Investments in 3G together with SOHO/SME segment determine the growth of networking equipment market in CEE region in 2009

When the crisis of 2009 hit, sales of networking equipment for the SOHO/SME sector were the only ones which noted growth. Worst hit was the corporate sector, which declined by double digits in the same year. On the other hand, sales of networking equipment for the telecoms sector decreased minimally in 2009 as infrastructural investments in the 3G standard prevented further decline.

The three main networking equipment markets (for the corporate, SOHO and SME and telecoms sectors) analysed in the study “Telecommunications and networking equipment market in Central and Eastern Europe. Development forecasts for 2010-2012” prepared by the research company PMR were noting growth in the period of 2007-2009. However, only one market continued with this trend in 2009 – the market of networking equipment for the SOHO and SME sector. The decrease of growth rate on this market in 2009 was a consequence as well of decreased sales (although on a smaller scale than in the other two sectors) as well as of changes in the equipment sold. More precisely, customers started to orient more on cheaper equipment, which also explains the rapid growth of certain price-competitive vendors on the market such as Tenda in the Czech Republic and TP-Link in Poland.



The high growth rate within the SOHO and SME sector in the period of 2007-2009 was a result of the low level of penetration with equipment, connected with the fact that telecoms operators were rapidly increasing the geographical range of their services in the selected period. In 2009, on the other hand, the corporate sector declined the most of the three markets analysed in the study (-8%) as customers within this segment encountered significant difficulties with financial liquidity and crediting. Consequently, the budget for networking equipment was one of the first which was a subject of budget cuts. Within the market of networking equipment however, the situation was strongly influenced by infrastructural investments in the 2G and 3G standards.

3G investments prevent further decline within the networking equipment market for the telecoms sector

Not only in 2009, but also in the period of 2007-2008, investments in infrastructure in the CEE region were dominated by development in the 3G standard. As the time of implementation of this standard was different in different countries in the region, therefore the value of such investments was not a subject of big fluctuations.



According to the PMR research, infrastructural investments in telecommunications in the CEE region in 2009 were worth a total of €2.36bn. Even though these investments make up the biggest portion of the networking equipment market for the telecoms sector, they were not able to prevent the minimal decline of one percent on this market in the same year.

In the opinion of Zoran Vuckovic, the author of the report, these investments were influencing the market of networking equipment for the telecoms sector on two levels: “First, the existence of big infrastructural projects itself was contributing to the value of the networking equipment market for the telecoms sector as infrastructural investments are its biggest part. Secondly, infrastructural investments are also affecting, although not directly, investments in other sub-segments of the networking equipment market for the telecoms sector – as investments in the IP-level networking equipment market.” The existence (or not) of developed telecommunications infrastructure is in consequence affecting the level of possible short-term investments from telecom operators. When the crisis hit in 2009, demand for internet and data transmission in the CEE region increased and as such was noted by the telecoms operators. In the case of Russia, this demand was created within the sectors of mobile internet (computers) and broadband fixed access, while in the Czech Republic from usage of mobile internet through handsets. In response to the growth, all operators in the region invested in networking equipment in order to increase revenues as these services were characterised with short return of investments. On markets where the necessary infrastructure was non-existent, the mentioned service could not be developed and therefore on those markets, demand for networking equipment was lower. Without 3G infrastructure it was impossible to invest in IP-level networking equipment – for the increase of network capacity in order to provide the service of mobile internet.


This press release is based on information contained in the latest PMR report entitled “Telecommunications and networking equipment market in Central and Eastern Europe. Development forecasts for 2010-2012”.

You are welcome to contact the author of the report:
Zoran Vuckovic, IT&Telecom analyst
tel. /48/ 12 290 61 71
e-mail: zoran.vuckovic@pmrpublications.com

For more information on the report please contact:
Marketing Department:
tel. /48/ 12 618 90 00
e-mail: marketing@pmrcorporate.com

 
About PMR

PMR www.www.pmrcorporate.com is a British-American company providing market information, advice and services to international businesses interested in Central and Eastern European countries as well as other emerging markets. PMR's key areas of operation include business publications (through PMR Publications), consultancy (through PMR Consulting) and market research (through PMR Research). Being present on the market since 1995, employing highly skilled staff, offering high international standards in projects and publications, providing one of most frequently visited and top-ranked websites, PMR is one of the largest companies of its type in the region.