European ICT market growing steadily

- Nearly 3 percent a year increase for the ICT industry - Software, IT services and data services driving expansion with 6% growth - Flat-screen televisions still in strong demand

Brussels, 8 March 2007 - The market for information technology and telecom -munications (ICT) in the EU will increase in 2007 by 2.9 percent to 668 billion Euro. "The European ICT industry continues to grow steadily, with IT services, software applications and broadband data services as the main drivers", commented EITO Chair Bruno Lamborghini on the basis of the latest study of the European Information Technology Observatory EITO, presented today in Brussels. In 2008 the European ICT market should again grow by around 2.9 percent, to 687 billion Euro.

Welcoming the report, the European Commission's Director General for Information Society and Media, Fabio Colasanti, stated: "The ICT sector remains one of the most dynamic sectors of the economy, with higher than average growth rates and research intensity. The study shows that the first signs of fundamental change are appearing as Europe moves towards a knowledge -based economy. The EU's 7th Framework programme for research, the current review of the regulatory framework for electronic communications and the i2010 initiative for a European Information Society are all designed to support continued growth in this area."

The EITO 2007 report shows that Information technology (IT) is proving to be a reliable source of growth: the companies involved are turning 320 billion Euro this year. This represents an increase of 4.4 percent. Above all, software and IT services are booming - with increases of 6.5 and 5.5 percent respectively. There is strong demand for professional IT services like outsourcing, consulting and system integration. "We are expecting similarly high rates of growth next year", says Lamborghini. The hardware market is also recovering: it is expected to grow by 1.7 percent in 2007 and in 2008 by 2.2 percent. Above all, notebooks and multi -function peripherals are creating an increase in demand while the market for desktop PCs is shrinking. For 2008, the EITO experts are expecting an overall market value in IT of 335 billion Euro (plus 4.7 percent).

Growth in the EU telecommunications market is lower than in IT. Here the market in the EU is increasing this year by 1.5 percent to 348 billion Euro and in the coming year by 1.1 percent to 352 billion Euro. With plus 6.4 percent, above all fixed data services such as DSL are currently experiencing a boom. "Broadband Internet is already standard in companies and private households are catching up", explains Lamborghini. "42 percent of households in Western Europe already have a fast network access." Mobile data services are also increasingly in demand. At the same time, the EU market for fixed voice telephone services is shrinking by around five percent a year. New value -added services must now provide revenue growth. Besides data and Internet services, Third Generation (3G) mobile traffic and mobile Internet access are increasingly popular. User -generated Web 2.0 applications and content are opening up new relevant opportunities.

The market for consumer electronics (CE) has further potential for growth. According to EITO, the Western European CE market is currently increasing by around 2.5 percent. Turnover and growth leaders are flat -screen televisions. "Digital technology has largely displaced analogue products", explains Lamborghini. "The industry now makes three quarters of its turnover with digital equipment."

Lamborghini emphasises that "the European Union has to face the global challenge. This can be achieved by exploiting the many strategic assets, such as the EU's advanced communications infrastructures and services as well as the world's largest market for education, comprising close to half a billion people. But at the same time Europe needs finally to put an end to its present weaknesses: market fragmentation, too little investment for R&D in ICT, limited high -tech start -ups, and insufficient preparation and mobility of people with the right kind of skills."

EITO expects new demand to be created, in particular, through IT innovations in the areas of P2P software, logistics and RFID, security technologies and e -health services, as well as through the digitalisation of public administration (e -government).

Lamborghini concludes: "The EITO 2007 Report has confirmed that Europe has entered a new ICT investment cycle encouraged by stronger than expected economic recovery, EU enlargement, the booming Asian markets and new technological opportunities. Strong growth of software and IT services, together with the diffusion of broadband networks, open new exciting opportunities for Europe in the next years of the decade."

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