Growing but still malnourished

In 2005, the value of the Polish IT market amounted to zł.17.8 billion, which was a 14.1-percent increase on the previous year. Research and consulting company PMR foresees the value of the market reaching zł.20 billion this year, and analysts are optimistic about the future.

"We expect the market to grow at a double-digit rate in the coming years," PMR analyst Paweł Olszynka predicts. PMR expects the market to be worth zł.22.3 billion next year and zł.24.6 billion in 2008.

But despite its dynamic growth, the Polish IT market is still relatively small in comparison to Western markets. Although the second largest market in the CEE region, Poland only accounts for 1.5 percent of the European market in terms of value.

Poland's market is also immature from a structural point of view. Nearly 60 percent of those buying IT products are large companies, 17 percent of the expenditure comes from public administration, 12 percent from individual users and just 13 percent from small and medium-sized companies.

"The market share of SMEs is relatively small in Poland," Olszynka said, adding that in Western Europe this segment's share is at least twice as large.

Also, hardware is still the most frequently purchased IT product in Poland, despite falling market shares (from 67 percent in 1996 to 46.5 percent in 2005). Services make up just over 32 percent of the market, while software accounts for a little more than 20 percent.

"In the old EU, the value of services is around 85 percent of the value of hardware," said the president of the Polish Chamber of Information Technology and Telecommunications (PIIT), Wacław Iszkowski, adding that this leaves room for potential growth in the services sector.

Recently, the focus in Poland's IT sector has been on consolidation. Not long ago, ABG merged with Ster-Projekt, and the resultant company is now in the process of joining with Spin. Additionally, the fusion of Softbank with Asseco Poland and Computerland with Emax are currently being finalized.

"Mergers will continue to take place in the coming years," said the president of ABG Ster-Projekt, Dariusz Brzeski.