Market Report, "Russia Information Technology Report Q2 2013", published

We forecast Russian IT spending will grow 11.4% in 2013 to reach RUB696.2bn.As well as spending being driven by rising incomes and an expanding middle class, the market is set to receive a boost after Russia's historic entry into the WTO, finally confirmed in August 2012. Enterprise modernisation is also increasing spending on hardware and business software applications. Major projects in key sectors such as banking, and oil and gas, and a restructuring of the utilities sector are key opportunities for vendors. Meanwhile, in the retail hardware market the expanding range of tablets and slim-line laptops available is helping to increase sales by meeting consumer demand for affordable mobile computing devices.

Headline Expenditure Projections

Computer hardware sales: RUB328.1bn in 2012 to RUB355.1bn in 2013, +8.2% in local currency terms. Tablets should be a strong growth area in 2013 as a wider range of low- and mid-range devices reach the market.

Full Report Details at
- http://www.fastmr.com/prod/589230_russia_information_technology_report_q2_2013.aspx?afid=301

Software sales: RUB121.9bn in 2012 to RUB139.2bn in 2013, +14.3% in local currency terms. Demand will grow as Russian enterprises become more integrated in global markets and supply chain.

IT Services sales: RUB175bn in 2012 to RUB201.9bn in 2013, +15.4% in local currency terms. Cloud computing and value-added services such as consulting and applications development are seeing strong demand growth.

Risk/Reward Ratings: Russia's score was 60.5 out of 100.0. Russia remains in fifth in our latest Europe RRR table, tie with the Czech Republic, but ahead of CEE peer Poland. The country ranks joint third for its Industry Rewards score owing to its large size, but ranks lowest for Industry Risks at 32.5.

Key Trends & Developments

* Russia's hardware market is going through a period of change as Russia's WTO entry should result in cuts in taxes on imports, which currently amount to 5-15% of a product's added value. This comes as high quality, low-priced tablets and slim-line laptops are becoming available from OEMs, particularly in China. The combination of lower import costs, cheaper mobile devices and the expansion of wireless networks (4G LTE will be nationwide by 2018), could usher in an era of rapid PC proliferation, particularly for personal rather than household devices. However, much will depend on the government's ability to maintain an environment conducive to further development, including an effective customs regime, low import duties and generally transparent business environment.
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