Russian IT Market in 2012
A chapter from 10th Annual Survey of the Russian Software Export Industry
Sep 04, 2013
Last year, the volume of the Russian information and communication technology market
(ICT market) increased by only 1.2%. The information technology market grew slightly more – approximately by 4% according to IDC and by 7% according to the Ministry of Telecom and Mass Communications of the Russian Federation.
Against a rapid (by tens of percents) increase in the ICT market during the period after the crisis of 2009, the market actually showed a zero growth in 2012.
A year ago, experts expected the growth of the Russian ICT market to reduce, but not in such degree. The IDC analysts see two main reasons for the deceleration: the decrease in the Russian economy growth rates and the reduction of IT costs caused by the fact that companies, coming through trials of that crisis, tend to spend money for various projects more reasonably demanding sound justifications of all costs. The ICT Russian market saturation in some of its separate large segments should be added to these two factors.
Another factor that is worth mentioning is development and expansion of modern cloud and telecom technologies which provide new instruments to cut communication and IT costs. The services of commercial data centers allow to upgrade available computing capacities without purchasing new servers, and the IP telephony ousted more expensive traditional voice communication.
Considering the entire ICT market, the main reason for the slowdown of its growth is the saturation in a number of its significant segments. Now, it is no longer possible to increase the volume of cellular communication operators’ services and mobile phone sales at the expense of new subscribers as almost all Russians (over 91% of the entire population, including children) already use mobile communications. Last year, mobile phones were generally purchased to replace existing old devices. Replacement of traditional mobile phones (mainly used for voice communication) by smart phones was underway. The average price of a sold mobile phone significantly increased, which means that in this case Russian economy deceleration had no great impact on the market growth indicators.
The same holds true for the market of personal computers, which now can be seen almost in each house and on each workplace. The relatively small growth that still remains in this segment is supported by replacement of desktops with laptops. Apparently, the desktop computer market in Russia, as well as around the world, will be steadily reduced.
Considering the level of economically developed countries, the Russian ICT market is not mature yet, although some signs of its maturation are already visible and the gap is quickly closing. In the sphere of telecommunication services the only lags behind the Western World exist for the share of smart phones in the total number of mobile communication devices, and also for the share of mobile Internet users in the total number of Internet users.
Due to the size of the country and to the rapid growth in recent years, the Russian Internet sector became one of the largest in Europe and will probably become the largest soon. About a year ago, Russia took the first place by the number of Internet users in Europe (according to comScore) and by the number of imported PCs in the EMEA region (IDC). In Russia there are 3.6% of all Internet users in the world, but herein less than 2% of all globe population lives in the country. By the number of broadband Internet users our position is not much worse – 6th and 7th place in the world (according to J’son & Partners Consulting and to Broadband-Forum.org, respectively).
By the average data downloading speed, which does not depend on country size, in 2011 Russia took 16th place among 224 countries of the world (according to Pando Networks). The Internet access rate in the Russian regions grew 4.4 times over the past year (according to a number of tariff plans).
By Internet connectivity, Moscow and St. Petersburg already match the level of the cutting-edge countries (over 80% of households are covered by the Internet) while other regions will reach this level in several years.
According to the Ipsos analytical company survey (which was conducted on demand of Reuters) - Russians are the world leaders among the VoIP technology users (36% of respondents used it at least once over the last three months).
Following results of 2011, Russia moved up to a rather high 27th place among 193 countries in the UN rating by the level of eGovernment development, having overtaken Ireland, Italy, Greece, Lithuania, Poland and some other European countries. In the previous similar rating it took 59th place only.
It can be assumed that the increase in the Russian IT market in 2013 should be a little greater than in 2012. IDC predicts its increase on the average by 8% per year in the next five years. Various companies’ experts anticipate more omportant growth rates in the following segments: smart phones, mobile applications, mobile Internet access, software, cloud technologies, navigation equipment and navigation services.
The Russian software market grew by 10% in 2012 (the sales of information security solutions increased even more). In the next years, the cumulative sales of software companies will most likely grow at least by 10% per year. In particular J’son & Partners Consulting experts expect a rapid growth of the mobile application market. By 2016, it will increase 8 fold and will reach $1.3 billion.
The ratio between smart phones and traditional mobile phones sold in Russia is still not in favor of smart phones. In the first quarter of 2013 their share was 40%. For the first three months of this year this indicator in the world market exceeded 50%. However, in Russia, the smart phone sales volume is growing faster. Therefore, it can be assumed that this year this ratio for the world and for Russian markets will be identical. According to the Euroset the sales of smart phones in Russia in the first quarter of 2013 increased by 34%, and the sales of traditional mobile phones reduced by 24% (in comparison with the same period of the previous year).
The sales of smart phones will be promoted by the launch of 4G networks (LTE). In this sphere, Russia’s lag behind the economically developed countries is not really great. According to J’son & Partners Consulting, in 2012 the share of sales of the subscriber devices that support the LTE technology in Russia comparing with the global sales was only 0.6%, but by 2015 it will increase up to 2%.
The volume of the Russian mobile video market in 2012 was $65 million (according to J’son & Partners Consulting). Expectedly, it will reach the level of $344.8 million by 2015.
J’son & Partners Consulting predicts that within the next three years, the sales of tablet-computes in Russia will grow 2.3 times and in 2015 it will reach 5.8 mln devices.
Last year, the volume of the Russian navigation market (the sales of systems, solutions, equipment, and services in the transport segment) was 15 billion rubles (about 0.5 billion US dollars) that is 25% more than the year before. GLONASS predicts its quadruple increase – up to 60 bln rubles ($2 bln) in 2013.
By IDC estimates, the Russian market of cloud services is growing approximately by 50% per year.
The ICT market share in Russia’s GDP did not change considerably and has remained at the level of 4% in recent years.
* – preliminary data
Source: IDC
* – preliminary data
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(ICT market) increased by only 1.2%. The information technology market grew slightly more – approximately by 4% according to IDC and by 7% according to the Ministry of Telecom and Mass Communications of the Russian Federation.
Against a rapid (by tens of percents) increase in the ICT market during the period after the crisis of 2009, the market actually showed a zero growth in 2012.
A year ago, experts expected the growth of the Russian ICT market to reduce, but not in such degree. The IDC analysts see two main reasons for the deceleration: the decrease in the Russian economy growth rates and the reduction of IT costs caused by the fact that companies, coming through trials of that crisis, tend to spend money for various projects more reasonably demanding sound justifications of all costs. The ICT Russian market saturation in some of its separate large segments should be added to these two factors.
Another factor that is worth mentioning is development and expansion of modern cloud and telecom technologies which provide new instruments to cut communication and IT costs. The services of commercial data centers allow to upgrade available computing capacities without purchasing new servers, and the IP telephony ousted more expensive traditional voice communication.
Considering the entire ICT market, the main reason for the slowdown of its growth is the saturation in a number of its significant segments. Now, it is no longer possible to increase the volume of cellular communication operators’ services and mobile phone sales at the expense of new subscribers as almost all Russians (over 91% of the entire population, including children) already use mobile communications. Last year, mobile phones were generally purchased to replace existing old devices. Replacement of traditional mobile phones (mainly used for voice communication) by smart phones was underway. The average price of a sold mobile phone significantly increased, which means that in this case Russian economy deceleration had no great impact on the market growth indicators.
The same holds true for the market of personal computers, which now can be seen almost in each house and on each workplace. The relatively small growth that still remains in this segment is supported by replacement of desktops with laptops. Apparently, the desktop computer market in Russia, as well as around the world, will be steadily reduced.
Considering the level of economically developed countries, the Russian ICT market is not mature yet, although some signs of its maturation are already visible and the gap is quickly closing. In the sphere of telecommunication services the only lags behind the Western World exist for the share of smart phones in the total number of mobile communication devices, and also for the share of mobile Internet users in the total number of Internet users.
Due to the size of the country and to the rapid growth in recent years, the Russian Internet sector became one of the largest in Europe and will probably become the largest soon. About a year ago, Russia took the first place by the number of Internet users in Europe (according to comScore) and by the number of imported PCs in the EMEA region (IDC). In Russia there are 3.6% of all Internet users in the world, but herein less than 2% of all globe population lives in the country. By the number of broadband Internet users our position is not much worse – 6th and 7th place in the world (according to J’son & Partners Consulting and to Broadband-Forum.org, respectively).
By the average data downloading speed, which does not depend on country size, in 2011 Russia took 16th place among 224 countries of the world (according to Pando Networks). The Internet access rate in the Russian regions grew 4.4 times over the past year (according to a number of tariff plans).
By Internet connectivity, Moscow and St. Petersburg already match the level of the cutting-edge countries (over 80% of households are covered by the Internet) while other regions will reach this level in several years.
According to the Ipsos analytical company survey (which was conducted on demand of Reuters) - Russians are the world leaders among the VoIP technology users (36% of respondents used it at least once over the last three months).
Following results of 2011, Russia moved up to a rather high 27th place among 193 countries in the UN rating by the level of eGovernment development, having overtaken Ireland, Italy, Greece, Lithuania, Poland and some other European countries. In the previous similar rating it took 59th place only.
It can be assumed that the increase in the Russian IT market in 2013 should be a little greater than in 2012. IDC predicts its increase on the average by 8% per year in the next five years. Various companies’ experts anticipate more omportant growth rates in the following segments: smart phones, mobile applications, mobile Internet access, software, cloud technologies, navigation equipment and navigation services.
The Russian software market grew by 10% in 2012 (the sales of information security solutions increased even more). In the next years, the cumulative sales of software companies will most likely grow at least by 10% per year. In particular J’son & Partners Consulting experts expect a rapid growth of the mobile application market. By 2016, it will increase 8 fold and will reach $1.3 billion.
The ratio between smart phones and traditional mobile phones sold in Russia is still not in favor of smart phones. In the first quarter of 2013 their share was 40%. For the first three months of this year this indicator in the world market exceeded 50%. However, in Russia, the smart phone sales volume is growing faster. Therefore, it can be assumed that this year this ratio for the world and for Russian markets will be identical. According to the Euroset the sales of smart phones in Russia in the first quarter of 2013 increased by 34%, and the sales of traditional mobile phones reduced by 24% (in comparison with the same period of the previous year).
The sales of smart phones will be promoted by the launch of 4G networks (LTE). In this sphere, Russia’s lag behind the economically developed countries is not really great. According to J’son & Partners Consulting, in 2012 the share of sales of the subscriber devices that support the LTE technology in Russia comparing with the global sales was only 0.6%, but by 2015 it will increase up to 2%.
The volume of the Russian mobile video market in 2012 was $65 million (according to J’son & Partners Consulting). Expectedly, it will reach the level of $344.8 million by 2015.
J’son & Partners Consulting predicts that within the next three years, the sales of tablet-computes in Russia will grow 2.3 times and in 2015 it will reach 5.8 mln devices.
Last year, the volume of the Russian navigation market (the sales of systems, solutions, equipment, and services in the transport segment) was 15 billion rubles (about 0.5 billion US dollars) that is 25% more than the year before. GLONASS predicts its quadruple increase – up to 60 bln rubles ($2 bln) in 2013.
By IDC estimates, the Russian market of cloud services is growing approximately by 50% per year.
The ICT market share in Russia’s GDP did not change considerably and has remained at the level of 4% in recent years.
| Indicator | 2012 | Drop (-)/Growth (+) following the results of 2012 | Source |
|---|---|---|---|
| Russian ICT market | $69 billion* | 1,2% | IDC |
| Russian IT market | $33 billion* | 3,9% | IDC |
| 700 billion roubles | 7% | Ministry of Telecom and Mass Communications | |
| Income from communication services | 1,53 trillion rubles | 5,2% | Rosstat |
| Mobile communication market | 679,2 billion rubles | 5,6% | Rosstat |
* – preliminary data
| IT services | 19% |
| Software | 14% |
| PCs | 24% |
| Mobile phones | 16% |
| Telecommunication and network equipment | 11% |
| Other equipment | 16% |
Source: IDC
| Indicator | 2012 | Drop (-)/Growth (+) following the results of 2012 | Source |
|---|---|---|---|
| Russian motor vehicle navigation market (systems,solutions, equipment, services) | 15 billion roubles | 25% | NP GLONASS |
| Russian mobile application market | $160 million | +256% | J’son & Partners Consulting |
| Smart phones | 11,2 million pieces | 29% | IDC |
| Tablet computers | +256,7% | Euroset Company | |
| 289,5% | IDC | ||
| 3.89 million pieces ($1.77 billion) | +344% (+278%) | ITResearch | |
| Netbooks | -17% | ITResearch | |
| Portable electronics | 88.6 million devices (484.8 billion rubles) | +16,7% (+20,5%) | Euroset Company |
| Mobile computers | - 5% (in monetary terms) | Euroset Company | |
| Smart phones | +69% in pieces (+60% in monetary terms) | Euroset Company | |
| 41,3% | IDC | ||
| E-book devices | + over 100% | Euroset Company | |
| Professional data panels | $125.5 million(33.3 thousand units) | +15% | ITResearch |
| Video conferencing | $96 million | +20% | TrueConf |
| Laptop computers | 9,5 million units | 13% | IDC |
| 9,37 million units | ITResearch | ||
| Desktop computers | 4,66 million units | -7,5% | ITResearch |
| 4,16 million units | +1,7% | Gartner | |
| Total revenue of the external DSS vendors | $152 million | +22,9% | IDC |
| Infrastructure software | +13% | IDC | |
| Printers, copiers, and multifunctional devices | 4.2 million units ($1 billion) | 0.1% (9.2% in monetary terms) | IDC |
| Monitors | 5.07 million units ($870 million) | -10% (-15,5%) | ITResearch |
| Servers | +9,2% | IDC | |
| IT services (system integration, consulting, etc.) | $6,3 billion | +8,4% | IDC |
| Software | $3.4 billion | +10%* | IDC |
* – preliminary data
| Indicator | Time | Absolute value | Indicator change | Penetration indicator | Source |
|---|---|---|---|---|---|
| Runet mobile audience | September-October, 2012 | 35 million subscribers | +51% | WapStart and Openstat | |
| Wireless Internet connectivity | End of 2012 | 40 million active subscribers (65.5 million subscribers by number of SIM cards) | 83% (of all Internet users) | J’son & Partners Consulting | |
| Active mobile Internet connection subscriber base of smart phone users | End of 2012 | 22,5 million subscribers | +88% | J’son & Partners Consulting | |
| Average mobile data transmission traffic per smart phone owner | 2012 | 303 MB/month | +150% | J’son & Partners Consulting | |
| Internet audience scope | End of 2012 | 61,3 million subscribers | +15% | comScore | |
| Broadband Internet access services | End of 2012 | +13,5-14% | AC&M-Consulting | ||
| Monthly Internet audience in Russia | Autumn 2012 | 61.2 million people 18+ (about 47 million people daily) | +12% | 52% | According to the Obshchestvennoye Mneniye Fund |
| Indicator | Time | Absolute value | Change | Source |
|---|---|---|---|---|
| Share of sales of the LTE technology supporting subscriber devices | By the results of 2012 | 0,6% | J’son & Partners Consulting | |
| Mobile video market | By the results of 2012 | $65 million | +160% | J’son & Partners Consulting |
| Market of mobile phones (including smart phones) | By the results of 2012 | 42 million units (199,1 billion roubles) | +5,8% (+14,4%) | Euroset Company |
| By the results of 2012 | 40 million units (95 billion rubles) | +5% (+18%) | Svyaznoy company | |
| By the results of 2012 | +5% (15-17%) | MTS retail network | ||
| Mobile phone availability | March, 2012 | 91% of the Russians | Public Opinion Foundation | |
| Netbook or laptop availability | March, 2012 | 28% of the Russians | Public Opinion Foundation | |
| Smart phone availability | March, 2012 | 11% of the Russians | Public Opinion Foundation | |
| Tablet computer availability | March, 2012 | 7% of the Russians | Public Opinion Foundation |
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