness of Croatia's economy and to narrow the gap with EU countries.
Projects rolled out in 2009 included a major healthcare IT system upgrade, part of an initiative launched
with the 2009 budget, as well as new VAT payment and prosecutorial case-tracking systems.
The Croatian government announced in June 2009 that it had launched a HRK55mn upgrade of the
national primary care IT system. The three-phase project covers maintenance, installation and
implementation of new functionalities within the existing Croatian healthcare IT system. The entire
project was scheduled to be complketed by the end of 2010.
Another key area for modernisation is e-government, where the National Office for e-Croatia is coordinating
government efforts with technical support and financial assistance from the EU. In 2009, the
Tax Administration of the Finance Ministry modernised its VAT system with assistance from EU funds.
The project was the second completed in this area.
Competitive Landscape
HP continued to lead the Croatia computer market in 2009, ahead of local rival M San Grup and
Taiwanese notebook giant Acer. Other best selling multinational brands include Lenovo and Dell. For
notebooks, HP, Acer, Fujitsu-Siemens and M San Grupa are among the leaders. The leading distributor
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of computers is supplier HG Spot. Gradual increases in mobile and fixed broadband penetration have
increased the popularity of low-cost portable computers.
Microsoft dominates the operating system software segment and benefits from a government software
licensing agreement worth around HRK74mn. Across all software segments, global vendors account for
around 40% of revenues, with local vendors taking the rest. SAP is the enterprise application software
leader, but the market is quite open, with around 20 companies competing for share.
Global and regional IT services vendors were active in Croatia in 2009. IBM enjoyed success in the
public sector, with wins from the Finance Ministry and the Office of the Chief State Prosecutor.
Meanwhile, regional player Hermes SoftLab, now part of the ComTrade group, won a tender to deliver
a retail e-banking solution for Croatia's BKS Bank, while Polish IT giant Asseco also expanded its
presence following two local company acquisitions.
Computer Sales
BMI forecasts that the Croatian PC market (including notebooks and accessories) will be worth
US$491mn in 2010, with flat or low single-digit growth compared with 2008. In H109, volume sales
suffered a double-digit percentage decline, with negative growth in both desktop and notebook categories.
PC sales were expected to finish in negative growth territory for full-year 2009 due largely to the sharp
economic deceleration.
BMI estimated total PC unit sales of about 300,000-330,000 in 2009. The preference for notebooks has
continued, accounting for 50% of sales in H109 to maintain 2008 levels. Lower prices, higher internet
penetration, new entertainment features and a greater premium on mobility are among the factors
boosting the popularity of notebooks.
Software
Croatia's software market is forecast by BMI at US$200mn in 2010 and is expected to grow at a
compound annual growth rate (CAGR) of 8% over the 2010-2014 forecast period. The 2009 economic
slowdown had an impact on software spending in key verticals such as financial services, telecoms and
government. The uncertainty led some companies to review IT budgets or look to defer systems updates,
but other companies saw IT as a means of achieving greater efficiencies in difficult times.
The domestic software market is still expected to grow to US$277mn by 2014, driven in part by
government and EU-subsidised IT projects. Sales were expected to return to single-digit positive
growth in 2010, followed by a double-digit performance in 2011. Looking ahead, an environment of
privatisation deals and investment in modernisation is likely to drive growth.
Services
The Croatian IT services market is projected at US$353mn in 2010 according to BMI estimates and is
expected to be the fastest-growing IT market segment over the forecast period. Following some major
projects in recent years, demand slowed somewhat in 2009 due to the recession.
IT services account for less than 30% of all IT spending in Croatia's hardware-dominated market
presently and the market is relatively undeveloped. However, there are a number of potential drivers
including privatisation and modernisation in many industry sectors, new competitive pressures that
prompt companies to look for efficiencies and EU support for reform.
E-Readiness
Croatian government statistics reveal a disparity in the level of E-Readinessin household and business
sectors. Data published by the Central Bureau of Statistics in September 2008 (the data related to 2007)
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found that less than one-third of Croatians used a computer every day and less than half once a week. The
survey found that computer and internet use was only common among the younger population (below
24). E-skills were judged low and only 7% of those surveyed had purchased anything on the internet
within the past year.
A further report released in February 2009 found an increase of only 4% in three measured categories of
household IT penetration compared with the previous year. Only 7% of Croatians purchased goods and
services over the internet according to the survey.
By contrast, nearly all enterprises used computers and had internet access according to the 2009 survey,
with 84% of enterprises conducting at least some financial business on the internet. Around 98% of
enterprises used computers on a daily basis and 64% had a website. However, the survey indicated
considerable room for development, with only 22% of enterprises involved in e-commerce, up just 2% on
the previous year. Moreover, the percentage of companies utilising an intranet had actually dropped
dramatically compared with the previous year's survey, to just 31% from 64%. The survey found a small
increase in enterprise usage of e-government services, although for roughly half of the companies, this
was mainly limited to basic activities such as obtaining information and downloading forms.
Table of Content
Executive Summary ...........................5
Households ................... 8
SWOTS .......9
Croatian IT Sector SWOT ............................... 9
Croatian Telecommunications Industry SWOT ...... 9
Croatia Political SWOT ................................ 10
Croatia Economic SWOT .............................. 10
Croatia Business Environment SWOT .......... 11
Central And Eastern Europe IT Markets Overview ..........12
IT Penetration ............. 12
Market Growth And Drivers ......................... 13
Sectors And Verticals .. 14
IT Business Environment Ratings ...17
Central And Eastern Europe IT Business Environment Ratings .................. 17
Table: Central And Eastern Europe Business Environment Ratings ....... 18
Market Overview ...............................19
EU Authority ............... 19
Background ................. 19
Hardware .................... 20
Software ...................... 21
Services ....................... 22
End-User Analysis ...... 23
Industry Developments ..... 23
Industry Forecast Scenario ..............26
Table: Croatia's IT Industry ' Historical Data & Forecasts (US$mn Unless Otherwise Stated) ..... 28
Country Context ............... 29
Table: Rural/Urban Breakdown, 2005-2030 29
Table: Consumer Expenditure, 2000-2010 (US$) 29
Internet ............................ 30
Table: Telecoms Sector ' Internet ' Historical Data & Forecasts, 2006-2013 ........................ 30
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Macroeconomic Forecast ............................. 31
Table: Croatia - Economic Activity .............. 33
Competitive Landscape ...................34
Hardware .................... 34
Software ...................... 34
IT Services .................. 35
Company Profiles .............................37
Microsoft Croatia ....... 37
Oracle ......................... 38
M San Group (M San Grupa) ....................... 39
HG Spot ...................... 40
Combis ........................ 41
Country Snapshot: Croatia Demographic Data ...............42
Section 1: Population .. 42
Table: Demographic Indicators, 2005-2030 . 42
Section 2: Education And Healthcare ........... 43
Table: Education, 2000-2003 ....................... 43
Table: Vital Statistics, 2005-2030 ................. 43
Section 3: Labour Market And Spending Power .. 44
Table: Employment Indicators, 1999-2004 ... 44
Table: Average Annual Wages, 2000-2010 ... 44
BMI Methodology .............................45
IT Ratings ' Methodology 45
Ratings Overview ........ 45
Table: IT Business Environment Indicators .. 46
Weighting .................... 47
Table: Weighting Of Components ................. 47
How We Generate Our Industry Forecasts ... 47
IT Industry .................. 48
Sources ....................... 49
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