U.S.

Commercial Service, Department of Commerce

Guide to European ICT markets with additional reports on Egypt, Korea, Singapore, and Vietnam
2008

Table of Contents CEBIT

AUSTRIA3 BELGIUM...9 BULGARIA...13 CROATIA..17 CZECH REPUBLIC......20 DENMARK...23 EGYPT..27 FRANCE30 GERMANY...37 GREECE44 HUNGARY50 IRELAND..53 ITALY....57 KOREA..64 THE NETHERLANDS..68 NORWAY..72 POLAND...79 PORTUGAL..81 RUSSIA.86 SERBIA.91 SINGAPORE.97 SWEDEN.101 SWITZERLAND.108 TURKEY.111 UNITED KINGDOM..115 UKRAINE119 VIETNAM...123

AUSTRIA

Capital: Vienna Population: 8.3 million Languages: German Monetary Unit: Euro Exchange Rate 2007: (1US$ = EUR 0.73) GDP per Capita (in US$ 39,064)

Ingeborg Doblinger Commercial Specialist Market Overview The Austrian ITC (Information technology and communications) market in 2006 totaled $16.1 billion. IT accounted for $ 8.2 billion and telecommunications for $7.9 billion. Computer hardware accounted for $ 2.9 billion, software products for $1.6 billion and IT services for $3.7 billion. Telecom services amounted to $7.6 billion and communications and network equipment for $373 million in 2006. Industry experts project that the IT market will expand 7.8 percent year-on-year in 2007 to reach $8.84 billion. Over the five year forecast period, the Austrian IT market should expand at a compound annual growth rate (CAGR) of 7.2 percent with the strongest growth to be seen in the hardware segment. Leading drivers will include spending on security solutions, streaming media, digital identity services, server blades, and the wireless rollout. Linux will experience a banner year, but web services will have less of an impact in the short term. Windows Vista will experience rapid growth but will not have the impact of previous Windows evolutions. Sales for the entire computer hardware sector are expected to increase by 9.5 percent in 2007. Industry experts forecast a growth of 6.6 percent for software products, and 7.2 percent for IT services in 2007. It is critical that software be user-friendly, whether marketed to personal users, business professionals or executives. It is vital that the software be bug-free and preferably written in German. Software packaging is important for retail sales and should be in German. Despite some bandwidth and tariff structure limitations, E-commerce is growing steadily. Presently, there are about 2.4 million commercial Internet users in Austria, however this number is expanding rapidly. Austrians spent about $38.1 billion for online purchases of products and services of all kinds in 2006 -- up from only $28.1 billion in 2005, which is a growth of 35.6 percent. By the end of 2007, online purchases will grow to $46.0 billion. The Marketplace for Business Process Technology Software is rapidly becoming a determining factor in the development of a countrys economic potential. Global business activities by companies require complex, multilingual, multi-functional, disseminated software solutions. The software must be globally integrated and standardized with interfaces to all possible available packages. Software solutions must take into consideration local regulations and laws governing hardware produced and sold by different manufacturers.

European standards will be developed which will facilitate entry into larger markets for application software. New technologies, together with the larger market into which they are introduced, will stimulate demand for new applications in networks, optical storage, image processing, multimedia services and more. IBM is the largest IT vendor in Austria. However, there are approximately 50 additional U.S. IT firms selling their products and services in Austria. In addition, there is strong competition from European and Asian suppliers in this market. The IT Services market in Austria expanded 7.3 percent year-on-year in 2006 to reach a value of $3.73 billion. Measured in Euros, the services market remained flat compared to the previous year. The Austrian IT services market can be characterized as a very mature market with no clear drivers in sight. The year 2006 has seen the development of a variety of new security threats, with detected malicious code affecting traditional IT systems and networks, embedded operating systems, and mobile and VoIP technologies. The ongoing effort by security vendors to enhance security tools and contain damage from newly aggressive security attacks has spurred further growth in the Austrian security software industry. This sub-sector grew 10.7 percent from 2005 to 2006, reaching $72 million. The market is expected to achieve $122 million in revenues by 2010, representing a compound annual growth rate (CAGR) of 13.4 percent. Security technology is an important foundational element for many of the leading growth drivers in the IT market today, including Web services and digital identity services.

STATISTICAL DATA ITC market Expressed in millions of US dollars ITC Market 2006 Computer hardware Software products IT services Total ITC Market 2007 ITC Market 2008 Est. annual growth rate over the next 3 years

2,878.8 3,150.9 3,450.8 1,587.5 1,692.9 1,807.1 3,730.9 4,000.2 4,278.1 8,197.3 8,844.0 9,535.9 7.8 percent

2006 import market share for USA: 32% 2006 exchange rate: 1US$ equals 0.80

The Marketplace for Communications Technology Telecommunications market In 2006, the market for telecommunications services in Austria increased in total volume. Growth was particularly strong in mobile communications. Tariffs continued to drop in the fixed and mobile network sectors. More than half of 2006 sales can be attributed to mobile communications, which grew at a rate of 8.6 percent in 2006. Due to increasing broadband penetration the sales in broadband services increased by 26.5 percent in 2006 vis--vis 2005.

Mobile communications market For a number of years, the prices for mobile telecommunications have fallen so dramatically that mobile telephony is now the toughest competition for fixed network telephony. By the end of 2006, there were 8.98 million active mobile phone subscribers, representing an increase of 7.1 percent vis--vis 2005 and a penetration rate of over 90 percent. The new regulatory framework for electronic telecommunications markets, which is laid down in five directives from the European Union and was translated also into Austrian national law in the summer of 2003, aims for a harmonized regulatory policy that promotes competition within the Member States. Articles 14 through 16 of the framework Directive are of central importance, giving a clear mandate to the national regulatory authorities (in Austria RTR GmbH) to carry out extensive market analyses at regular intervals. RTR is an independent regulating body and is in charge of granting licenses, assigning frequencies, setting prices and terms of contracts, monitoring the market and arbitrating disputes. Because of a shortage of frequencies, the mobile communications market, which was liberalized in 1996, has fewer players than the fixed network. Market entry for a new company is possible only if that company is granted or, since the summer of 2003, transferred frequency usage rights. The Austrian mobile market has been quite competitive in recent years, but over the last year the market has shown signs of saturation, reflected in the restructuring of operations by some operators. The market continues to be led by Mobilkom Austria with a market share of 40.8 percent, followed by T-Mobile with 36.4 percent, One with 19.8 percent, and Hutchinson 3G with 2.7 percent in 2006. Fixed network market The estimated number of authorized public fixed voice telephony operators in Austria is 67. Of these, six major players have a share of 90 percent. At the beginning of market liberalization, the fixed network market opened up mainly via the carrier network operators. Relatively easy market entry with little required investment input resulted in a large number of applications for licenses. Most of the major providers are developing, or have already developed, into full service providers. In addition to providing speech, data and Internet services, they are also offering Server Hosting, Application Services, and mobile services. Providers that can offer a full range of products and services have the best chance of surviving in the long term. There were 2.9 million fixed lines in service at the end of 2006, a decline of 3.0 percent over 2005. Telekom Austria claims 2.8 million of these. The number of fixed access lines operated by Telekom Austria has been declining in recent years as customers opt for ISDN lines or replace their fixed line with a cellular subscription. Meanwhile, the number of cellular subscribers has increased dramatically. To sum up, the telecom services sector has been largely liberalized, is well developed, and is extremely competitive. Licenses are required for wire-bound public voice telephony, public offering of line leases, and wireless voice telephony. A single simple registration requirement applies to all other telecom services. The convergence of mobile phones, Internet, TV, satellite, and cable offer a potent mix of new services, especially to American firms, which are the most experienced suppliers for many of these services. U.S. telecom services providers present in Austria include Abovenet Communications, Airpage, AT & T Global Network Services, Equant Network Services, Facilicom International, UPC Telekabel, and Verizon. Mobile communications will continue to increase with the drop in tariffs. Broadband Broadband penetration (expressed as a percentage of the population having it) is expected to increase from 1.2 million lines in 2006 to 1.5 million lines in 2007, while fixed network voice telephony and leased lines will decline somewhat.

Broadband as a growing sector should be an attractive target for investment by U.S. companies. An alternative operator or Internet Service Provider (ISP) can implement broadband access to end-users either by using self-operated access technologies such as optical fiber, power-line, radio networks (W-LAN), and cable television networks (CATV), or by resorting to the unbundled (copper) access network of Telekom Austria and purchasing bit streaming as a wholesale service. There exists an enormous potential for further development of the broadband market through the use of innovative technologies and products. It is estimated that 30 to 35 percent of all Austrian households will have a broadband connection by the year 2008. Internet services The Austrian market for Internet services is growing rapidly. About 5.9 million Austrians were active Internet users in 2006, an increase of 7.3 percent over 2005. Of these 2,411,000 were workplace users and 4,916,000 were home users. Relatively high telephone costs and ISP subscription fees, a general reluctance by Austrians to use electronic payments, and data protection concerns, hinder use of the Internet. Nevertheless, the future of electronic commerce in Austria appears promising. Austrians spent about $38.1 billion for online purchases of products and services of all kinds in 2006 up from only $28.1 billion in 2005, which is a growth of 35.6 percent. In 2007, online purchases will amount to $46 billion. . Telekom Austrias Aon is the largest Internet provider in Austria, but there are some 204 ISPs in the country. A complete list of ISPs can be obtained from the following website: www.ispa.at Higher-ticket products solely dependent on broadband take-up are growing in popularity, including video-on-demand and music services that allow customers to download films. The Marketplace for Digital Equipment & Systems The Austrian digital camera market was valued at US$ 314 million in 2006, a decline of 8.2 percent vis--vis 2005. It is a market, which has captivated the Austrian consumer in previous years. The leading vendors in this market were Canon with a market share of 16.5 percent, Sony with 10.9 percent, Olympus with 10.2 percent, Kodak with 10.1 percent, Fuji with 9.6 percent, Nikon with 8.9 percent and HP with 5.9 percent. Other vendors had a share of 27.9 percent. The integration of digital cameras in 2006 moved beyond a point of differentiation as devices in the mid and lower ranges of vendor portfolios were included in the market and heightened consumer expectations, making imaging and video capability into a consumer commodity. Central to the expansion of the camera phone segment were substantial declines in component costs such as imaging sensors, combined with the development of manufacturing processes that have evolved to include the integration of digital cameras as a standard element in the production process. VGA and sub-VGA cameras are now priced below US$50. Consumer point-and-shoot cameras are the traditional digital cameras. Resolution of these cameras currently ranges from 1MP models to 8MP models (e.g. HPs Photosmart 215 or Sonys DSC F828). All of the models have removable memory and a color LCD display that can display the images captured. Camera Phone Vendor Strategy Due to growing commoditization and technological evolution in the camera phone space, vendor strategy evolved substantially in 2006 in an attempt to expand usage scenarios beyond casual, spontaneous image capture, and to provide new points of differentiation.

The introduction of the Nokia N90 saw the first significant departure from vendors persistent focus on resolution, and the collaboration with Carl Zeiss to incorporate quality lenses, designed with the dual intention of increasing quality rather than the pure volume of mega pixels. Similarly, in January 2006 Motorola joined forces with Kodak for the purposes of CMOS sensor supply and integration of software and services to enable access to the Kodak Easy Share Gallery, printers, and retail kiosks. In addition, Nokia added to existing partnerships in announcing a collaboration with Yahoo in April 2006 to add support for Flickr, the online photo sharing facility for its N series devices, thus enabling immediate upload OTA direct from a handsets gallery. When considered in conjunction with the addition of WLAN and UPnP (universal plug and play) support in devices such as the Nokia N80, such moves illustrate that the leaders in cameras phone imaging are those that are not only leveraging brand, component, and service strength from parallel markets, but are also already embracing convergence with regard to devices, networks, and services. This points to the beginning of a process of unifying fixed and mobile domains and enabling a seamless reciprocation of user experience, whereby a user can access and utilize the same service, regardless of location, access point, and terminal. There was a sharp slowdown in the growth of the digital camera market in 2006. The market declined 8.2 percent in 2006 vis--vis 2005. Industry experts predict that 2007 will show a small drop in shipments and will continue to show small declines each year until 2008. The decreasing importance of the camera phone has had the effect of stunting the growth of the camera market at the low end. The focus is turning from cameras in the phone market to other functions such and streaming media.

Disk storage systems The Austrian disk storage systems market is highly competitive with a relatively low volume of annual array sales. At US$206.6 million in end-user spending, Austria accounted for just 2.9 percent of 2006 disk storage systems spending in Western Europe. The US$206.6 million in disk systems revenue represented a 16.8 percent growth over the previous year. New shipments of disk storage systems grew at a healthy pace of 47.3 percent in 2006. Austrias growth in this sub-sector contributed approximately 2.6 percent of total incremental shipments of storage systems throughout Western Europe. Storage spending was also driven by projects intended to increase data resiliency and to reduce data recovery and restore times. Such trends would certainly support the shift towards networked storage, which when appropriately designed and implemented, provides endusers with a much more resilient and efficient storage ecosystem. A large portion of recent storage spending was in the financial services, telecom services, government, and healthcare industries. HP was the largest supplier of disk systems and accounted for 41.5 percent of total 2006 sales. IBM ranked second with a share of 22.5 percent. EMC ranked third with 11.5 percent of supplier revenue, while HDS ranked fourth with a share of 7.5 percent, and Fujitsu-Siemens dropped to a 5.1 percent share of the Austrian disk storage systems market. The top three suppliers accounted for 57.5 percent of total 2006 array sales, and the top ten suppliers exceed 80 percent of total market value. Unix sales are expected to remain flat through the forecast period. Sales of external arrays for disk storage supporting Unix are expected to increase 1.5 percent when

compounded annually through 2010, while internal Unix storage systems will experience a 5 percent decline during the same period. The Unix market will account for approximately 30 percent of all array sales in 2010, down slightly from 33 percent in 2006. The Windows array market will grow 2.5 percent, compounded annually, between 20062010. Windows will remain the largest operating systems market segment throughout 2010, increasing from 45.5 percent of total 2006 sales to 46.6 percent in 2010. Linux will remain the fastest growing operating systems segment of the disk systems market and will experience a 16 percent compound annual growth rate through 2010. Both internal and external arrays supporting Linux will increase throughout this forecast period. This segment is expected to account for 11.3 percent of the 2010 market.

Upcoming Events ItnT Trade Show Date: January 27-29, 2009 Reed Exhibitions Vienna Messezentrum Wien Neu Messeplatz 1 A-1020 Vienna, Austria Tel: 43-1-727 20-0 Fax: 43-1-72720-443 Email: info@messe.at Website: www.itnt.at For further information about the ICT industry in Austria, please contact: Ingeborg Doblinger Commercial Specialist U.S. Embassy Boltzmanngasse 16 A-1091 Vienna, Austria Tel: 011-43-1-31339-2120 Fax: 011-43-1-310 69 17 E-mail: ingeborg.doblinger@mail.doc.gov www.buyusa.gov/Austria/en Sources: IDC Austria - E-mail: www.idc.com RTR (Austrian Telecom Regulating Authority) - E-mail: www.rtr.at

BELGIUM

Capital: Brussels Population: 10.000.000 Languages: Dutch, French, (English), German Monetary Unit: Euro Exchange Rate: 0.69 (Jan, 2008) GDP per Capita (in US$): $33,754 (2007 est.)

Local Market Commercial Specialist Mr. Ira Bel E-mail: Ira.Bel@mail.doc.gov Tel: +32 2 508 2434 Fax: +32 475 29 69 85.

Market Overview Belgium is a small market of only 10 million people. However, the Belgian Information and Communications Technology (ICT) sector is doing very well and, over the past year, has grown significantly faster than the Belgian and, in fact, European economy all sectors combined. The ICT sector represents a turnover of 21.7 billion dollars for Belgium and Luxembourg. Last year the Belgian ICT sector grew 5.0%, slightly higher than the western European average ICT growth of 3.1% and the overall growth of the Belgian economy of 2%. For the first time since 2000, the Belgian ICT sector is growing faster than the national economy. Belgiums telecom sector has been struggling over the past few years, particularly with regards to the liberalization of the European markets. Notwithstanding the liberalization of telecommunications in 1998, the fixed-line market is still dominated by the former monopoly operator, Belgacom, which is 51% state owned. There are about 40 other operators, but the only significant one is Telenet, which owns a substantial cable infrastructure but has only a small share of the overall market. For the mobile phones there are three major players: Proximus (Belgacom), Mobistar (France Telecom) and BASE (KPN). All formally introduced third-generation (3G) mobile phones services in the third quarter of 2003 but have so far failed to market them. The information technology market seems to be mainly driven by new investments by SMEs, the median being companies with a turnover of 5 million dollars. Computer hardware, personal peripherals, software and IT services are growing steadily. Only office equipment, data and network hardware are in decline.

The Marketplace for Business Process Technology

All the big names in the IT business processes sector are present in the Belgian market: Oracle, PeopleSoft, Act!, Seibel and SAP. Microsoft is a new comer on the market looking to carve out its share of the CRM segment with its sales application. Competition between these companies is fierce. Ever since the IT bubble burst in early 2000, investment in the sub-sector has been nearly non-existent; most

companies cancelled their IT projects. However, since 2003 investment has been resuming quickly. Big corporations are largely catered for; the SME market, on the other hand, is wide open and growing. SMEs are quickly realizing that they are behind the United States in terms of business processes and must catch up fast to remain competitive. CRM and document management seem to be the main market drivers. Microsoft has anticipated this demand and is marketing mainly its CRM software to companies employing 5 150 people. According to the Belgian IT market intelligence group InSites, over the next year, 40% of Belgian companies intend to increase their IT budget by 10% to 15% for business processes; the main segment being firms with a turnover between $500,000 to $10,000,000. Only 1% of Belgian companies intend to decrease their IT budget. Smaller companies will rarely contact the larger corporations such as PricewaterhouseCoopers or EDS. They view the service as disproportionately expensive and will rather contact one of the 40 Systems Integrators on the market. These latter hold to themselves 20% of the entire IT market and tend to carve out their own niche market mainly: document management and archiving, telecom integration and CRM. American firms looking to penetrate the Belgian business processes market should contact the systems integrator that caters the target to the end-user.

The Marketplace for Communications Technology

E-commerce fares well in Belgium; in 2003, of the 4.5 million regular surfersrepresenting 44% of the population, over 2.2 million Belgians made an online purchase, this is 4% more than last year. E-commerce in Belgium is worth 500 million dollars. The average e-shopper spends $100 per year. Purchasing entertainment ticket (concerts, movies) and transportation passes (plane, train) represent 28% of online traffic. E-commerce has grown significantly over the past few years but may have hit a slower growth plateau. This is probably due to the stagnation of computer sales rather than true weakness of the sub-sector. Overall Internet access is fairly high in Belgium approaching 60% penetration. 84% of the Internet connections in Belgium are broadband, either ADSL or Cable. The weak link is the PC sales among senior citizens. Less than 50% of the 55-year-olds have access to a computer and the Internet and less than 20% of the 65-year-olds have access to these tools. The number of companies creating their web sites is growing. According to 2003 market data 82% of Belgian companies have an Internet site. According to the OECD, 50% of the content of Belgium s registered domains are in English, while the rest is equally divided between French and Dutch. However, 24% of Belgian companies use an extranet with customers and 6% allow online transactions. Credit card purchases are becoming more widely accepted but there are still some security concerns. Concerning M-commerce, it remains very weak in Belgium. The main hinders for online buyers stems from technical difficulties. In fact, 20 % of Belgians find it difficult to buy online due to bad service design. There is therefore a market for products that increase user-friendliness of online purchases. A local company, the Free Record Shop, is offering the possibility to order audio tracks online. Currently, they are offering over 500,000 tracks for download. This should be an excellent stimulant for the e-commerce market. Free record shop is competing with less well-established, iTunes, MSN, Skynet and Tiscali. MSN offers 6,000 tracks

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online. Likewise, the demand for security appliances, multiple methods of payment (pay-pal has yet to catch on in Belgium), and Internet services is high. There is also a significant demand for telecom services including Text To Voice (TTV) and Interactive Voice Recognition (IVR).

The Marketplace for Digital Equipment & Systems

Since the Dot.Com bubble burst in early 2001, the data storage/SAN market has been depressed. There were over investment, over capacity and nearly 25% of the data storage companies failed. They were bought at rock bottom prices and were consolidated. Despite, the infrastructure of the SAN market is aging and still operating under its capacity. Surprisingly, in the past three months it has known a pickup in demand. According to SAN service providers, demand is expected to rise significantly over the next few years. Sources Inc. contends that, an upcoming change in European legislation requiring companies to archive data may further bolster the market. Security products are increasingly in demand. Of the estimated 3,500 companies that have storage demands, an estimated 75% still have to make their first step. Systems Integrators are looking for devices and software that can seamlessly handle iSCSI and Fiber Channel. Interestingly the Belgian SAN market intends to acquire an extra Systems Integration type layer. Some companies on the market, such as Source n.v., will not sell hardware or software but will provide SAN solutions and will act as an intermediate between the end-user and the data warehousing company. Traditional film development is down as the popularity of digital cameras grows. There has been a steady decline in the use and development of traditional film amid the rapid rise of digital cameras. They currently represent 37% of the world market of camera sales, and this number is expected to grow to over 63% by the year 2006, according to National Imaging Distributors. The Belgian photo finishing industry is realizing the growing need for digital photo printing capabilities, and therefore the push for its growth will be welcomed within the country. Spector Photo Group and other Belgian photo finishing companies are developing methods of printing that are convenient and easy for consumers. Web-based and kiosk ordering are the chief forms of digital photo processing that are growing in popularity in Europe and specifically in Belgium. There is also a strong market for document management and archiving such as technologies that scan and use Optical Character Recognition (OCR) to store and efficiently access documents for e.g. medical and banking services. American firms interested in penetrating this market should contact one of the 40 specialized Systems Integrators (SI) on the market. The U.S. Commercial Service maintains a list of qualified Belgian SIs. For more information please contact Mr. Ira Bel, mailto:Ira.Bel@mail.doc.gov or call +32 2 508 2434.

Future Prospects in this Market Best prospects in the Belgian ICT sector seems to be: SAN equipment, iSCSI and Fiber Channel compatible tools, network security appliances and related software. The market is also strong for solutions that improve perceived if not effective security

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of online transactions. CRM, data management and archiving are expected to grow steadily over the next year offering high opportunities for American companies operating in these sectors. In the hardware/peripheral sector, consumers are increasingly interested in data storage equipment, PDAs (GPRS with Internet connectivity, possibly with GPS capabilities), WiFi, small/entry level servers, laser printers, color inkjet and multi functional printers, TFT and LCD screens. In the software sector, consumers are interested in all types of standard applications, Internet and Intra- and Extranet software, web content management software and solutions, networking software and network security products, development tools, Windows, Linux and UNIX-based products, storage management software, CRM and ERP products, and application management products. There is a strong demand for game software tailored for the consumer market. In the services sector, demand is focusing on desktop and network management, application hosting, security services (assessments and scans) and all types of Internet and E-Commerce-related services. There is a growing demand for telecom equipment and services for mobile, fixed line telephony, cable, broadband, mobile (value-added) data services, and all types of Internet-related communication services. The Belgian market requires also: Outsourcing and maintenance of infrastructure installation, VoIP services for the business market, security applications for mobile communications, entertainment applications, multimedia services and applications, and communication security products and services.

Important USDOC Resources in this Market

Mr. Ira Bel will be coordinating SCE program at CeBIT March 4-9. The U.S. Commercial Service will be bringing over 30 ICT Market Experts to CeBIT and will offer free to American firms only the possibility to brief the Commercial Specialists on their product or service and the Specialists will give their feedback as to the U.S. firms product potential in their respective markets. Again, this is a free program. Please contact Mr. Ira Bel at mailto:Ira.Bel@mail.doc.gov or call +32 2 508 2434 or call +32 475 29 69 85.

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BULGARIA Capital: Sofia Population: 7.9 million Languages: Bulgarian Monetary Unit: Lev (BGN) Exchange Rate: 1 USD=1.359 BGN (Bulgarian National Bank exchange rate on December 19, 2007) GDP per Capita: $4,100 Local Market Commercial Specialist Stanislava Dimitrova Commercial Specialist Commercial Service, U.S. Embassy Sofia 16 Koziak Str. 1407 Sofia Bulgaria Tel: +359 2 937 5100 Fax: +359 2 939 5735 E-mail: Stanislava.Dimitrova@mail.doc.gov Web: www.buyusa.gov/bulgaria

Market Overview The macroeconomic data shows that Bulgaria has a stable growth in GDP of 5% for a period of 7 years. Expected GDP growth in 2008 is 5.8%. The inflation rate of 6.9% for 2008, no budget deficit, budget surplus of 3.5% of GDP in 2007, no currency fluctuations (since the Bulgarian lev is pegged to the Euro) and attractive corporate taxation of 10% imply excellent environment for business activities in the sector. Since 2004 budget surpluses have been reported. Unemployment rate in 2007 is expected to be 7.5%. The new opportunities in the Bulgarian ICT sector are based on talented human resources, mature software organizations and the direct access to global markets through the NATO membership (2004) and the European Union accession in January 2007. Bulgaria has a long tradition of excellence in IT skills - being known as the "Silicon Valley" of the former Soviet Bloc. Currently, there are over 4,000 actively operating ICT companies in Bulgaria. Most major U.S. IT firms are present, and new technologies and Bulgaria's EU membership are increasing market opportunities. According to the latest report of the Communications Regulation Commission, the telecommunication market in Bulgaria in 2006 amounts to $2,277 billion. The telecom market in 2007 value amounts to 12.5% of Bulgarias GDP which is an increase of 5% compared to 2006. According to ISI Emerging Markets, the market of wireless telecom services will grow by nearly 20% in nominal value terms this year to more than $1.23 billion despite the high usage base accumulated in the previous 4 years. The market of telecommunications technologies retained the pace of expanding in 2007 driven by cell-phone operators and Internet services mainly. Bulgaria's fixed penetration is the 2nd highest fixed penetration rate in Central and Eastern Europe. The decline in the fixed line business has been offset by the strong growth in the mobile and broadband segments. The telecom market in Bulgaria is dominated by the former state monopolist Bulgarian Telecom Company (BTC) and three mobile operators alternative operators are also emerging. Bulgaria's market is developing towards the advanced stage with already 117.4 percent mobile penetration according to ISI Emerging markets. Internet market

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remains below average but outstrips neighboring markets. The governments influence over the sector is only regulatory through the Communications Regulation Commission, since state is not a major stockholder in biggest corporations. There were B2B solutions dominating in the software segment. The trend in the hardware computer market is towards branded than assembled PCs with a growth in mobile configurations as well as servers.

The Marketplace for Business Process Technology Bulgaria is the leader in the field of outsourcing among the countries in East Europe according to the research of CIO (Chief Information Officers, published by CXO Media Inc.) and Meta Group Inc. The major activities are in the areas of developing software computer system software, networking software and web-design, CAD/CAM/CAE software, telecommunications and wireless development software, application software, firmware, hardware computer and systems assembling, digital and analog printed circuits design, PCB manufacture, analog mixed engineering, microelectronics design ASICs, front-end and back-end microelectronic activities, and automation systems for industrial automation. An adequate technical training, years of experience in the development of hardware, software, and electronic products, and good language skills are the basis for a large and attractive pool of workforce in the Bulgarian business process technology sector. The key factors are: more than 20% of the population speaks a foreign language, close to 5,000 university and college students enroll in IT degree programs annually, Bulgaria employs about 20,000 ICT professionals and ranks 3rd in world for certified IT professionals per capita as well as 8th in the world in terms of absolute numbers. In addition, there are 110 CISCO academies in the country. A number of foreign companies have outsourcing arrangements with Bulgarian software companies. As a result of the saturation of the market, the number of available IT specialists is decreasing. The fact that the exported software products developed in Bulgaria are free of VAT led to the situation where more than 50% of the export is contributed by software developing companies. According to the EITO, the software market in Bulgaria totaled to $505 million in 2006. Not surprisingly, major foreign investors in the sector, HP, IBM, SAP, etc., are expanding their operations in Bulgaria.

The Marketplace for Communications Technology Bulgaria has one of the highest penetrations of telephone service in Eastern Europe, with around 38 subscribers per 100 inhabitants. The Bulgarian Telecommunications Company (BTC) owns Bulgarias largest fixed telecommunications network. AIG Capital Partners, part of AIG Global Investment Group, officially acquired 90% of the countrys main landline telecom BTC in block deals on the local stock exchange endorsed in mid-August 2007. BTC has launched Internet television services stationed on triple play technologies for transfer of voice, data, and video. The BTC will invest $19.93 million in the digitalization of its fixed-line network. Digitalization must reach 75-81% by the end of 2008. It is expected that the alternative telecoms will take 50% of the BTC traffic in the next few years. Twenty Bulgarian operators have been licensed to install and operate a network for fixed-line voice telephony. Despite the license, only a few operators have their own fixed infrastructure. The rest of the companies primarily offer VoIP services and have signed interconnectivity agreements. PC-PC telephony is popular in Bulgaria as well. The move has led to lowering the tariffs for international and long-distance calls while having only a marginal effect on BTCs market penetration. 97.5% of the fixed line revenues are still generated by BTC. In 2005, Bulgaria has introduced the service of choosing different telecom operators to deliver domestic and international telephony. Four operators have initiated this service (Gold Telecom Bulgaria, Nexcom Bulgaria, Orbitel and Spectrum Net). Only 0.2% of the overall fixed-line service revenues are generated for these four operators.

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The mobile penetration rate in Bulgaria is 117.4% of the population at end-June 2007. The mobile market in Bulgaria is still growing faster than any other telecommunications sectors. In 2007, three telecommunications operators operate on the Bulgarian mobile cellular networks and services market - three GSM operators: MOBILTEL EAD with a trade name - MTEL, COSMO BULGARIA MOBILE PLC with a trade name GLOBUL and the BULGARIAN TELECOM COMPANY with a trade name VIVATEL. Mobiltel services almost 5 million SIM cards as of November 2007. The Austrian telecommunications operator TELECOM AUSTRIA AG paid $1,95 billion to acquire 100 % of the Mobitel in June 2005. Mobitel uses the Pan-European digital GSM standard (900 MHZ). Mobiltel was launched in 1995. The second GSM operator, COSMO Bulgaria Mobile, launched operations in 2002. Globul services more than 3.5 million SIM cards as of June 2007. In 2004, BTC was granted a license for Vivatel, the third GSM operator. Vivatel launched operations in November 2005. Vivatel services about 873,000 SIM cards as of June 2007. Bulgaria held tenders for 3G mobile network licenses and WiMAX Class A and Class B point-tomultipoint wireless license in 2005. The 3G licenses went to Mobiltel (class A), BTC (class B) and Globul (class B). Bulgaria is likely to outrun Europe in development of third generation mobile services, the so-called UMTS, according to experts. One of the local 3G operators, Mobiltel, launched its UMTS network in less than 6 months after receiving the license. Globul and Vivatel also launched 3G networks. However, it is expected that the 3G-service market will develop in three to five years. In 2005, four point-to-multipoint licenses went to Max Telecom (class A), Transtelecom (class A), Nexcom (class B) and Mobiltel (class B). Currently, they all are in the process of launching their services throughout Bulgaria. The fifth WiMAX telecom operator in Bulgaria Carrier BG will start offering its services in the spring. Carrier BG alone will invest over $140 millions in the next three years. Until 2009 the company will offer services in ten big Bulgarian cities, including the capital Sofia, Varna and Plovdiv. The demand for WIMAX equipment is substantial. It is expected that 20% of all Internet users will move into mobile WIMAX. WIMAX in Bulgaria will substitute the last mile segment and provide services in areas that do not have Internet access. Bulgaria has about 12 Internet service providers who have their own networks. Cable, LAN Internet access and DSL broadband are now largely available and affordable. Since the Bulgarian Telecommunications Company provides affordable ADSL access, both business and private ADSL users increased. The market is certainly growing at very high speed in 2007 as practically all-new web users get broadband packages. Orbitel, TPN, Digital Systems, SpectrumNet, are some of the top Internet service providers. A recent survey of GfK shows that about 52% of all Bulgarians have access to Internet. 75% of Internet users are between 15 to 40 years old. Internet penetration in the capital city reaches nearly 50%. The Internet access market in Bulgaria amounts to $74 million. Bulgaria's broadcast and cable media are also expanding. There are 500 cable TV providers with more than 1.1 million subscribers or 53.6% of the households. Cable TV operators are upgrading their networks in order to be able to provide interactive services such as Pay Per View TV, Video on Demand, triple play, cable Internet and telephony services. These companies have entered the telecommunications services market. A number of companies are providing phone services using VoIP technology. Some of the bigger operators such as Cabletel offer digital TV. There are two companies offering satellite television. In Bulgaria only the satellite television is fully digitalized at present. The Sector Policy in Communications foresees full digitalization of the cable television till 2010, full covering of the country with digital land television till 2015, inculcating of the digital broadcast system DAB till 2015 and digital broadcast fewer than 30 MHz (DRM) till 2020.

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The Marketplace for Digital Equipment & Systems Sales of personal computers are expected to rise 40.1% in 2007 accelerating from 3.5% in 2006, according to data of the research agency IDC. The average growth of the computer market is forecast at 20.1% per year until 2011. The share of the portable computers is expected to reach 52% of total sales. The market expansion reflects lower prices and improved economic environment. An earlier analysis of IDC indicated that the local IT market is projected to expand by 47.7% in two years to $791 million in 2009. Hardware sales are expected to keep its share of about 71% in total. Software sales are evaluated at 12% of the local IT market and services 17%. There is a tendency of a shrinking market share of the desktops for the account of a growing market share of the laptops. The laptop market segment had a growth of 75.7% in 2006. HP and Fujitsu Siemens have a market share of 29.7% of the total PC market in Bulgaria. In the segment of the laptops, BenQ, MSI, Prestigio, IBM, HP, Dell, Toshiba, and Fujistu-Siemens were the main brands preferred, while in the desktop segment assembled PCs hold about 80% of the market share. In the laptop segment the leader is still HP, followed by Fujistu-Siemens on the second and Toshiba on the third place. HP, IBM, and NEC are the desktop brands that were preferred by the Bulgarian consumer. The leader HP holds 50.3% market share, followed by IBM and NEC.

Future Prospects in this Market There is potential for entry of large international software companies because of the 0% export tax, low salaries and the prior expertise of the local workforce. Typical example is HP, SAP Sofia and Tumbleweed Communications (decided to close location in Bangalore, India and open office in Sofia). Both fixed and mobile segments of the Bulgarian ICT market still have high growth potential that is about to be explored by the new market entrants. Large investments are expected in both segments. A number of foreign companies are opening call/service centers in Bulgaria. There are opportunities for participation in tenders for sale of computers and peripherals for government procurements where the key factors are price, quality and after-sales support. The government of Bulgaria has an e-government initiative that will provide major opportunities for US ICT companies. The Bulgarian Ministry of Interior has plans to implement new e-passport personalization system. There is an expanded demand for U.S. providers of advanced telephone service solutions, as well as value-added telecommunications services. Other best prospect subsectors include Internet services, wireless and broadband Internet access technologies, cable television, and voice-over-Internet, routers, switches, access servers, equipment for mobile telephony, cable operators equipment for transmission and fixed wireless equipment, equipment for WiMAX networks. The full digitalization of the State's fixed-line network and the completion of the national 112 emergency management system are among the top-priorities of the Bulgarian government.

Important USDOC resources in this Market www.nsi.bg - National Statistical Institute of Bulgaria www.daits.government.bg - State Agency on IT and Communications www.crc.bg - Communications Regulation Commission www.investbg.government.bg - Invest Bulgaria Agency www.basscom.org - BASSCOM www.bait.bg - Bulgarian Association of Information Technology www.nsi.bg - National Statistical Institute

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CROATIA

Capital: Zagreb Population: 4.43 million Languages: Croatian Monetary Unit: Kuna (KN) Exchange Rate: 1 USD=5.14 KN; 1 EUR=7.32 KN (Croatian National Bank mid exchange rate, average for October 2007) GDP per Capita: EUR 7.706 (2006) Local Market Commercial Specialist: Miroslav Nikolac Commercial Service, U.S. Embassy Zagreb 10002 Buzin Croatia Tel. +385 1 661 2026 Fax. +385 1 661 2446 E-mail Miroslav.Nikolac@mail.doc.gov www.buyusa.gov/croatia

Market overview Telecommunications Until a few years ago, the Croatian telecommunications market showed an inclination towards fragmentation, with dozens of alternative ISP and telecom operators appearing after full liberalization of telecom services in the beginning of the decade; eventually, the small size of the market drove most of those companies out of business. Some companies that showed resilience and/or creativity were eventually taken over or merged; Iskon Internet, the only company that seemed to have the potential to compete with the incumbent telecom operator on a larger scale, eventually received an offer it could not refuse and is now a member of the Croatian Telekom group, which is in turn owned by Deutsche Telekom. However, the telecom companies the likes of Metronet and Optima Telekom - that were properly capitalized have not only survived, but are currently playing a significant role in the financial markets as well, attracting significant investments through their debt and equity flotations. Five years ago, this scenario would have seemed impossible. The only market segment that remains undisturbed is the mobile telecommunications Croatia is now well past the point of a 100% mobile telephony penetration, and with three existing mobile operators, there is little room for new market entrants. IT equipment Government spending and investments by telecommunications and financial institutions are still the main drivers behind the IT equipment and business process technology market segments. They are also the key drivers behind the PC market growth. Just as a wide variety of boxes DVD recorders, DVD+HDD recorders, HD TV, etc. started to swarm the market, many consumers begun to realize the full potential of the Internet: with the

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onset of Internet TV, offering 65 channels for a monthly subscription of USD 13.00 and a possibility to include the HBO Premium program package and a recording option for additional USD 11.00, satellite TV, cable TV and DVD/HDD recorders became redundant in Zagreb and larger cities served by broadband. Still, large appetites of an average Croatian consumer assure continuous development of all market segments, including PCs, laptops, audio/video equipment, etc.

The marketplace for business process technology According to the local branch office of IDC, the Croatian market for IT services in 2006 reached another all-time high of USD 310 million, representing an increase of almost 40 percent compared to the previous year. The growth was spurred by the usual suspects: the government, banks and telecom providers, but also by the dynamic economy and EU and World Bank funding for IT services contracts. After having surprised the analysts for the second consecutive year, this impressive growth is expected to slow significantly, to an average annual rate of 10 percent over the next five years. IBM remains the top IT services provider in the country, followed by local companies Combis and Apis IT. Applications consulting and custom application development were the fastest growing market segment and accounted for approximately 25 percent of the IT services market; they were followed by hardware/software support and installation with 24 percent and systems integration services with 23 percent of the market.

The marketplace for communications technology Fixed and mobile telecommunications Although their public appearance indicates otherwise, the alternative fixed telecommunications operators are suffering from the painful fact that the incumbent operator HT Inc. still enjoys a 92 percent market share in the fixed telecommunications market. Some interpret this fact as a potential, others as a threat; however, for companies that are in dire need of funding in order to expand their new state-of-the-art networks, this is quite disturbing it is difficult to attract investors by quoting a marginal market share, especially after the incumbent operator listed its stocks on the Zagreb and London stock exchanges. While Optima Telekom is fighting off the allegations about its stock being junk and Metronet is forced to refute the rumors it is about to go bankrupt, the incumbent operator remains unimpressed by their presence and continues to record significant margins with a total revenue of EUR 910 million in the first three quarters of 2007, it recorded a net profit of EUR 294 million! With approximately 300,000 ADSL subscribers (of which 23,000 use the IP TV service), HT remains the undisputed market leader. The three mobile operators T-Mobile (a part of the HT group), VipNet and Tele2 are enjoying the healthy demand for mobile communications. And it is not only about minutes any more; VipNet invested more than EUR 60 million in the development of wireless Internet access in the past three years. In October 2007, VipNet and T-Mobile were almost equal in terms of subscribers approximately 2 million each but with EUR 410 million in revenues for the first three quarters of 2007, T-Mobile displays a somewhat better financial performance. Tele2, the latest entrant to the market, registered 455,000 users in its network. All that said, it is apparent that all market leaders are focusing on new services such as tripleplay and mobile Internet. Number of minutes is becoming less relevant; the main strategy is to set up the infrastructure to allow for bundling of services and thus bring customer loyalty.

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Internet Compared to the expansion of the mobile telephony in Croatia, Internet seemed to grow at an embarrassingly slow pace. However, it is growing continuously and quite rapidly in some segments, especially considering the number of ADSL subscribers, which nearly doubled to 300,000 in 2007. Cable TV It was bound to happen sooner or later - after years of competing, the two dominant cable TV operators, Digital City Media (DCM) and Adriatic-Kabel, were merged to form a new company B.net through a EUR 55m takeover by Austrias Bewag. Although the two cable TV operators were present in almost 250,000 Croatian homes, they failed to take advantage of the initially slow ADSL roll-out by the incumbent operator; their initial Internet access offer was too slow and too expensive compared to ADSL. Today, their Cisco-enabled network, if properly managed and marketed, could finally become a serious player in the market. The total revenue of B.net is expected to reach EUR 14 million in 2007.

The Marketplace for Digital Equipment & Systems Being a small market, Croatia was not really interesting for large vendors. This was the case until 2001, when the PC sales in major markets worldwide experienced a slump; after that, every market became interesting. But Croatia paid off surprisingly well. The total number of PCs sold in Croatia is now well above 250,000 per year. HP (Compaq) was among the first to show dedication to the market and it is reaping the benefits ever since: it accounted for a third of approximately 90,000 laptops sold in Croatia in 2006. HG Spot, a local consumer electronics retail chain, is also the No. 1 manufacturer of desktop PCs sold in Croatia. The development of retail networks and manufacturing facilities by the leading consumer electronics stores indicates that there is a large potential for growth the average price for a desktop or a laptop PC is now well below the Croatian average monthly net salary, and the prices are steadily decreasing.

Future prospects in this market Business process technology, the equipment for broadband services and mobile Internet access seem to be the best prospects in this market. All of the infrastructure required to get the product to the market is already there huge retail networks, consumer electronics megastores, and IT equipment integrators. But while the two traditional suppliers to telecommunications operators in Croatia Ericsson and Siemens have a clear advantage over the competition thanks to their manufacturing operations in Croatia, U.S. suppliers are often not consistent in their approach to the Croatian market. Still, all of the significant U.S. IT/telecom equipment vendors are traditionally present and recognized by the market.

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CZECH REPUBLIC

Capital: Prague Population: 10,7 million Language: Czech Monetary Unit: Czech Koruna (CK) Exchange Rate: USD1= 17CK GDP per Capita: USD 12,100 Local Market Commercial Specialist: Luda Taylor U.S. Embassy Commercial Section Trziste 15 118 02 Prague 1 Czech Republic Telephone: + 420 257 022 315 Fax: + 420 257 022 810 E-mail: Luda.Taylor@mail.doc.gov

Market Overview The market in the Czech Republic is considered open; there are no tariff barriers. During the last five years, the country made a considerable progress in expansion of IT usage and investment. Governmental purchases and focus on small and medium size business are increasing, creating opportunities and enabling the market to grow steadily. IT ratios have surpassed the standards of the original members of the EU. In mobile telephony, the figure is far exceeding the average EU statistics. Considering the Czech Republic is a small country with population of 10.7 million, the number of mobile phones reached 13.1 million at the end of 2007. The penetration is over one hundred percent. The latest trend in the Czech Republic is to cancel the fixed line at home, and buy another mobile phone instead. Internet penetration is divided into two categories. There are 34 percent of households and 97 percent of business with Internet access. Internet access became crucial for Czech business. Since the introduction of ADSL, the market opened and progressed still further. The market is highly competitive with robust U.S and European firms and increasingly competitive Czech firms. The decline of U.S. dollar makes U.S. companies more competitive vis--vis European competitors, though Czech membership gives the Europeans a slight edge in tariff rates. U.S. companies with niche products and services will continue to find good opportunities. The best market entry strategy continues to be working with a local partner, either agent or OEM. Czech Government is possible, but it takes a long time, before a decision is made. During the year 2007, the IT growth in Czech Republic exceeded 17 percent. This trend is expected to carry on in 2008.

The Marketplace for Business Process Technology Expansion on the PC market continues, as the Government is pursuing the adopted State Information Policy Plan, in order to promote and upgrade the expansion of IT. Computer and office equipment hardware still accounts for a very large share of the IT market, but the market is gradually shifting to software and services. The expenditure for IT is 4.82 of

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Czech GDP, placing the Czech Republic around the half way mark of EU member states. The share of VAT from IT to private sector is 3.7 percent. IT represents 17.8 percent of the total market, making it the third largest in Central/ Eastern Europe. New analysis of the IT market in the Czech Republic predicts very steady growth, and increasing number of jobs in the new centers being built in the South East of the country. Software development in the public and private sector accounts for a large number of employees. More growth of IT is being introduced in the public sector, specifically, police work, judiciary, postal services and banking. Electronic signature is legal on Tax Returns. Commercial Register and Land Register are included in a new Public Portal, available as of January 2008.

The Marketplace for Communications Technology Telecommunications still represents one of the most dynamic sectors in the Czech Republics ICT market. The industry is experiencing annual growth, and this trend is expected to continue. Further liberalization is taking place, with the help of Telefonica (formerly Czech Telecom), the major player on the Czech market. The main area of production, telecommunication technology and electronic components is worth 19.8 percent of the market. Overall spending on telecommunication equipment and services has steeply increased. This is mainly due to the massive use of mobile telephony. The leading companies in the communications sector are: Telefonica o2, T- Mobil, Radiokomunikace and Vodafone.

The Marketplace for Digital Equipment & Systems High definition and digital terrestrial television, together with videoconferencing and Digital Light Projection are the main areas of interest in the Czech Republic. Industry is responding to demand concerning the digital technology. Digital broadcasting is broadcasted via existing TV stations, but analog broadcasting still prevails. Video and audio conferencing, servers, audio and video telephones, audio and video transmission services are currently provided by one company in the Czech Republic. Most products are imported, specifically video and audio conferencing. The major global players present on the Czech market include US, German, Japanese and South Korean firms. US products are highly thought of, and are popular. A large number of US companies not only operate, but also ship their products to Netherlands, UK, Ireland and Germany, before reaching the local market. . Future Prospects in the Market Investments Hardware investment is confined to replacement, upgrades and acquisition of new technologies. Investments in IT are increasing on annual basis. Market driving forces are the banking sector, media, state authorities and institutions, and SME. Major players on the Czech market include Microsoft, IBM, Auto Cont, Oracle, Hewlett- Packard, Sun Microsystems, Unysis, CompuSource/MacSource and Unicorn. Technology used is mainly Microsoft, IBM, Sun Systems, Oracle, Novell, Compaq, Symantec Spectrum and Citrix. Best Products/Services Electronic components Network equipment Wireless equipment Data service equipment Voice service equipment

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Video conferencing equipment Safety and Security equipment

Opportunities Telefonica increased investment and is committed to further modernization of the Czech telecom sector. E-commerce in the Czech Republic continues to grow. The progress is slow, but steady. U.S. suppliers are price competitive in the Czech Republic, due to the continuously fluctuating dollar.

Important USDOC Resources in this Market INVEX, International Fair of Information and Communication Technologies October 7-11, 2008, Brno The largest telecom event in Central / Eastern Europe, and ranked as one of the top four IT fairs worldwide. Over 600 exhibitors from 18 countries regularly take part. www.invex.cz, e-mail: invex@bvv DIGITEX, International Fair of Consumer Electronics and Digital Entertainment October 7-11, 2008 Brno invex@bvv.cz AMPER 2008, 16TH International Electronics Trade Fair April 1- 4, 2008, Prague, Exhibition Center, Letnany International information technology show www.amper.cz Telecommunication Office (Regulatory body appointed by government) Sokolovska 219, Prague 9 web: www.ctu.cz, e-mail: info@ctu.cz Association for Information Society: www.spis.cz Association for e-Commerce: www.apek.cz Center for e-Commerce: www.e-commerce.cz

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DENMARK

Capital: Copenhagen Population: 5,451,341 Languages: Danish Monetary Unit: DKK Exchange Rate: (publisher to insert at press time) GDP per Capita (in US$): 53,354 (2006, year-end exchange rate)

Peter Strandby, Commercial Specialist Embassy of the United States of America Commercial Section Dag Hammarskjlds Alle 24 DK-2100 Copenhagen Denmark Tel.: (+45) 3341 7117 Fax: (+45) 3542 0175 Email: peter.strandby@mail.doc.gov Web: www.buyusa.gov/denmark

Market Overview Denmark has a strong international position in the IT and wireless sector and a first class telecom and data infrastructure. Denmark has one of the highest rates of Internet penetration, mobile phone penetration and e-business implementation in Europe, along with one of the highest IT spending level per capita in the world. Denmark is an excellent test market for new products/technologies and exporters due to its manageable market size and a general willingness by the population to exploit the newest technologies. The countrys IT readiness was recently confirmed when Denmark topped the rankings in World Economic Forums latest Networked Readiness report. The Danish government has pushed for a liberal telecommunication market and actively encourages ICT penetration and usage. The incumbent telecom company, TDC, is the major provider of fixed lines due to its ownership of the old public telephone network. In recent years, Danish power companies have initiated a comprehensive expansion of fiber optic networks. Imports and exports of IT products have only increased slightly over the last year, but over a fiveyear period, there has been a steep increase. More IT products have continually been imported than exported. Imports of IT products doubled from USD 4.5 billion in 1996 to USD 9.0 billion in 2006 and so did exports with an increase from USD 3.0 billion in 1996 to USD 6.0 billion in 2006. The IT software markets expansion has been gradually slowing down and all predictions by the IT industry have been revised down to a growth rate in 2007 of 5.5 percent, well below the previous years average rates of 6-7 percent. The total annual growth in IT related expenditure (hardware, software, services) has been steady at around 9-10 percent since 2000. The Marketplace for Business Process Technology The Danish ICT sector is structured towards a service market rather than a production market. Denmark has been on the innovative forefront for many years regarding the development of business process software. Microsofts purchase of Copenhagen based Navision was a clear

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indication of that. Navision was a leading global provider of integrated software solutions for small and medium-sized businesses and was acquired for approximately USD 1.75 billion, which at the time was Microsofts second largest deal. There is an ongoing development in the public sector to coordinate government IT usage and create a national IT infrastructure, which among other things will raise internal IT efficiency as well as meet a growing demand for e.g. e-government and electronic services to businesses and the public. In an effort to increase competition and ensure compatibility of IT systems, the Danish Parliament has decided that as of January 2008 (or whenever technically possible), all future IT solutions in the public sector must be based on open source technology. Outsourcing of IT functions and software development in the public and private sector is a large growth area. The Danish market for IT outsourcing was estimated at DKK 8.4 billion in 2006. During the coming years round half of the existing outsourcing agreements in both sectors are due for renegotiation. These contracts are considered to be worth DKK 3 billion, although it is expected that a majority of these agreements will be made with existing suppliers. Finally, the public sector aims to outsource its entire IT operations and is expected to sign outsourcing contracts worth around USD 100 million annually the next two to six years. The Marketplace for Communications Technology Telecommunications Main indicators, end 2006 Subscriptions in 1,000s Broadband 1,728 xDSL 1,062 Cable 507 Fiber optic 29 Others (WiMax, LAN, etc.) 130 Mobile 5,800 UMTS (3G) 326 IP telephony (Danish service providers) 235 Source: Danish National IT & Telecom Agency With more mobile subscriptions than inhabitants Denmark has a high distribution of mobile telephony. There are three companies with established GSM mobile networks. In addition, there are a number of companies who offer mobile services through leasing within these networks. Denmark awarded its third generation (3G) UMTS licenses through an auction in 2001 to four operators. Currently, the largest provider of 3G telephony is 3, which launched its activities in Denmark in 2003. Currently, 3s users account for two thirds of all mobile data transfers in Denmark. The other main mobile service providers in the market have recently started to offer their own 3G services. These services, however, are presently only offered in the largest Danish cities. Subscriptions to IP telephony more than doubled from 107,000 in 2005 to 235,000 at the end of 2006. Round 45 Danish-based companies accounted for these subscriptions. Broadband internet access is available to 98 percent of Danish households and businesses through the telephone grid. 60 percent can also access the internet using cable modems via cable TV networks (TDC/Stofa) or community antenna systems. The penetration of broadband access has risen dramatically in all parts of Denmark and the total number of broadband connections has quadrupled from 2002-2006 corresponding to 32 connections per 100 inhabitants. The fiber networks that are currently being expanded now reach more than 10 percent of the population making Denmark one of the most fiber intensive countries in Europe. Especially building associations in urban areas and larger businesses connect to these fast networks. New wireless alternatives to broadband access such as WiMAX are emerging as the demand for easy internet access and mobile connectivity is rising.

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The Marketplace for Digital Equipment & Systems IT usage in the workplace is widespread in Denmark and 97 percent of companies with 10 or more employees have internet access. Working from home or on the road by accessing company databases etc. via the internet is becoming increasingly widespread and over half of all businesses with more than 10 employees utilize this type of remote working to a lesser or greater extent. A growing number of consumers are becoming confident with purchasing products and services online. More than 40 percent of the population has made a transaction online within the last month. The average amount per transaction is also rising. The most common goods and services bought online are travel products, entertainment (music, movies, etc.), software, consumer electronics, and computer hardware. Like in many other parts of the world, online gambling such as poker and casino games are also becoming increasingly popular. Danish consumers are very trend conscious and there is strong potential in the high-end of some markets. Both when it comes to replacement products such as PCs (laptops now outsell desktop PCs) as well as home entertainment (flat screen TVs, DVD players/recorders, hard disk recorders, and other digital equipment). Also, the markets for portable electronics such as mp3 players and GPS navigation devices are rapidly expanding. Like the rest of Europe the conversion from analog to digital equipment will continue to dominate the Danish market. Digital TV is now widely available through set top boxes, just as the introduction of digital radio broadcasting has created a growing market for digital (DAB) radios. Demand for Home Entertainment Centers that integrate several digital technologies in one box is also rising. Future Prospects in this Market The Danish market is often used to test new IT products and prototypes. Tests may include product tests concerning e.g. usability and commercial tests to clarify a products potential in the market. The affluent Danish market with strong buying power, sophisticated consumers with a preference for high-end, advanced IT products, the large number of families with computers at home, the magnitude of internet usage, and the high educational level of the average citizen contribute to Denmarks position as a favorite test market. Another important reason why Denmark makes a great testing ground for new IT products has to do with Denmark being a fairly small and homogeneous market. The homogeneity is reflected in the demand patterns of the population. This means that once demand for a specific product or a type of product penetrates the consumer segment, it reaches a critical mass in the course of a fairly short period of time. Faster and cheaper internet access has increased the market for related products and services such as servers, routers, and cable modems. Laptops are now outselling desktop PCs, increasing the demand for wireless connectivity and expanding the market for access hardware to create such wireless networks in homes, offices, or WiFi hotspots in public places. An increasing number of private and corporate customers are making the switch to IP telephony creating a growing demand for related hardware and devices, just as there is a willingness among private Danish consumers to use online, non-Danish IP service providers especially for longdistance calls.

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Important USDOC Resources in this Market Peter Strandby, Commercial Specialist Embassy of the United States of America Commercial Section Dag Hammarskjlds All 24 DK-2100 Copenhagen Denmark Tel.: (+45) 3341 7117 Fax: (+45) 3542 0175 E - mail: peter.strandby@mail.doc.gov Web: www.boyusa.org/denmark

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EGYPT

Capital: Cairo Population: 78 million Languages: Arabic (official), English, French Monetary Unit: Egyptian Pound (LE) Exchange Rate: (publisher to insert at press time) $1=LE5.55 GDP per Capita (in US$): $1432 (2006) Local Market Commercial Specialist Name, Color Photo (300dpi .jpeg file) & Contact Info: Hend El Sineity, Senior Commercial Specialist Address: 8 Kamal El Din Salah St., Garden City, Cairo, Egypt Tel: +20 (2) 2797-3482, Fax: +20 (2) 2795-8368 Email: Hend.El-Sineity@mail.doc.gov

Market Overview To keep in step with the rapidly advancing world of the 21st Century, the government of Egypt has made the commitment to improve the Information and Communications Technology (ICT) industry and assist it in every way to grow and thrive. The Ministry of Communications and Information Technology (MCIT) was founded in 1999, and has since been a key player in the advancement of the ICT sector in Egypt with a view to launching the country into the Information Age. The ideal geography and infrastructure, the labor low cost, the educated and skilled human resources, and the right legislative environment are major factors for Egypt to become an investment destination. Egypt could well become the ICT leader of the region in the near future. The ICT market is one of the fastest growing sectors in the Egyptian economy. In the last few years, MCIT announced a number of initiatives to boost the ICT industry. PC for each home initiative gives the citizens the opportunity to purchase a PC and pay on installment with their telephone bill. The broadband initiative reduced to 50% the monthly subscription of an ADSL connection to encourage more usage of the Internet. IT clubs are now widespread in Cairo & other cities, and in urban areas to give easy access to computer and Internet. The call center industry is picking up and demand is increasing on establishing new ones. The Marketplace for Business Process Technology Egypts IT industry, including software development and other services is currently valued at around $250 million (LE 1.434 billion). Plans for the annual value of the domestic software industry is to reach $1.2 billion by 2010. The Information Technology Industry Development Agency (ITIDA) a 20-month-old entity established by Law number 15 of 2004, aims at paving the way for the diffusion of the e-business services in Egypt and supporting an export-oriented IT sector. ITIDA is also charged with laying the groundwork for the introduction of electronic signature-recognition systems. ITIDA offers long-term accreditation programs, including the twoyear Capability Maturity Model Integration (CMMI) accreditation, for Egyptian software companies, sweetening the pot with an 85% subsidy on CMMIs $50,000 fee. In June, the global management consultancy AT Kearny issued a report focusing on the marketing strategy needed to establish Egypt as an offshore-services center. The report identifies software development as one of nine IT subsectors at which Egypt has significant potential

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The Marketplace for Communications Technology The telecommunication market is a vibrant sector growing at 20-25% annually. This sector was regulated for a long time. In 2000, Egypt signed the WTO Telecom Treaty that requires its members to open their entire telecom sector making it compliant with international standards. As a result of Egypts serious steps to deregulate this sector, public payphone cabins, the cellular phone systems (Egypt has currently three GSM operators), prepaid calling card service have been awarded to the private sector. Telecom Egypt is currently the only operator of the landline network. The National Telecommunication Regulatory Authority (NTRA) will issue within weeks an RFP for a second fixed line license, which will be operational by 2009. Also, NTRA will award the three GSM operators licenses to provide voice and data services based on open technologies. The government reported that the number of dial-up users rose from 1.6 million in 2002 to about 7.8 million in October 2007. One reason for this rise is the cheap dial-up fee, currently less than one cent per minute. The government's Broadband Initiative, introduced in May 2004, cut the price of ADSL service from E 150 ($24) per month for 256K transmissions to currently E 95 ($16.70) and introduced wireless Internet services for local and commercial business. According to official statements, ADSL subscribers have increased from 96,000 in January 2006 to more than 367,000 in January 2007. Fixed line subscribers reached in October 2007, 11.2 million, a teledensity of 15.1%. Mobile phone services continue to grow. As of October 2007, mobile subscribers in Egypt's three providers Vodafone Egypt, Mobinil, and Etisal reached 27.7 million, a density of 37.68%. The three GSM operators are offering between 2.5G and 3.5G services, such as WAP, GPRS, and SMS. The Marketplace for Digital Equipment & Systems The computer market is growing at more than 20% annually, and locally assembled PCs account for 80% of the computer market. Nearly all major U.S. brands are available and have local sales offices and support networks. A January 2007 assessment estimated that more than 6 million Egyptians (out of a total population of 78 million) use computers, with an increase of more than 150,000 new computers each month. MCIT is partnering with other government bodies and the private sector to increase a still relatively low percentage of computer penetration (about 7.5%). Factors contributing to low penetration include insufficiently trained human resources, the absence of advanced Internet training in school curricula, low Arabic content on the net, and lack of public awareness. The ministry is sponsoring Internet centers and subsidized Internet cafes in towns throughout Egypt; as of January 2007, there were more than 1400 IT clubs, with plans to expand to 1500 by mid2007. In October 2006, and Ministry of Education contracted Lucent Technologies and its local business partner to improve Internet access and data delivery to some public schools. The trial project will provide broadband Internet access, e-mail, and distance learning at high speeds to students and educators. In December 2006, Google signed two agreements with the Ministries of Education and Higher Education, giving Google email, instant-messaging, and calendar webbased services to 3 million university and 8 million preparatory school students Future Prospects in this Market In early 2008, U.S. companies will find good business opportunities in the telecommunication sector, with the launch of a second fixed land license and the new technologies and equipment needed. The mobile market is growing and also represents a sizeable market niche. The three GSM operators will be awarded licenses to offer international calls and transmit voice and data. The call center business is booming in Egypt. AT Kearny has ranked Egypt as number 12

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worldwide. There are about 6 call centers in Egypt. The largest is located in the Smart Village high technology park located in 6th October City. Important USDOC Resources in this Market The U.S. Department of Commerce certifies a number of International Buyer Program (IBPs) in the ICT sector. Market research studies on the ICT sectors are available on www.export.gov.

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FRANCE

Capital: Paris Population: 62.5 million Language: French Monetary Unit: Euro (EUR) Exchange Rate: USD 1 = .69 Euro (Jan. 2008) GDP per Capita: USD 32,340 Local Market Commercial Specialist: Charles Defranchi U.S. Commercial Service - American Embassy 2, Avenue Gabriel 75008 Paris FRANCE Tel: 33 1 43 12 28 63 E-mail: charles.defranchi@mail.doc.gov Market Overview Estimated at $65 billion, the French IT market ranks third in Europe after Germany and the United Kingdom, and represents 17% of the total Western European IT market. Next to software and services, computer hardware, including local-area and wide-area networking equipment, is the largest segment of this market, with an estimated value of $20 billion or about 30% of the total IT market. The computer & peripherals market has grown by 8% in 2007. The market is driven by the sale of consumer electronics, including smart phones, I-mode, 3G and PDAs. The level of penetration individual homes exceeds 50%. The French public sector has greatly contributed to the boost in IT sales, as it currently represents 6% of total IT investments. Launched in January 1998, the Government Action Program for an Information Society (PAGSI) is investing billions of dollars in the automation of VAT declaration, customs declaration, the filing of social contributions by employees. As a result, over 2.3 million French taxpayers or 4% of the overall population filled out their income tax return on the Internet. France is perhaps more than any other country in Western Europe on the threshold of the new Internet and mobile revolution; it is accelerating rapidly as one of the top leaders in the new high technology era. The European Association for Competition in Telecommunications announced that France had become the largest broadband market in Europe. Revenue from these high-speed subscriptions alone already exceeds $2 billion annually. In France the overwhelmingly dominant mode of broadband connection is ADSL, representing 94% of broadband connections and 97% of growth.

The Marketplace for Business Process Technology With a turnover of $45 billion, the French software and IT services market ranks #1 in Europe. This market has known a steady growth of 6.5% in 2007, pulled by demand in Consulting Services (up 6%), Engineering (up 4.5%), Facilities Management (up 9.5%) and Packaged Software solutions (up 5.5%).

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Over 6,000 French firms specialize in software services, 2,000 with 10 employees or more. Key activities in this market are Engineering and Integration (23%); Software Development and Technical Assistance (22%); Packaged Software (21%); Facilities Management and On-Line Services (20%); Consulting Services (8%); Training Services (3%); and Third-Party Maintenance (3%). The French packaged software market is valued at $8.2 billion. The ten largest software publishers on the French market are: Microsoft ($1.1 billion); IBM ($546 million); Oracle ($304 million); SAP ($225 million); Sage ($152 million); HP ($148 million); Symantec ($129 million); Cegid ($115 million); Dassault Systemes ($90 million); and EMC ($88 million). Six of these organizations are American. Sales generated by the 100 largest French software publishers amount to $4 billion. The five largest French software publishers are: Dassault Systemes ($793 million); Business objects ($746 million); GL trade ($143 million); Atos Origin ($132 million); Cegid ($115 million). While Dassault Systems and Business Objects generate 90% of their income through their international operations, other French software firms primarily focus on the French market. Demand from large firms is supporting growth in the software and services market, especially in the area of infrastructure software, middleware, security, and business intelligence. In addition, recent decisions concerning the Chorus project at MINEFI, the French Ministry of Economy, Finance and Industry, confirm the public sectors role of growth driver in the French market.

The Marketplace for Communications Technology

The French broadband market is going through an amazingly dynamic phase of growth and convergence. Fiber optic cable already forms the backbone of the French fixed line network, with direct links to large businesses and government administrations. Fiber connections to businesses continued to increase in 2005, while the first major residential connections (FTTH) began in 2006. Meanwhile, the number of traditional wire line broadband connections to French residences is increasing steadily, dominated by ADSL. Usage of broadband capable, also known as Third Generation (3G), cell phones is also growing, as they aggressively target a maturing French mobile sector. Wireless broadband connectivity is increasing as well, especially through the spread of public hot spots. For consumers, this rising access to broadband is enabling and driven by the growth of e-commerce and e-media consumption in France. For businesses, broadband connectivity is an increasingly integral part of marketing, communication and distribution strategies. General French business and consumer commitment to broadband consumption is clear; French Voice over Internet Protocol (VoIP) retail subscribers already number over 5 million. Improvements in wholesale access have been made through line unbundling; to the extent that French consumers now have the advantage of having one of the most competitive broadband markets in Europe. Consumer demand for services such as video on demand, mobile television and videophonesthough still in their infancyis increasing. Also, the exact combination of standards (UMTS, Wi-Fi, WiMax, FTTx, ADSL etc.) within Frances telecom infrastructure is currently being established. The arrival at the end of 2004 of 3G UMTS cell phones marked the emergence of broadband as a force in the French mobile sector. French mobile phone usage is finally catching up with the European average, with an expected 44.4 million users by 2007

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 a penetration rate of 83%. It is the hope of mobile providers that consumers will adopt the new services made possible by 3G technology, notably mobile television, mobile video phone and faster downloading speeds. Frances main cellular carriers have made enormous investments in 3G developments, spending several million dollars on the licensing alone. Over 13 million subscribers used mobile multimedia services (MMS, WAP services, e-mail, etc.) during the first quarter 2006, or close to 30% of all mobile operator subscribers, for a 29.1% increase over the first quarter 2005. The competition between the three companies for broadband cell phone users has just begun. Each provider is offering consumers different packages of quality, functionality, geographical coverage and price. Wireless connectivity is growing residentially as well. Internet providers increasingly promote modems that can stream wireless media to Wi-Fi and/or Bluetooth enabled TVs, computers and telephones. WiMax network installations are also growing in France. The national regulator has opened up frequencies and begun the licensing process for regions throughout the country. Current business packages now integrate data and VoIP services with mobile and fixed telephone services. Very high speed Internet connectivity is already available for businesses in urban locations, thanks to Frances pre-existing fiber optic networks. The new field of competition for these Internet providers in France lies in the convergence of services offered. Most Internet providers now offer VoIP and the seven largest, as well as dominant cable provider Noos, offer Triple Play services (Data, Television, Voice). Competition is turning on price, service and the array of products offered. For example, Orange combines a higher price with claims of better service and offers of additional products such e-gaming, video surveillance and video-phone. In an effort to find the most competitive package of services, companies are routinely offering Wi-Fi compatibility and VoD as well. There has been an explosion in demand for triple play solutions, rapidly evolving towards quadruple play ones, in which mobile services are also included in the package.

These include: Voice Communication: both on a mobile and at home using VoIP, both with videophone. High Speed Internet Access: both on a 3G mobile and to a home network. Television: both on a mobile and to a home network in HD, with video on demand. Mobile The penetration rate for mobile usage is nearing 80%, up from 55% as recently as 2002. The movement of the French consumer towards mobile phones has been helped along by the widespread adoption of Short Message Service (SMS) as a preferred means of communication. French consumers average nearly a billion text messages per month, or about 27 per active customer.

France is currently exhibiting one of the strongest growth rates in the trend of Internet browsing on a wireless device; subsequently, French mobile operators are attempting to usher in a similar transition towards 3G broadband capable models. However, the three main service providers are approaching this trend with different strategies, although they are currently relying on EDGE (2.5G) technology.

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The Marketplace for Digital Equipment & Systems The computer & peripherals market has grown by 7% in 2007. The market is driven by the sale of consumer electronics, including smart phones, I-mode, 3G and PDAs. The level of penetration in individual homes exceeds 50%. The French public sector has greatly contributed to the boost in IT sales, as it currently represents 6% of total IT investments. The French government continues increasing its use of the Internet as a medium of communication with the public. As a consequence, public services have improved in quality while significant savings have been generated. Launched in January 1998, the Government Action Program for an Information Society (PAGSI) is investing billions of dollars in the automation of VAT declaration, customs declaration, and the filing of social contributions by employees. As a result, over 2.3 million French taxpayers or 4% of the overall population - filled out their income tax return on the Internet.

Internet Connections and High-Speed Connections Over 28 million French people of all ages regularly access the Internet, 19% of whom through high-speed cable or DSL connections. This represents respectively a 12% and a 30% increase from 2005. Nearly 13 million homes have a PC, 10 million of which being connected to the Internet. On the business level, 98% of French SMEs use a PC; 80% are connected to the Internet, and over 50% have websites. SMEs (49%) have websites to provide services to their clients and suppliers, while French corporations (79%) use their website in order to promote their image. Seventeen percent of these organizations engage in E-commerce.

Servers The five top server manufacturers are HP (40%), IBM (15%), Dell (14%), FujitsuSiemens (6%), Sun (6%), and Misc (19%). Estimated at $687 million, the server market has grown by 4% in 2006. French corporations continue decreasing expenditures related to maintenance and platform administration and supervision while increasing expenditures related to information systems availability, security and quality of service. Personal Computers

The French PC market has experienced a 10.7% growth in volume in 2006. In 2006, 2 million computers were sold, against 1.8 million in 2005. 92% of companies of more than 100 employees supply their employees with laptops. Moreover, 83% have access to internet. The five largest PC brands are HP, Acer, NEC, Dell and Toshiba, whose market shares are respectively 22%, 16%, 12.5%, and 5.5%. Sales by these companies represented 67.7% of all computer sales on the French market in 2007 against 61.5% in 2005 while sales of other companies dropped by 7.1%. Printers The market for printing products has reached $4.6 billion in 2007, a 7% growth from 2005. The market continues being primarily boosted by the sale of multi-function printers, whose sales reached 4.5 million units in 2006, a 30% growth from the previous year. The average price of a multi-function inkjet printer has dropped to

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under $200, which makes it an attractive feature for most households. Photograph printers also continue being extremely successful, with sales of about 200,000 units in 2006. Over sixty percent of the inkjet cartridges are being sold through very large super-market chains because of their attractive pricing and accessibility. HP controls 44% of the printer market, followed by Lexmark and Epson. The toner cartridges market also represents a major source of revenue.

Future Prospects in the Market

Government opportunities As previously indicated, the French government has launched the Government Action Program for an Information Society (PAGSI) in order to put government services online. Three key services have already been automated: VAT declaration, customs declaration, and the filing of social contributions by employees. In addition, an increasing number of French fill out their income tax report on the Internet.

Unbundling The Internet market has been stimulated by the development of high-speed access, particularly with the introduction of local loop competition via unbundling. Since December 2002, the consumer high-speed market has seen the development of a new type of residential ADSL offer based on unbundling. Alternative operators use their own high-speed equipment end-to-end, thereby maintaining better control over the economic and technical parameters of their ADSL offers. This allows them to differentiate their offer from that of the incumbent operator.

Best Products/Services Business Process Technology Management consulting in IT systems (2% growth) Engineering services (2%) Facilities management and Third-Party Maintenance of Applications (TMA) (8%) Packaged software (5%), especially Integrated Management Software and PLM solutions, expected to grow respectively by 5.7% and 7.5% each year until 2008. Application Service Provider (ASP) solutions: this market grew from $400 million in 2004 up to $800 million in 2006. This includes hosted CRM solutions, whose growth has been 40% in one year. Service Oriented Architecture Solutions (SOA) 70% of its current users are planning to expand these architectures further.

Communications Technology Third Generation (3G) and Universal Mobile Telecommunications System (UMTS) promise to offer consumers the ability to engage in much more advanced activities via their mobile phones, including high-speed internet access and the capacity to send messages containing color images and audio files. This technology, along with highspeed wireless Internet service, and mobile commerce, should fuel significant growth in the future.

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Digital Equipment & Systems Portable devices (laptops, palmtops, smartphones, etc.) Wireless solutions I-mode related products Portable storage devices (USB keys, hard-drives, etc.)

Opportunities The ATAWAD (i.e. any time, anywhere, any device) era causes the French to increasingly seek portable solutions that provide them with permanent access to data across the Internet, whether personal or professional. The market for devices such as laptops, palmtops, and blackberries is therefore growing very rapidly. Great opportunities are also available for wireless solutions both for the home and the office, especially with the advent of 3G high-speed mobile Internet bandwidth. The year 2007 will see a continuation in a dynamic cycle of investments that support innovating projects. Increased accessibility to high Internet bandwidth and wireless solutions will also boost demand for systems integration, especially in the field of Ecommerce, which is anticipated to grow by 50% in 2007. Promising opportunities are therefore available to American firms seeking to export to France, especially for those that provide packaged software as U.S. firms already control 70% of this market. Security is a major concern of the French consumer in regards to their online activities. French consumers have proven a willingness to pay greater amounts for better service, which for Internet services means better security. As broadband usage increases so will the demand for protection of online transactions, and the need for evolving solutions to old and new Internet menaces (Spam, Viruses, Fraud etc.). Indeed if demand for security is not satisfied, it may threaten the growth of demand for broadband in general. American companies have historically been more efficient at meeting client demand.

Important USDOC Resources in this Market http://www.idc.fr - International Data Corporation (IDC) http://www.pac-online.fr - Pierre Audoin Consultants (PAC) http://www.bipe.fr - BIPE (leading European provider of forward-looking economic analyses and consulting services) http://www.eito.com - European Information technology observatory (EITO) http://www.syntec-informatique.fr - Syntec informatique (French association of the software and computing services companies) www.afa-france.com - Internet Access Providers Association (AFA) www.Aforstelecom.fr - French Association of Network & Telecom Services Operators (AFORS) www.form.fr - French Association of Mobile Operators (AFOM)

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www.arcep.fr - Regulation Authority for Electronic and Postal Communication (Arcep) www.anfr.fr - French National Frequency Agency (ANF)

Local Market Commercial Specialist: Charles Defranchi U.S. Commercial Service - American Embassy 2, Avenue Gabriel 75008 Paris FRANCE Tel: 33 1 43 12 28 63 E-mail: charles.defranchi@mail.doc.gov

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GERMANY Capital: Berlin Population: 82.5 million Languages: German Monetary Unit: EUR Exchange Rate: EUR 1 equals USD 1.40 (2007) GDP per Capita (in US$): 34,837 (2006) Local Market Commercial Specialist Senior Commercial Specialist John Lumborg U.S. Commercial Service American Embassy Neustaedtische Kirchstrasse 4-5 10119 Berlin, Germany Phone: +49 30 8305-2730 Fax: +49 30 2045-4466 Email: john.lumborg@mail.doc.gov

Market Overview The German economy is the world's third largest and, after the expansion of the EU, accounts for nearly one-fifth of European Union GDP. Germany is the United States' largest European trading partner and is the sixth largest market for U.S. exports. Germanys "social market" economy largely follows free-market principles, but with a considerable degree of government regulation and generous social welfare programs and protections. Germany is the largest consumer market in the European Union with a population of over 82 million. However, the significance of the German marketplace goes well beyond its borders. An enormous volume of worldwide trade is conducted in Germany at some of the worlds largest trade events, such as CeBIT, Medica, Hannover Fair, Automechanika, and the ITB Tourism Show. The volume of trade, number of consumers, and Germanys geographic location at the heart of a 27-member European Union that added ten members in 2004, and two more in 2007 make it a keystone around which many U.S. firms seek to build their European and worldwide expansion strategies. Consumer demand, which has been sluggish for several years, appears to be picking up. The economy, however, continues to be mainly driven by exports. Business confidence indices rose in early 2006 and still show signs of optimism, despite the increase of the value-added tax from 16% to 19% in January 2007. The German economy continues to suffer from structural problems, including inflexibility and over-regulation in labor markets, taxation, and business establishment, as well as high social insurance costs. The German government recognizes the need for change and has begun a series of reforms. While many observers regard these programs as a useful start, most also expect that additional reforms to enhance competitiveness will be required. German firms focusing on exports, especially in the automotive, chemicals and high tech sectors, have recently enjoyed healthy profits and have exported more goods and services than firms from any other country. The retail sector, by contrast, continues to struggle. Major manufacturing firms have increasingly shifted their production overseas to maintain global competitiveness and reduce costs.

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Since the beginning of 2006, what had been an export-led recovery has begun to expand into the domestic economy. Investment in machinery and equipment has grown rapidly and business confidence has been high the latest survey results from the Munich-based Ifo Institute showed optimism is holding at a 15-year high. More recently there have been signs that the economic recovery has finally reached the labor market. The non-seasonally adjusted unemployment rate dropped to 9.6% in November 2006 the lowest since the fall of 2001 compared with a Eurozone average of 7.7%, according to data released by Eurostat, the European Unions statistical office. Average unemployment was forecast to decline to 4.5 million in 2006, with a further decline to 4.3 million in 2007, assuming continued healthy economic growth. While much of the improvement has been the result of an expanding number of temporary or low-paid jobs, more importantly, the numbers of socially-insured jobs and of self-employed have been rising, too Germany presents few formal barriers to U.S. trade or investment and has pressed the new EU Commission to reduce regulatory burdens and promote innovation in order to increase the EU member states competitiveness. Germany's own regulations and bureaucratic procedures, however, can prove a baffling maze. While not directly discriminatory, government regulation is often complex and may offer a degree of protection to established local suppliers. Safety or environmental standards, not inherently discriminatory but sometimes zealously applied, can complicate access to the market for U.S. products. American companies interested in exporting to Germany should make sure they know which standards apply to their product and obtain timely testing and certification. German standards are especially relevant to U.S. exporters because, as EU-wide standards are developed, they are often based on existing German ones. With annual revenues of more than EUR 134 billion and a workforce of some 750,000 employees, the ICT sector is one of the biggest contributors to Germanys economy. Germanys ICT sector is the largest in Europe, followed by the U.K.s. T Demand for software and IT services is up. Even hardware shows signs of recovery, although constantly declining prices will not allow for considerable increases.

The Marketplace for Business Process Software and Services Software The German market for software is the largest in Europe, ranking second in the world after the United States. The German software market amounted to EUR 17.9 billion in 2007 (EUR 9.1 billion for system software, EUR 8.3 billion for application software) and is anticipated to grow by 3-5% over the coming years. Stronger economies and increasing investment in IT-modernization had a positive impact on the overall software market, particularly on system and infrastructure software. These infrastructure upgrades, which started in 2005 and 2006, will continue in the near future. After relatively slow growth in recent years, many German companies are now planning to invest in major software updates. One driving factor behind these investments is the increasing important role of medium-sized firms in international business. They have a strong need to upgrade their existing software platforms according to the regulations and requirements of the global stage. Significant growth rates are anticipated for the following areas: business intelligence (BI), enterprise content management (ECM), storage management software, product lifecycle management software, middleware, IT-security, customer relationship management software and document management software. With a market volume of EUR 1.1 billion in 2006, ERP systems still account for a large segment of the German software market. However, market analysts predict moderate growth rates for this segment due to gradual saturation of the market.

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Software as a Service (SaaS) is expected to play an increasingly important role in Germany. Current marketing campaigns of large software manufacturers (e.g. Microsoft Software and Service or SAP Business by Design) will generate increasing interest for this sales model and hence will lead to greater prominence in the market. Smaller software companies are also expected to benefit from this trend. The most important applications for SaaS are seen in customer relationship management and ERP. Even though German software companies are very competitive, analysts estimate that approximately 80% of software products sold in Germany are from U.S. suppliers (the majority of the large U.S. software developers have subsidiaries in Germany.) In 2006, the 25 largest software companies in Germany accounted for about EUR 6 billion in sales within Germany (35% share of the German market). Despite this, Germany is still open for imports. U.S. software products are well accepted, since the United States is widely seen as leading the world IT industry in innovation and quality. Surveys reveal that about 80% of German companies are willing to invest heavily in purchases of IT equipment. Although resistant to new-market-entrants, the following industries are expected to undertake major investments for software products (due to the need to standardize and optimize business processes, implement IT-security features and adjust to new regulations): the public sector, the banking and insurance sector, the medical sector, and the utilities and automotive sectors. There are no trade barriers obstructing sales of U.S. software. Industry specific and niche products will continue to find good sales opportunities in Germany. However, as the European Union continues to expand as a single market, U.S. vendors will also meet growing competition from other European software vendors in the German market. As in other IT sectors, the German software industry is characterized by growing consolidation, as firms merge with and acquire software producers to augment their products capabilities, participate in leading-edge technologies, and expand their market reach. Services After a rough period, the German market for IT services, which amounted to EUR 29.4 billion in 2007, is anticipated to grow between 4% and 5% in the next few years. Outsourcing is expected to remain the growth engine of the market (see table below source IDC) driven by an increasing search for cost reduction and flexibility and the need to focus on core business. An IDC report predicts that the sectors of Outsourcing and Systems Integration will experience the highest growth, in contrast to the sinking figures of custom application development and the stagnant growth rate for hardware support and deploy.

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In addition, there is a growing demand for security, e-business projects and CRM services. Most large American IT service providers have facilities in Germany, and, for official statistical purposes, are counted as local firms. This also grants them national treatment from German and EU authorities. Approximately 60% of overall IT-services sales are attributed to German subsidiaries of U.S. firms. U.S. products and services consequently enjoy an excellent reputation. A major problem the German ICT industry currently is facing is the lack of skilled engineers (presently 43,000). Technical universities in cooperation with large companies in Germany are aware of this situation and are in the process of reviewing their current curriculums and internships as well as the level of support they presently grant to students of natural science. Studies report that approximately 50% of these students discontinue their studies before graduating.

The Marketplace for Communications Technology The German telecommunications market is expected to reach about EUR 66 billion in 2008, and is, despite stagnating growth, still the largest telecommunications market in Europe. There are more mobile than fixed-line subscribers and sales of mobile services (including data) are expected to be the only growth segments in 2007 and 2008. Thousands of miles of high quality fiber optical cable make the country ready for the application of the future. Broadband deployment continues to be the main topic in fixed-line telecommunications, as Germanys broadband deployment is only average compared with other countries. Broadband is still considered to be key to developments in the equipment segment, where optimists also hope that UTMS will drive demand for mobile infrastructure equipment. Deutsche Telekom AG (DTAG) will remain the dominating figure in the telecommunications arena. Recent activities show that DTAG is focusing its activities on W-Lan, online shopping, security, higher bandwidth for heavy users and special offers for online gamers and SMEs. Main drivers of telecommunications growth in Germany are broadband, value-added services and mobile communications. Technologies and services that address these market segments are considered to be the best prospects for American SMEs. To gain market share, competing

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operators need new and different equipment and technologies from what DTAG offers. DTAG has longstanding, established relationships with existing suppliers or systems integrators, and a preference to continue to work with them. This fact can make it difficult for new (particularly small) vendors to establish a foothold and sell to the incumbents, according to local market experts. Germany is the European leader in Internet commerce and is among the worlds most sophisticated markets: business worth a total of EUR 438.7 billion was conducted online in 2006, and EUR 779.8 billion is predicted for 2010. In 2006, over 30% of all goods and services traded online in Western Europe (EU 15 plus Norway and Switzerland) were sold in Germany, representing by far the largest market share of any Western European country. Germany, the worlds number one exporter, is the largest economy in the European Union and the third largest in the world. As Europes most populous nation, Germany also has the largest number of Internet users, nearly 56 million people in 2007. These users generate one of Europes highest per capita revenue rates and contribute, alongside businesses, to the predicted 84% growth of e-commerce volume in Germany. B2C - In 2006, EUR 46 billion were exchanged in the B2C market, representing 11% of the Germanys total e-commerce volume. Price plays a major role in determining where various IT products are purchased. Sales of small-ticket items such as speakers, web cams, and wireless input devices are reasonably balanced between bricks-and-mortar stores and online shops. More expensive devices, however - laptops, desktops, monitors - are purchased 58% online. Retailers without "physical" retail stores or those lacking brand recognition sometimes encounter difficulties when trying to win the trust of German customers. Besides price and trust, product diversity is also an important competitive factor. B2B - Virtually all German small and medium-sized businesses have Internet access. In 2006, EUR 392 billion were exchanged in Germany in the B2B sector. In contrast to B2C, business-tobusiness trade is unaffected by seasonal cycles and is predicted to grow steadily, reaching EUR 636 billion by 2010. Germany represents 31% of the entire western European online trade among businesses by far the largest share of any country. Among wholesalers, the traditional distribution channels still clearly dominate: nearly 72% of companies employ a field sales force, and about 61% market their products via telephone and mail advertising. Despite this apparent reluctance among B2B firms to embrace the online world, there is a clearly measurable trend toward internationalization. 56% of these same companies have expanded their territory in order to sell to other parts of Europe, and nearly 34% deliver outside the continent.

The Marketplace for Digital Equipment & Systems U.S. computer products are viewed as innovative products of superior quality and leading edge technology. Despite the current economic slowdown, IDC predicts that Germany's hardware market including network equipment will reach EUR 33.7 billion in 2007 and will account for approximately 23% of the EUs IT market. The cheap dollar is a helping factor in the United States retaining its import share of approximately 25% thru the end of 2008. For the overall computer hardware and peripherals segment, however, forecasts are disappointing. Analysts expect growth to reach a mere 0.9% in 2007 after stagnating demand in 2005 and 2006. Growth will be driven by individual segments which are currently enjoying considerable growth, such as notebooks, handheld PCs or multifunctional device. Experts see the increased use of the Internet in the workplace and growth of eBusiness as drivers behind potential future growth. These positive trends have resulted in a need to process larger data volumes, coupled with a demand for higher bandwidth and applications requiring increased output performance. After three years of economic stagnation and a subsequent

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reluctance to invest, German firms face a pent-up demand for investments in IT communications infrastructure, including a demand for more powerful server systems (RISC/UNIX).

Future Prospects in this Market Software The following industries are expected to make major software investments in order to standardize and optimize business processes with a focus on IT-security: public sector, banking and insurance sector and medical sector, although all these areas are difficult to penetrate by new-tomarket companies. Industry will also invest in production software tools. Best prospect areas: IT-security; customer relationship management (CRM) technologies; supply chain management software; document management software; business intelligence software; infrastructure software; storage software; resource management software Services The following industries are expected to make major software and services investments in order to standardize and optimize business processes, as well as to implement IT-security features: insurance (EAI, web services, BPO because of legal, demographic and political changes, insurance companies need more flexibility) and banking (primarily outsourcing services). Best prospect areas: Outsourcing services; IT-security services; E-commerce projects; BPO (Business Process Outsourcing) services; CRM services Communications The mobile telephony segment is still widely regarded as one of the main growth drivers in the German ICT market despite the fact that demand for hand-held sets is stagnating only Internetrelated technologies have experienced higher growth rates. Best prospect areas: WLAN, broadband access via satellite, Interactive TV in Germany: Hardware U.S. computer products are viewed as innovative, with superior quality and leading edge technology. Germany accounts for approximately one quarter of the EUs total IT market. The United States is expected to retain its 2006 import share of approximately 25% at least until the end of 2007 Best prospect areas: Leading-edge ICT products are sought after by German distributors: servers, laptops, printers, memory, and networking products.

Important USDOC Resources in this Market (Including USDOC programs and events) Hardware and Peripherals Senior Commercial Specialist John Lumborg, U.S. Commercial Service, American Embassy, Neustaedtische Kirchstrae 4-5, 10119 Berlin, Germany Phone: +49 30 8305-2730 Fax: +49 30 2045-4466 Email: john.lumborg@mail.doc.gov Software and Services Commercial Specialist Doris Groot , U.S. Commercial Service, American Consulate General, Koeniginstrasse 5 , 80539 Muenchen, Germany , Phone: +49 89 2888-749, Fax: +49 89 285261, Email: doris.groot@mail.doc.gov

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Internet and E-Commerce Commercial Specialist Mathias Koeckeritz, U.S. Commercial Service, American Embassy, Neustaedtische Kirchstrasse 4-5, 10117 Berlin, Germany, Phone: +49 30 8305-2731, Fax: +49 30 2045-4466, Email: mathias.koeckeritz@mail.doc.gov Telecommunications Equipment and Services Senior Commercial Specialist Volker Wirsdorf, U.S. Commercial Service, American Consulate General, Giessener Strasse 30, 60435 Frankfurt, Germany, Phone: +49 69 7535-3150, Fax: +49 69 7535-3171, Email: volker.wirsdorf@mail.doc.gov Internet: www.buyusa.gov/germany/en

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GREECE

Capital: Athens Population: 10.8 million Languages: Greek Monetary Unit: Euro () Exchange Rate: $1 = .69 (Jan 2008) GDP per Capita (in US$): $21,300 Local Market Commercial Specialist: Debbie Asmakli Priamou 91, Vas. Sophias Ave. GR-101 60 Athens Greece Tel: +30/210/720-2307, 2326 Fax: +30/210/720-8660 E-mail: Debbie.Priamou@mail.doc.gov Market Overview Greece by geographic location is the Balkan crossroad connecting emerging economies of the Balkan countries with the highly promising Greek IT market. Moreover, Greece is one of the market-bridges connecting European Union and Asian markets. Compared to other European markets, the Greek information technology market is relatively small. In the last decade, however, it has been characterized by the highest growth rate making the Greek market the most challenging one in the E.U. There are several E.U. funded projects in process that will allow for further expansion of the Greek IT market and an increase in the demand for high tech products. It is estimated that in 2007 the IT Market in Greece will be $1.9 billion. The new Digital Strategy 2006-2013, a government plan, places information communications technology (ICT) high on Greeces agenda. The main objective of the Digital Strategy 2006-2013 program is to provide digital services to businesses reorganize the public sector, develop digital services for citizens through the creation of gateways and the expansion of broad banding. The program is funded by the 3rd Community Support Framework and is coordinated by the Information Technology Committee. The new policies of the E.U. also include the project: i2010 that focuses on the internal market for information services and investments in ICT innovation and competitiveness. Investments of $3.4 billion are expected to be made in the IT sector and in communications services, related to the Operational Program Information Society of the 3rd Community Support Framework. It is estimated that the growth rate of the Information Technology market in Greece will increase by 4% in 2008, the sales of the IT sector are estimated at $6.5 billion and the profits are estimated at $384.7 million.

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Greece maintains high records in the telecommunications sector and according to the European Information Technology Observatory; the growth rate of this particular market, which was 3.5% in 2005, is expected to increase by the same rate in 2008 at $7.5 billion. In the years to come the Greek Government and the Ministry of Transportation and Communications aspire to transform Greece into the premier telecommunication hub of Southeastern Europe. It is expected that such government programs will create great demand for IT equipment and will lead to a great development of the continuously growing IT sector.

The Marketplace for Business Process Technology The Greek software market is large and growing and the competition is intense. Almost 55% of the total software distributed in Greece is produced locally. The major companies include: Singular, DIS-Computer Logic, UNISOFT, INTRASOFT, BYTE Computer SA, MLS Pliroforiki, 01 Pliroforiki SA, InfoQuest SA, Iason Pliroforiki SA, SystemSoft SA (Singulars Business Partner), EnterSoft SA. In 1996, the first generation Enterprise Resource Planning (ERP) systems appeared in the market, evolving the IT business environment into a client server and windowslike structure. Today, the implementation of ERP systems is considered basic for the competitive performance of any firm. The Greek market demand is for ERP systems that support commerce-logistic transactions, sales procedures, as well as Customer Resource Management (CRM) service procedures and projects implementation procedures. In 2006 the market of computer hardware is reached $856.6 million, a 4.6% increase over 2005. The highest increase was in portable computers (23.4%) and high-end servers (22.5%). The growth is expected to continue. IT services reached $929.3 million, an increase of 6.3% in comparison with 2005. An increase of up to 2.9% is expected in 2008. Overall, the Greek market is a competitive and prosperous market for major firms that develop software and hardware such as Microsoft Hellas S.A., Oracle Hellas S.A., IBM Hellas S.A. and Hewlett Packard Hellas which are already operating in the Greek market. The Market Place for Communications Technology Fixed-line telephony: The liberalization of telecommunications internationally resulted in the improvement of services and the decrease of prices as more telecommunication companies entered the fixed-line telephony market and competition was created. The government agency that supervises and controls the telecommunication field is the National Committee of Telecommunications and Posts (EETT). Today, most major telecommunication companies operating in Greece offer fixed-line telephony service: Altec Telecoms, Cosmoline, Infoquest, Forthnet, Lannet, Tellas, Telepassport, Vivodi and Q-Telecom. The competition between these companies has lead to a lowering of the prices and an improvement of the services offered for the benefit of the clients. However, the Hellenic Telecommunications Organization (OTE) is still the main fixed-line operator serving almost 6,000,000 clients in Greece.

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Mobile Telephony: Greece maintains very high records in the mobile telecommunications sector. Mobile telephony penetration exceeds 75% of the Greek population. It is calculated that in the next decade 2,000,000 new subscribers will be added to the Greek market in all the networks of mobile telephony thus increasing the percentage of penetration to 95%, which will be among the highest in Europe.

Greek Telecommunications Sector Company Name Ownership Market Hellenic Telecommunications Organization (OTE) Hellenic Republic: 36%, Greek Institutional Shareholders: 14% International Institutional Shareholders: 36%, Hellenic Exchangeable Finance S.C.A.: 3% Rest Shareholders: 11% Fixed-line (local, domestic long-distance, international), data, internet FORTHnet Institution of Technology and Research ([I].[T].[E]) with 20,31%, Cycladic Capital Management 11.9%, NOVATOR EQUITES LTD with 34.33%, while the remainder percentage belongs in the investment public, as well as in workers and collaborators of Company. Fixed-line (local, domestic long-distance, international), data, internet

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Q-Telecom TIM (100%) * Fixed-line (local, domestic long-distance, international), mobile, data, internet Tellas PPC (50%), WIND (50%) Fixed-line (local, domestic long-distance, international), mobile, data, internet CosmOTE OTE (58.9%), Telenor (18%), WR Enterprises (7.08%) Mobile Vodafon-Panafon Vodafon (64.0%) Mobile STET Hellas Telecom Italia Mobile (81.4%) Mobile Internet: Since 2002, the Internet users-base in Greece has grown approximately 40 percent per year. Still, Greece in 2005 ranked last in regard to the use of Internet among the 25 member states of the EU. About 35 percent of the population and almost 100% of the large Greek businesses have Internet access. Approximately 70 percent of Greek users use the Internet from their homes. About 61 percent of home access is through dial-up, 21 percent through ISDN and 8 percent through broadband. It is expected that the expansion of ADSL connections with greater speed will further the number of Internet users. Broadband services in the past were not so popular mainly because of

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the high costs. A survey from Eurostat showed that by the end of 2005 broadband Internet connections increased 1 percent for householders and 44 percent for companies. In 2007, it is estimated that broadband use will increase, as private providers (Forthnet, Vivodi, Tellas, HOL and others) as well as the Hellenic Telecommunication Organization (OTE), are aggressively promoting broadband service packages and reduce their prices.

The Marketplace for Digital Equipment & Systems There is a strong personal computer assembly market in Greece accounting for about 60 percent of the Greek hardware market. The four local firms dominating the market are the Quest Group, Pouliades & Associates, INTRACOM and the Altec Group. The majority of the hardware components in Greece are imported from the U.S. and Asia. There is no local production of computer networking equipment in Greece. There is a limited presence of French, German and Israeli and, to a smaller degree, Japanese and Far East manufacturers. The information technology products that originate from the United States account for 55 percent of Greeces import market. The primary equipment imported from the US includes personal computers, servers, printers, modems, multiplexing equipment and related software and is either shipped directly from the U.S. or U.S. subsidiaries in Europe. Some of the largest information technology consumers in the Greek market are state controlled companies and organizations. During the period 2003-2008, it is expected that approximately $2.4 billion will be spent on IT projects. The EU will provide almost 70% of the funding for these Greek Government IT projects through the Information Society program falling under the 3rd & 4th Community Support Framework (CSF). Along with the funds from the EU, Greece offers well-trained and experienced engineers and professionals.

Future Developments in the Greek Market

The introduction of new generation networks is the leading objective in Greeces digital strategy for the three-year period 2006-2008. An objective of the digital strategy is to increase the utilization of fast Internet to at least 7 percent of the Greek population by 2008. The General Directorate of Corporate and Domestic Clients of OTE estimates that by the end of 2006 OTE will have 300,000 ADSL subscribers which will increase to 800,000 in 2008 provided OTE upgrades the broadband speed to 4Mbps in 2007 in order to provide triple play services. The Voice over Internet Protocol, (VoIP) service, first appeared in Greece in 2004 and the market is still considered limited. All major Greek telecommunications companies offer this service. Many major companies (Space Hellas, Singular, Euro Bank, Cisco, Germanos, Multirama, Avaya, etc.) are gradually replacing their internal telephone networks with VOiP networks. This way they have one network for voice and data transmission. It is expected that interest in VOiP will increase as broadband use expands. On February 2, 2006 the Greek Government signed, in Lisbon, an agreement with Microsoft Corporation. It also provides for preferential financial terms for the purchase of Microsoft user licenses, the free use of software at home by the employees of the public sector and software training. In addition, the company will establish an innovation center (Microsoft Innovation Center) in Greece, where executives of Greek software companies will be trained in the development of business solutions that will

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be based on Microsoft systems. Also, by 2008 Microsoft is planning to create ten training centers in the areas of Greece that have high unemployment rates, to offer training on Microsoft applications. The E.U. has agreed to partially fund Greeces plans to boost broadband services and penetration more than fourfold. The financing plan of Greece includes: .. Co-financing of projects by the European Union and the Greek State ..Public and Private partnerships

The development of venture capital of $130 million comprised of resources from the EU, the Greek State and private investors to jointly invest in new technologies and R & D at an entrepreneurial level.

Important USDOC Resources in this Market Local Market Commercial Specialist: Debbie Asmakli Priamou 91, Vas. Sophias Ave. GR-101 60 Athens Greece Tel: +30/210/720-2307, 2326 Fax: +30/210/720-8660 E-mail: Debbie.Priamou@mail.doc.gov

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HUNGARY Capital: Budapest Population: 10 million Languages: Hungarian Monetary Unit: Hungarian Forint (HUF) Exchange Rate: 1 US$= HUF 172 (Dec. 2007) GDP per Capita (in US$): 11,222 (2006) Local Market Commercial Specialist: Andrea Imrik US Embassy, Commercial Service Szabadsag ter 7., Bank Center, Granite Tower H-1054 Budapest, Hungary Phone: (36-1) 475 4234 Fax: (36-1) 475 4676 e-mail: andrea.Imrik@mail.doc.gov www.buyusa.gov/hungary

Market Overview Typically accustomed to annual growth exceeding 10 percent, Hungary will see growth in its IT market slow to 4-5 percent in 2007, according to International Data Corporation (IDC) analysis. This is due largely to a significant drop in public sector orders, which represent 40 percent of total IT spending, as the Hungarian government (GOH) implements austerity measures to cut its huge budget deficit and postpones large IT projects until EU project funds are available under the second National Development Plan (2007-2013). However, the outlook is more positive for 2008 and beyond. With a new flow of EU funds coming on stream and an eventual increase of IT spending expected in the telecommunications, utilities and financial services sectors, IT market growth should reach 7 percent in 2008 and could average 20 percent in subsequent years thereafter. Spending on IT hardware will account for less than 25 percent of IT spending by 2008, down from 41.5 percent in 2005. Meanwhile, software and IT services, 15.5 percent and 43 percent of the IT market respectively in 2005, are expanding. In addition, EU development funds totaling USD 4.6 billion for 2007-2013 will allow Hungary to increase IT spending by 25 percent, providing significant stimulus to the sector. EU grants require 30-50 percent matching funds and can be acquired to develop e-commerce and electronic payments, e-marketplaces and Customer Relations Management (CRM) and Enterprise Resource Planning (ERP) systems. Hungary has also emerged as one of the leading locations in the world for IT and business services outsourcing, due to good infrastructure, low-cost, skilled labor and proximity to Western Europe. The GOH plans to use EU development funds to attract 5-10 additional shared services centers (SSC) to Hungary, which is already home to about 30 such facilities. The Hungarian National Development Plan has earmarked US$12.1 million to help establish and expand SSCs, which in turn is likely to generate demand for IT hardware and software.

Business Process Technology In 2005, the Hungarian Customer Relations Management (CRM) market was USD 16 million (excluding installation). Banks, telecommunications companies, large companies and utilities are the primary CRM consumers, but small-to-medium-size enterprises (SMEs) are a quickly growing group as they gain access to EU funds to spend on upgrades. Hungarys SSCs are also expanding users of CRM, representing 35 percent of the market in 2005. There is also increasing

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demand for industry specific, vertical CRM solutions. Forecasters anticipate 5-6 percent annual growth in CRM until 2008. Major suppliers include SAS, Oracle-Siebel, Amdocs, Microsoft, SAP and some domestic companies like R&R Software. In 2005, sales of Enterprise Resource Planning (ERP) licensees and upgrades amounted to USD 60 million, 15 percent higher than the previous year. Yearly growth for the next five years is projected at 10 percent and will exceed that of the overall IT market. The manufacturing sector represents the largest ERP user in Hungary with 30 percent, followed by utilities, retail and wholesale companies. ERP suppliers are also focusing more on SMEs, where opportunities continue to expand. Major suppliers like SAP, Oracle and Microsoft, as well as other companies such as Exact, Epicor and Megatrend, are competing in the Hungarian market and targeting SMEs. Other demand-drivers for ERP solutions include the flow of EU funds and expected reforms in the healthcare sector and public administration. The market for IT security software increased 20 percent to USD 33 million in 2006, including license fees and upgrades. This segment, representing about 6-7 percent of the Hungarian market, is expected to grow by 15 percent in 2007 and by an average of 20 percent in the following years. Basic content security solutions (e.g., antivirus, spam, spyware) and web filtering software make up over half of IT security spending. Sales of identity and access control management software, representing 15-20 percent of the IT security software market, have been particularly robust in the last two years - a trend that is likely to continue. Intrusion detection and vulnerability management software represent 20 percent of the security market and is growing more slowly. Major suppliers in Hungary include Symantec, McAffee, and CA. Communications Technology There were 3.275 million fixed telecommunication lines (including 713,306 xDSL lines) at the end of September 2007, representing a (decreasing) penetration rate of 32.58 percent. About 65 percent of Hungarian households have a fixed-line phone. Carrier service earnings reached about EUR 3.5 billion in 2006, and only a moderate increase of 3.7 percent can be expected in 2007, according to EITO. The former state monopoly, Magyar Telekom, dominates Hungarys telecom market. Following its privatization in the mid-1990s, the company is now majority-owned by Deutsche Telekom. Magyar Telekom has a 79 percent market share in fixed line services. The remainder of the fixed line market is controlled by local telephone operator Hungarian Telephone and Cable Corp (www.htcc.com) and Monortel, which is owned by UPC, a part of the U.S. Liberty Media Group. In the corporate market, alternative service providers Pantel (HTCC Group) and GTS-Datanet also compete. In addition to fixed line services, Magyar Telekom is engaged in mobile telephony. Its subsidiary, T-Mobile, leads this market with a 44 percent share, followed by Pannon GSM with 35 percent, and Vodafone with 21 percent. Mobile penetration reached 104.4 percent in September 2007, with 10.5 million subscribers. With 1.65 million Internet subscribers at the end of September 2007, Hungary has a relatively low Internet penetration rate of 16 percent. However seventy-five percent of Internet connections are broadband. Household Internet penetration is now 33 percent. Digital Equipment & Systems With 2005 sales of about USD 2.5 billion, Hungarys IT sector is typical of more advanced markets in Central-Eastern Europe. Hungarian IT spending per capita in 2007 is projected at USD 259 compared to USD 400 in the Czech Republic and USD 210 in Poland. In 2006, Hungarians bought 18,000 x86 servers, up 17 percent from 2005, and over 500,000 PCs. Just under half of these were notebooks, a 55 percent increase over the prior year. This growth trend is expected to continue in 2007. Meanwhile, sales growth for desktop PCs was only 4 percent. Major vendors include Acer, Albacomp, Dell, HP, Fujitsu-Siemens, Asus, and Toshiba.

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Sales of multifunction printers (MFP) increased from 131,000 pieces in 2005 to 149,500 pieces sold in 2006. Five suppliers HP, Lexmark, Epson, Canon and Samsung sold 90 percent of all MFP equipment sold. High-end equipment suppliers include Canon, Xerox, Konica-Minolta, HP and Ricoh. The disk storage market grew significantly in 2006, to USD 80 million. Total storage capacity is now 6,600 terra bytes. Revenue of disk storage products is expected to increase by 13.5 percent in 2007. The three major suppliers include EMC, IBM and HP, with a combined 75 percent market share in 2006. The disk storage market is expected to grow by an average 15 percent annually for the next five years. The digital camera market is estimated to grow 10-15 percent yearly, but competition here, too, is fierce, with many players vying for share. Future Prospects in this Market Best overall prospects for U.S. companies include: notebooks, disk storage devices, network equipment, security appliances and converged devices. Best software prospects are: Business Intelligence, ERP, Application Integration Tools, System and Application Management and Security. Best prospects in services are: Application Consulting Services on enterprise applications (ERP, CRM), Application Integration, Network and Desktop Outsourcing and Data Center Consolidation and near-shore/off-shore services (very often as a mix of IT Outsourcing and Business Process Outsourcing). The Budapest Transport Company (BKV) plans to re-issue a tender for an electronic ticket system for Budapests public transportation network, including subways, buses and trams. Mobile service providers T-Mobile and Pannon are obliged to invest each HUF 20 billion (USD 116 million) in the coming two years into their 3G/HSDPA infrastructure in exchange for their 900 MHz mobile concessions, recently extended until 2016. T-Mobile will install 300 new base stations and upgrade 400 existing ones, whereas Pannon will build or renew 1000 base stations. The National Communications Authority will issue a tender in the spring of 2008 for digital terrestrial TV and radio broadcasting services in Hungary. In line with a EU directive, Hungary is obliged to phase out analog terrestrial TV and radio broadcasting by the end of 2011. The upcoming tender will award a 12-year concession for five TV multiplexes and one radio multiplex. The concession may be extended once for a period of five years.

Important USDOC Resources in this Market For additional information on sales opportunities please contact: Andrea Imrik, Commercial Specialist U.S. Embassy, Commercial Service Szabadsag ter 7. Bank Center, Granite Tower H-1054 Budapest, Hungary Phone: (36-1) 475 4234 Fax: (36-1) 475 4676 e-mail: andrea.imrik@mail.doc.gov www.buyusa.gov/hungary

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IRELAND

Capital: Dublin Population: 4.24 million Languages: English and Irish (Gaelic) Monetary Unit: Euro Exchange Rate:$1.0 = Euro 0.68 GDP per Capita (in US$): $44,500 Commercial Specialist: Padraig OConnor U.S. Commercial Service, U.S. Embassy, 42 Elgin Road, Ballsbridge, Dublin 4, Ireland. Tel: +353-1-667-4756 Fax: + 353-1-667-4754 E-Mail: Padraig.OConnor@mail.doc.gov

Market Overview Ireland has a strong knowledge-based, export-focused ICT industry with over 1,000 companies employing 84,000 people and generating revenues of $78 billion. The sector has significant indigenous and foreign-owned segments across manufacturing, software, and services. A consistent pro-business environment encompassing low corporate tax rates, excellent skills base and an entrepreneurial business culture has underpinned sector growth over the past decade. Irelands $11.45 billion ICT market is very mature with strong domestic and international competition. It has significant telephony (fixed & mobile) penetration and a solid digital games culture. While PC penetration rates and broadband usage are improving, the major hurdles to stimulating long-term sector growth are limited bandwidth and low levels of ICT adoption across several end-user segments. The following is a summary breakdown of the Irish ICT market by sector.

Sector Business Process Technology Communications Technology Digital Equipment & Systems

Market Size $1,860 million $7,220 million $2,370 million

Growth 3-4% 3-5% 3-5%

This contrasting paradigm between sector and market in Ireland actually benefits U.S. business as Ireland represents a location that offers excellent opportunities for U.S. ICT companies to achieve export success, both within the local Irish market and in the wider European context. Irish companies are increasingly interested in strategic trade opportunities with U.S. firms and they make ideal partners for U.S. SMEs interested in the European marketplace.

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The Marketplace for Business Process Technology

Sector Computer Services Computer Software

Market Size $1,220 million $ 640 million

Growth 3-5% 3-4%

The market for business process technology has been one of Irelands fastest growing business sectors in recent years. Within the computer software segment, Microsoft is the dominant player with Oracle, IBM and SAP also prominent, while Linux is starting to gain market share. Demand for browser-based enterprise software has increased, driven by the move toward mobile computing and e-working. Increasing emphasis is being placed on security and storage technology solutions. In recent years, the ERP and CRM sectors have been sluggish and the days of forward-buying software by the commercial sector are over. Within the services sector, there is increased demand for managed services, systems integration, network maintenance and enterprise systems. Key market players include HP, Accenture, Fujitsu, IBM, EDS, BearingPoint and Cap Gemini. The Government, telecommunications, health and education sectors are expected to underpin growth in 2008. ICT adoption and deployment in the health and education sectors are well below the OECD and EU norms. Until recently, there was a perception in parts of the public sector that technology was an optional overhead, confined to computers and software rather than processes that can enable significant change, increasing efficiencies and ultimately saving money. Annual investment in ICT ($382 million) represents just two percent of the entire Department of Health budget, while the education sector has yet see to commencement of the planned $370 million three-year ICT investment program announced in 2007. IT spending is expected to grow by 3.5% in 2008. The two key drivers behind future growth are an increased focus on business-value propositions as opposed to operational cost reduction among IT decision makers and stable Government IT spending. Investment in enterprise software is expected to exceed $290 million in 2008 driven by document and content management solutions, business intelligence and analytics, database, web servers and enterprise portals. Expenditure on network storage software is over $70 million while the security software market is estimated at $140 million. Spending on software in the healthcare sector is expected to reach $38 million in 2008.

The Marketplace for Communications Technology

Sector Telecommunications Services Telecommunications Equipment

Market Size $6,410 million $ 810 million

Growth 3-5% 3-5%

The Irish telecommunications sector continues to be buoyant with revenues increasing by over 6 percent, driven largely by the mobile sector. There are some 7.0 million telecom access paths in Ireland and the total voice minute traffic is about 18 billion annually. Mobile telephony dominates with 4.9 million subscribers while fixed lines are about 2.1 million. The Irish broadband market is exhibiting significant growth, albeit from a very low base, with especially strong take-up of mobile broadband in 2007. There are almost 794,000 broadband subscribers. While over 525,000 homes are connected to cable TV, the promotion and adoption of cable as a broadband access path has been low (9.7%), largely due to the poor quality of the cable network.

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Irelands telecommunications sector is fully liberalized and there is strong competition in the $3.37 billion fixed line segment with Other Authorized Operators now holding 31% market share compared with Eircoms (the incumbent fixed operator) 69% share. In an attempt to improve Irelands broadband penetration ranking, the Irish Government re-entered the telecommunications market in 2003 to construct regional broadband infrastructure (carrierneutral, open access Metropolitan Area Networks), in partnership with local government authorities, in over 80 cities, towns and regional locations in Ireland. This regional broadband network is managed by eNet, a private company that holds a 15-year concession to act as the Managed Services Entity to the network until 2018. Like most EU countries Irelands wireless communications sector is very mature with market penetration at 114 percent and total annual revenues of about $3.0 billion. Irish mobile operators have the highest average revenue per user (ARPU) rates across Europe especially as the lucrative pre-paid segment account for 74% of all Irish mobile subscriptions. The level of mobile number portability (switching operators) averages 84,000 per quarter. The two principal operators - Vodafone and O2 - account for over 3.8 million subscribers while the third operator, Meteor (owned by Eircom), has some 900,000 subscribers. The fourth operator - 3 Ireland (Hutchison Whampoa) provides services solely based on 3G technology and only has 3.6% market share. While the networks utilized by Vodafone and O2 were founded on GSM (2G) and GPRS (2.5G) technology, both operators have been upgrading to UMTS (3G) networks since mid-2005. Telecommunications operators in Ireland continually invest in their networks and generally source leading-edge telecommunications equipment and software for their networks and administrative systems. Irelands mobile sector is a proven test market for new technologies and solutions as Irish mobile subscribers are diligent adopters of new services. VoIP is expected to remain a significant growth opportunity. The major issue facing the Irish telecommunications sector going forward is Eircoms proposal to structurally separate its network and retail business units into separate companies.

The Marketplace for Digital Equipment & Systems

Sector Computers & Peripherals Consumer Electronics

Market Size $1,760 million $ 610 million

Growth 3-4% 2-4%

The computers and peripherals segment is very mature with all major international brands competing for market share. U.S. manufacturers such as Apple, Cisco, Dell, EMC, HP, Sun, 3Com, and Xerox have strong positions in the market with Dell and HP being the market leaders. Annual PC sales are about 400,000 units. In the current strong Irish economy, there is a very limited demand for second-hand PCs. Home PC ownership is forecast to grow with increased availability of broadband infrastructure. At the same time, PC ownership (67%) is not as dynamic as the mobile telephony sector (114%), or even the games console sector. Over one million people use a PC at home or in the workplace in Ireland. There has been strong growth in notebooks and PDAs reflecting a trend toward mobility products. Server demand has also been strong and flat panel monitors are the norm. Price erosion has been a key trend within the hardware segment. Vendors have incorporated ATA storage technology in the latest desktop models. Serial ATA ports and disk drives are in demand as features that facilitate integration with servers and network storage areas. In the printer segment, color models are driving market demand while multifunction devices are increasing in popularity. Industry observers are cautiously optimistic for the market forecasting increased demand for hardware upgrade projects in the business sector as a return to three-year life cycle practices is

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anticipated. Increased demand for security and wireless technologies is also expected, especially in light of a growth in notebook sales, PDAs and other wireless devices. Within the e-commerce sector, almost $3.7 billion was purchased online in 2006. purchasing activity was forecast to reach $4.8 billion in 2007. Online

The consumer electronics segment has experienced strong growth in recent years. Irelands strong economic performance allied to increased disposable income and rising home ownership has underpinned this growth. Over 1.46 million households have a television of which 308,000 have upgraded to digital technology, while over 492,000 households (33%) have a digital games console. The personal electronics sector has also experienced excellent growth with strong demand for personal devices such as iPods, MP3s, sat-navs. Within the digital games sector, there is excellent penetration of Sonys Playstation technology (PS1, PS2, PS3 and PSP), Microsofts xBox 360 as well as Nintendos DS and Wii product ranges.

Future Prospects in this Market Market opportunities exist for U.S. companies with innovative leading-edge information and communications technology products. Most promising prospects include data networking equipment, wireless networking equipment, security technology, laptops and notebooks, PDAs, storage technology including virtualization, multi-function printers, VoIP technology, and leadingedge software products across all market segments. Sector opportunities exist for U.S. companies who look upon Ireland as a proven gateway to Europe. Over 86% of Irelands $78 billion ICT output is exported to Europe and points beyond. Irish-based firms have developed sophisticated supply-chain management systems using an array of local importers, contract manufacturers, joint-venture partners, agents and distributors to produce and move product in-and-out of Ireland. These companies are increasingly interested in strategic trade opportunities with U.S. firms. With a common language and American business affinity, and a workforce highly experienced with international trade, Irish companies make ideal partners for U.S. SMEs interested in the European marketplace. For example, U.S. software companies seeking to penetrate the lucrative European software market should consider entering into joint venture/licensing agreements with Irish firms who have the experience of exporting to EU markets. The U.S. Commercial Service in Ireland is available to assist interested U.S. companies in this regard.

Important USDOC Resources in this Market U.S. Commercial Service in Dublin has several programs to assist U.S. ICT companies in finding appropriate partners in the Irish ICT sector. Irish agents and distributors continually seek to identify and source the latest innovative products but are selective in attending international ICT trade fairs. To stimulate interest, U.S. Commercial Service Dublin promotes U.S. exhibitors at a wide range of ICT events in the U.S. and Europe to the Irish ICT community and offers a customized contact service whereby Irish company interest is relayed direct to relevant U.S. ICT firms.

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ITALY

Capital: Rome Population: 57.8 million Languages: Italian. German is the official second language in the Trentino-Alto Adige region (Tyrol); French is the official second language in the Valle dAosta region. Monetary Unit: Euro Exchange Rate: 1 Euro = U.S. $0.797 (2006) GDP per Capita (in US$): 26,264 Local Market Commercial Specialist: Nicoletta Postiglione American Consulate General, Commercial Service Via Principe Amedeo 2 20121 Milan, Italy Tel: +39/02/62688-522 (direct phone number) Main: +39/02/62688-500 Fax: +39/02/6596561 E-mail: Nicoletta.Postiglione@mail.doc.gov Web: http://www.buyusa.gov/italy/en/ Market Overview Italy is the world's sixth largest industrialized economy and Europe's fourth largest market for the Information and Communications Technology (ICT) industry. The size and importance of the Italian economy are often not fully appreciated by American exporters, but the potential for expanded American ICT exports to Italy is significant. The Italian ICT market, which represents approximately 9 percent share of the total European market, still suffers from long-existing structural problems and is undersized and lagging behind in comparison with the other major European countries. Nonetheless, the technology gap is narrowing and ICT penetration is improving. After an extended period of poor performance, the Italian economy in 2006 finally showed signs of recovery, and this reflected positively on the development of the ICT sector. According to preliminary estimates, the Italian ICT sector in 2006 was valued at US$ 79.6 billion, an aggregate growth of 1.4 percent in Euro currency over the previous year, and prospects are good for the next three years. The Italian Government is committed to modernizing the country through the development of policies for accelerating widespread acceptance and use of new information and communication technologies, both in the public and private sectors. A deep reform of the Italian public administration, based on cost-effectiveness, decentralization, transparency and simplification, is taking place. The need to reach higher levels of efficiency and to offer higher quality public services is playing a key role in the growth of the e-business / e-commerce sector. In particular, significant developments are occurring in the fields of e-procurement, health care management and fiscal services. The Italian government, both at central and local level, is also fostering a new economy business culture to boost economic competitiveness and efficiency by offering small and medium size enterprises grants for the adoption of ecommerce solutions, for turning to broadband access, and for utilizing digital signature. The Italian Public Administration at local level is a major IT investor, while at central

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level it has recently made severe cuts on IT expenditures, in order to contain general budget costs. In any case, Public Administration will continue to represent a key enduser as the Italian government attempts to advance Italys information society. The leading Italian government agency responsible for implementing strategies is the Ministry for Reforms and Innovation in Public Administration - Department of Innovation and Technologies http://www.innovazione.gov.it/eng/index.shtml The Marketplace for Business Processes Software & Computer Services The improvement of the economic situation in Italy is favorably affecting the development of both the software and computer services sectors, which are among the largest in Europe. Preliminary estimates for 2006 value computer services at US $11.8 and software at US $5.2 billion, an increase of 1.6 percent and 2 percent respectively over 2005 in Euro currency. Computer services are forecast to continue registering positive growth over the next three years, supported by a significant number of new projects being started by large-sized enterprises and by the stabilization of professional fees, as opposed to the down-pricing process of the previous years for retaining the customer base. Renewed investments are also taking place among many medium-sized Italian companies wishing to rationalize their operations. Market analysts also forecast a cycle of steady and above-average growth for software in the next three years and a role as a strategic driver for the whole IT sector. In the computer services sector, in 2006 consulting services and system integration had a positive trend, but the best performance (+2.5 percent) was registered for "selective" outsourcing services (such as application management, system and network management). Together with the growing segments of Business Process Outsourcing and Business Transformation Outsourcing, they are expected to gain momentum and to be increasingly utilized as tools to promote efficient and costeffective business operations. Internet-related services to support intranet/extranet and e-business solutions also performed well, as did integration of Web and e-commerce solutions with ERP, supply chain management and customer relationship management solutions. Integrated IT security and business continuity services are finally being perceived as a core business requirement, and budget allocation in these segments is turning increasingly important for Italian enterprises. In the software sector, system software accounted approximately for 14 percent of the market, while middleware accounted for 26 percent and registered a growth of 4.5 percent in 2006. There is an increasing diffusion of Open Source Software and a growing demand for security, network & system management solutions, IT management and monitoring solutions, and Application Servers as a solution for complex application integration issues. Application software accounted for approximately 60 percent of the total software market, with packaged software representing 18 percent of application software. Ecommerce applications are one of the fastest growing segments, with procurement applications in the lead. Information security applications are also becoming increasingly important for Italian enterprises in all sectors, as well as Business Intelligence and Data Warehouse products for an optimal management of company information. Companies in the banking, insurance, manufacturing, media, professional services, utilities, health care and Public Administration sectors are expected to continue to invest in computer services and software to enhance competition. Public Administration will continue to represent a key end-user as the Italian government

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attempts to advance Italys information society. The computer services and software market is heavily fragmented among over 55,000 operating companies. The top ten companies, however, hold approximately 50 percent of the business. A group of about 3,000 medium sized companies holds approximately 45 percent of the market, while a plethora of small companies, often very specialized by vertical market segments and serving the needs of SMEs, holds the remaining 5 percent. The U.S. dominates the market and most major American companies in the sector have established an Italian subsidiary.

The Marketplace for Communications Technology The Italian market for telecommunications equipment and services is the third largest in the European Union, is up-to-date with the implementation of EU directives and is considered one of the most open in Europe. During 2006, this market continued its rationalization and consolidation process, experiencing different growth rates for different market segments. Preliminary estimates value the telecommunications market at US $54.7 billion in 2006, an aggregate 1.1 percent increase in Euro currency over 2005. Telecom systems and terminals were estimated at $6.5 billion, infrastructure at $5.7 billion, fixed network services at $20.9 billion, and mobile network services at $21.6 billion. The major Italian telecommunications operators include the former state monopoly Telecom Italia, which remains Italys dominant operator across all communication services; Wind, the second-largest fixed network and the third-largest mobile communications operator in Italy; the metro Ethernet company Fastweb; British Telecom, Tiscali, Eutelia, the Swedish company Tele2, Verizon, Colt Telecom, and Cable & Wireless. The four mobile network operators, which also hold a UMTS license, are Telecom Italia, Vodafone, Wind and H3G. Growth is being driven by mobile communications and broadband. Italy is one of the largest mobile communications markets in Western Europe and one of the most advanced, considering technology and consumer preferences. Mobile phone diffusion in Italy is among the highest in the world, with over 75.6 million mobile phone lines activated in June 2006 (+13 percent over the same period in 2005), serving 44.6 million clients and equaling a penetration rate of approximately 80 percent. Broadband access is developing very rapidly, with close to 8 million users connected at the end of 2006 and a growth rate of over 37 percent, mainly due to the increasing offer of interactive digital content. The market for mobile content and value added services (VAS) is increasing constantly and was estimated at $5 billion in 2006, a 20 percent increase over 2005. Third-generation phone terminals and services are also registering excellent growth rates, thanks to the availability of new digital content and to very aggressive promotional campaigns by the operators. While most business users still utilize smart phones mainly for mobile e-mail applications and, to a minor extent, for SMS messaging, Italian consumers utilize the mobile phone as a true multimedia device, are very open to new services as they become available, and are playing a key role in the development of the mobile VAS market. The lively Italian market for VAS is characterized by more than 13,000 different services offered by more than 500 suppliers, including telecom companies,

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media companies, the major record and movie labels, and mobile content and service providers. Infotainment services hold the lions share, with video services representing the real innovation and expected to become increasingly important. Mobile TV was introduced in June 2006 for the soccer World Cup and it is estimated that at least 110,000 phone terminals based on the DVB-H (Digital Video Broadcast Handheld) technology have been sold to date. Other very successful services include instant messaging; download of logos, ring tones, screensavers, wallpapers, true tones, chat and community services, and java games. The introduction of HSDPA (High Speed Downlink Packet Access) and DVB-H technologies will offer both consumer and business users further improved bandwidth and quadruple play services (broadband Internet access, television and telephone with wireless service provisions), thus accelerating the convergence of communications and multimedia operators and opening new market opportunities. With regard to Internet usage, Italy has experienced explosive growth in the past six years. The number of business and home Internet users has boomed and is estimated to have reached over 29 million in 2006. Italian Internet users are relatively less mature in the use of this medium with respect to the European average, but they are rapidly catching up. Let Wi-Fi (Wireless Fidelity) technology, is also developing very rapidly. Investments for wireless networks are growing exponentially, offering excellent business opportunities. It is estimated that in 2006 there were approximately 2500 hot spots available throughout Italy, but the number is constantly increasing. In the broadcasting sector, the Digital Terrestrial Television, with over 4 million decoders sold since its introduction in 2004, is forecast to become one of the main vehicles for the diffusion of digital contents to Italian families and for access to online services offered by the public administration. Presently there are over 30 channels broadcasted at national level, 200 channels at local level, and a dozen channels available through prepaid cards. The number of users is also constantly growing for the satellite pay-TV, Sky Italia (owned by the Murdoch group) and for the cable TV packages offered by the Italian company Fastweb. As a result of market development, the digital entertainment segment is expected to grow at a rate of 25-30 percent in the next three years. This includes subscriptions, prepaid cards and pay-per-view for terrestrial and satellite TV access and access to digital contents via mobile phones and via the Internet (music downloads, online video games, etc.).

The Marketplace for Digital Equipment & Systems The positive signs of recovery of the computers and peripherals market shown in 2005 continued in 2006. Preliminary estimates assess the market at over $6.8 billion in 2006; with a 3.6 percent increase over 2005 in euro currency. The Italian market is far from being mature and the potential is high. The sector is forecast to remain one of the best prospects for U.S. imports in the next three years, especially in certain market segments. In 2007, larger companies kept consolidating and rationalizing their existing infrastructure, paying more attention to Return on Investment (ROI) and Total Cost of Ownership (TCO), while some medium-sized companies took advantage of decreasing prices to replace their computer hardware. Families also played an important role, though less significant than the previous year, in the purchase of sophisticated PCs, supplied with multimedia, entertainment and communication devices. Pressure on

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prices continued to be strong in 2007 and often created a considerable divergence between shipment trends and value trends. According to AiTech-ASSINFORM, the major Italian Association of Information and Communications Technology companies, in the first semester of 2006 sales in units grew 12.7 percent for Personal Computers and 3.5 percent for midrange servers. PC units sold (both desktops and portables) were 2,118,000, with families purchasing 438,000 units (+13.5 percent), and enterprises purchasing 1,680,000 units (+ 12.4 percent). Over the past few years, portable PCs have been gaining market share over desktops and servers. In the first semester of 2006, with 1,055,000 units sold, portables grew 18.5percent in volume, versus an increase of 6.6 percent for desktops (965,000 units) and an increase of 16.6 percent for PC servers (98,000 units). Portable PCs now account for 52.2 percent of the PC market, doubled over 2004. The mainframe/high end server segment continues to record considerable growth, especially in the banking sector, confirming the trend of larger enterprises to invest in the rationalization and better management of their information systems. The midrange server segment and the workstation segment are facing growing competition from both mainframes and Wintel platforms, which are aggressively priced and offer continuous performance improvements and a wide range of applications. The storage segment is recovering and is expected to continue growing, also in view of the implementation of recent Italian laws calling for data protection, business continuity and disaster recovery procedures. The printer segment is also growing, with multifunction printers registering growth of over 35 percent. With regard to the Italian Consumer Electronics hardware market, it is becoming increasingly important and offers excellent business opportunities. Italy ranks among the fastest growing European countries with an estimated market value of $8 billion and an increase of 15 percent over the previous year. Digital technology products, such as Plasma TVs, LCD TVs, home theater equipment, MP3 players, digital cameras, satellite components, game consoles and camcorders are showing 2-digits growth due to expanded availability in retail stores and to dramatically decreasing prices. Future Prospects in this Market In spite of the modest results of the past few years, all trade sources indicate that the general outlook for the Italian ICT market in the next three years is positive. In the computer services and software sectors, best prospects are for projects designed to cut costs and complexity, raise flexibility and efficiency or integrate different IT systems; application integration projects at all levels (from databases to solutions) based on different approaches: portals, Application Servers, Web Services, etc.; and security projects, where the main issues are common to all sectors of the economy. ICT security software and services are expected to grow at sustained rates in the next three years. These include risk analysis, security infrastructure design and implementation, development and monitoring of security management policies and management of support applications; intrusion prevention and detection systems, identity management solutions, secure networking equipment, firewall software and equipment, secure content control software, internet access control tools, and security authentication, authorization and administration tools; business continuity and disaster recovery procedures.

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Sustained growth is expected in both B2B and B2C e-commerce solutions. The most active players focusing on the implementation of B2B solutions are the automotive, the pharmaceutical, the grocery, the IT and the telecom sectors. E-procurement is growing very positively and virtually all major Italian industrial groups and major companies, as well the Public Administration, are organized for it. In the B2C, the most promising purchased items will be computers and software, books, Internet music and videos, and bookings for entertainment events, vacation and travel. Excellent development potential also exists for selective outsourcing services such as remote monitoring, business continuity and management of security technologies internet-related services to support intranet/extranet and e-business solutions; storage management; and integration of Web and e-commerce solutions with ERP, SCM and CRM. The growing complexity of network technologies and the need for specialized skills to implement e-business and internet security strategies is also leading large and medium-sized Italian businesses to increasingly outsource services to supplement their in-house capabilities. In the Public Administration sector, demand for advanced solutions to face new challenges is creating new opportunities: this includes the management of large command, control and logistics systems for civil protection projects from the management of major events with large participation of the public to the management of emergency situations, and large mobility and security projects. Solutions to enhance government efficiency are also becoming increasingly important, including interoperability of large databases, privacy, services to the citizens, environmental protection and energy saving. In the telecom sector, trends indicate a gradual decline in fixed networks and a steady growth in the mobile segment. Fixed-mobile convergence (FMC), although at an early stage in Italy, is expected to develop considerably in the next three years, stimulating the need for products and services allowing the seamless integration of mobile and fixed-line telephone services, such as the new UMA terminals, PDAs with advanced telephony features, etc. Key factors will be extended broadband availability and wireless technologies. Wi-Fi (Wireless Fidelity) technology, which will represent an important part of FMC, is also developing very rapidly. Investments for wireless networks are growing exponentially, offering excellent business opportunities. Telecom value-added services will continue to be a particularly dynamic segment. In the IT hardware sector, market is far from being mature and IT potential remains considerably high. As the Italian economic conditions improve, demand is expected to be stimulated and the market to grow increasingly. In particular, sales of notebooks, mainframes, PC servers, and higher performance midrange servers are projected to pick up, as well as sales of increasingly powerful storage solutions and of computer security solutions. U.S. technology and standards are highly regarded and the best opportunities for success will be for those American companies offering innovative and sophisticated products. However, it is important that U.S. companies team up with well-established Italian firms for distribution or joint venture agreements in order to handle the burdensome bureaucratic procedure of public procurement.

Important USDOC Resources in this Market Every year, the Commercial Service (CS) in Italy organizes the participation of a delegation of U.S. companies to Infosecurity/Storage Expo Show, Italys most

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important ICT security and storage management event, held annually in Milan in February. In 2008, CS Italy will also recruit U.S. companies to participate in the Wireless and Mobile Forum, a major event exclusively devoted to wireless and mobile technologies and solutions, and in the M2M and RFID Forum, Italys most important conference and exhibition focused on Machine-to-Machine communication and Radio Frequency Identification. The Commercial Service offers a wide range of services to American companies wishing to enter the Italian market or to strengthen their position there. CS Italy can also assist U.S. companies in organizing Single Company Promotions through presentations to potential clients and business partners in its conference rooms at the U.S. Embassy in Rome and the U.S. Consulates in Milan, Florence and Naples. For further information about the services provided please visit the CS Italy web site: http://www.buyusa.gov/italy/en/ Public tenders make most purchases by the Italian Public Administration open to both domestic and foreign companies. Announcements of tenders on public procurements are monitored by the U.S. Mission to the European Union and can be accessed through the web page: http://www.buyusa.gov/europeanunion Local Market Commercial Specialist: Nicoletta Postiglione American Consulate General, Commercial Service Via Principe Amedeo 2 20121 Milan, Italy Tel: +39/02/62688-522 (direct phone number) Main: +39/02/62688-500 E-mail: Nicoletta.Postiglione@mail.doc.gov Web: http://www.buyusa.gov/italy/en/

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REPUBLIC OF KOREA

Capital: Seoul Population: 49,024,737 Languages: Korean Currency: Won Exchange Rate: $1 = 948 KRW (Feb. 2008) GDP per capita: $25,000 (2007 est.)

Market Overview Korea has been a world leader in broadband services and is now exploring more innovative technologies that can support next generation convergence services to capitalize and build upon this success. The Korean telecom industry has already started to offer the first phase of convergence services with voice/data, fixed-line/mobile, and telecom/broadcasting. However, more advanced global technologies are still in strong demand to sustain competitiveness and continue growth in Koreas dynamic information and communication technology (ICT) market. The overall Korean market demand for information technology (IT), telecom equipment, services, and software solutions was worth USD 185 billion in 2006, and it is estimated to grow at an average annual rate of eight percent over the next few years. The best prospects for U.S. exporters include equipment and solutions for broadband convergence networks (BcN), Internet protocol TV (IPTV), wireless broadband (WiBro) services, digital content, 3.5G high speed packet access (HSPA), radio frequency identification (RFID), home networking, electronic commerce, IT security, voice over Internet protocol (VoIP), data, voice, and video integrated triple play services (TPS). A seamless computing/communication environment and demand for multimedia content are driving investment in innovative convergence technologies and services. New investments under the Korean governments ICT initiatives will continue to create more opportunities for U.S.-based firms that can offer cutting-edge technologies in ICT services, equipment, and solutions. However, bills pending before the Korean National Assembly directly affecting the Korean ICT industry, including data privacy and the Telecom/Broadcasting Convergence Act, are not progressing due to the conflicting interests of different government agencies and legislators. Major Telecom Indicators
Population/ Households
48M/15.9M

Fixed-Line # Of SS P Rate (%) 23.1M 48.1%

Cellular Phone # Of SS P Rate (%) 40.2M 83.8%

Internet # Of SS P Rate (%)

34M 74.8%

Broadband Internet Cable TV # of HH P Rate # Of HH P Rate (%) (%)

14.0M 88.1% 12.4M 78.0%

Notes: M - Millions, SS - Subscribers, P - Penetration, and HH - Households. Networks Korea ranks among the top countries in the world in terms of Internet usage and broadband penetration. According to the Korean Ministry of Information and Communications (MIC), in 2006, there were 14 million households out of 15.9 million using high-speed broadband services, which accounts for more than 88 percent of total households in Korea. Korea was one of the first countries to commercialize mobile worldwide interoperability for microwave access (WiMax), which allows wireless and mobile broadband connections at a

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minimum speed of one Mbps up to 20 Mbps. BcN is being deployed as the foundation upon which the latest convergence services requiring additional bandwidth will be offered. Nationwide, BcN will allow transmission of data and images at speeds of 50 Mbps to 100 Mbps. The Korean government has spent USD 560 million on research and initiated projects in this area over the past three years, thereby prompting private companies to invest USD 21 billion in building a BcN designed to integrate wired and wireless technologies with the telecom and broadcasting sectors. MIC plans to invest billions of dollars more to increase the number of BcN-based households from 5.5 million at the end of 2006 to 8.2 million in 2007 and eventually to all urban households by 2010. 1) Telecom/Broadcasting Convergence The telecom and broadcasting industries are transitioning and developing into a new arena by combining each others technologies in the IPTV services market, which is expected to grow at an average annual rate of 34 percent until 2012 when it will reach four million subscribers and collect USD one billion in revenue. Acknowledging that the existing Internet network does not have the capacity to manage the data traffic potentially generated by IPTV services, Korea's largest Internet service provider (ISP) KT has embarked upon an ambitious program to connect every household in Korea with fiber to the home (FTTH) services at a cost of USD one billion. In November 2006, MIC and the Korea Broadcasting Commission (KBC) conducted IPTV trial services for two months involving 360 individual customers and a consortium of service providers, C-Cube (KT) and Daum. Although the result of the trial confirmed that IPTV service in Korea is commercially viable, the main obstacle to its further spread is the absence of a regulatory system. The industry hopes to introduce commercial IPTV service by the end of 2007, and MIC plans to regulate it as the service evolves. Digital multimedia broadcasting (DMB) is another growing convergence service already offered by various consortia of broadcasting and telecom companies since 2005. From 2005 to 2010, the market for terrestrial DMB service is forecast to grow from USD 14 million to USD 730 million, while that of satellite DMB service is expected to grow from USD 18 million to USD 640 million. Market demand for U.S.-based mobile digital content is expected to explode in the next several years driven by DMB service providers. 2) Voice/Data Convergence Services The Korean telecom industry is migrating from voice to Internet protocol (IP)-based data technology to introduce various services, through BcN voice phone and high-definition (HD) videophone, by integrating voice with data networks. The sound quality for the BcN voice phone is expected to be comparable to that of a compact disc. BcN videophones will be able to offer value-added services with diverse entertainment content. According to industry analysts, the Korean VoIP service market is forecast to grow at an average annual rate of 54 percent, which was valued at USD 250 million in 2006 and is projected to be worth USD one billion in 2009, spawning the VoIP devices market to reach USD 260 million by 2009 from USD 105 million in 2005. The opportunity in the VoIP service market has become more viable for three main reasons. First, Korea has a state-of-art infrastructure of high-speed Internet in place that is exposed to 80 percent of the population and is ready for the service. Second, as of 2008, MICs new telecom policy allows users to maintain existing phone numbers even upon migration to VoIP service. Lastly, the market for mobile VoIP phones on WiFi or mobile WiMax technology will allow VoIP service to be available virtually anywhere and compete with mobile cell phone services. 3) Wireline/Wireless Convergence Services There is a new growth market where wireline and wireless services are being combined to offer new value-added services. Koreas two largest telecom carriers KT and SK Telecom

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commercialized WiBro services (similar to mobile WiMax) in mid 2006. SK Telecom invested USD 500 million to build wide-band. code division multiple access (WCDMA) networks. As of 2007, SK Telecom plans to utilize highspeed downlink packet access (HSDPA) technology to then offer value-added convergence services like videophone and high-speed data transmission. To maximize accessibility and convenience for consumers, telecom carriers even offer communication modems that cover both HSDPA and WiBro services. Telematics, one example of a convergence service, offers traffic information, security, and digital terrestrial and/or satellite broadcasting services by utilizing wireless radio signals Subscription rates
1 2003 2004 2005 2006 Subscription rate Broadband 11,178,499 11,321,439 12,190,711 14,042,698 WiBro N/A N/A N/A 6,942 Cell Phone 33,591,758 36,586,052 38,342,323 40,197,115 Mobile Internet 34,089,041 37,084,652 38,854,074 40,150,000 Cable TV 11,724,452 11,357,195 12,273,917 12,370,000 Satellite TV 779,114 1,652,255 1,855,240 1,900,000 1 The subscription rate for cable and satellite TV is measured by the number of households

2. Market Size in Revenues for Telecom/Broadcasting Services 2003 36,570 7,305 2004 40,200 8,194 2005 42,658 9,086 2006 43,429 10,130

Telecommunication Broadcasting ICT sector Imports

ICT Equipment & Components

2003 42,438

2004 49,754

2005 53,950

2006 58,803

Regulatory Regime Standards There are a number of market access issues for U.S. suppliers in Koreas telecom market, including: foreign investment ceilings, licensing requirements for service providers, linkage of spectrum allocation and technologies, and the governments push for the development and use of unique Korean standards. The Korean government encourages Korean industry to develop Korean IT/telecom standards through the Telecommunications Technology Association (TTA) and the Electronics and Telecommunications Research Institute (ETRI). U.S. suppliers of leading-edge equipment and solutions for advanced IT/telecom services exploring the Korean market are encouraged to carefully consider the possible limitations to market access that the development of Korean standards may pose. There has been a growing awareness in Korea of the importance of protection of intellectual property rights (IPR) for both domestic and foreign providers of software and technologies, so the Korean government has taken greater steps than in the past to enforce IPR. Nonetheless, U.S. suppliers of IT/telecom products and technologies should make sure that their intellectual

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property is adequately protected prior to entering the market and carefully plan ways to avoid possible infringement. Best Prospects The market demand for fixed-line broadband Internet services is saturated. The size of the wireless Internet services market, which was valued at USD 1.9 billion in 2003 and forecast to reach USD 6 billion by 2007, is still continuing to grow. This growth stems from the over 40 million mobile phone subscribers. However, anticipated explosive growth in demand for new value-added convergence services, including WiBro, DMB, IPTV, HSDPA, RFID, home networking services, and digital content over the next few years will stimulate stronger demand for next generation network infrastructure, handsets, components, and software/solutions. Barriers to Entry At present, all computer software/solutions products (both customized and packaged) including some wireless equipment under HS code 8525 (switches, base stations, transmission equipment, and repeaters), enters Korea at a duty rate of zero percent. However, equipment is still subject to type approval and electro-magnetic compatibility (EMC) testing. Both type approval and EMC tests are conducted at the Radio Research Laboratory (RRL) under the auspices of the MIC. The procedures to be followed in obtaining RRL certification are extremely complex, making it very difficult, if not impossible, to attain without the assistance of a Korean representative. For this reason, many U.S. suppliers have found it to their advantage to have their Korean agent/distributor or importer engage the services of one of 30 companies licensed in Korea as RRL testing agents to handle the entire testing process on behalf of the U.S. suppliers. However, effective as of May 2005, Korea accepts test data from U.S. laboratories, evaluated by the U.S. National Institute of Standards and Technology (NIST) and certified by the MIC, for telecom products that are required to comply with the U.S. Federal Communications Commission (FCC) standards. This is the first phase of a three-phase Mutual Recognition Agreement (MRA). U.S. companies can obtain complete information, including the lists of items subject to type approval, type verification, or type registration, EMC registration, and certification fees through the following website: http://approval.rrl.go.kr/eng/index.jsp. - U.S.- Korea Free Trade Agreement (KORUS- FTA) on foreign ownership in the Korean telecom industry The KORUS-FTA negotiations were concluded in April 2007, and the major ICT industry chapters include: 1) a cap on foreign ownership of Korean telecom operations at 49 percent; and 2) provisions that technology standards guidelines will be maintained at current levels. However, foreign ownership in companies other than KT and SK Telecom can be extended to 100 percent via indirect investments, which raises the possibility of U.S. telecom operators tapping into the Korean market by establishing an independent entity. Furthermore, foreign companies will not be discriminated against in utilizing domestic networks, allowing them to operate telecom businesses by piggybacking on a domestic companys network already inplace. For more information on how the KORUS-FTA could benefit your company, please contact CS Korea. For More Information: The U.S. Commercial Service in Seoul, Korea, can be contacted via e-mail at: chris.ahn@mail.doc.gov; Phone:+82-2-397-4186; Fax: +82-2-739-1628; or visit our website: www.buyusa.gov/korea/en.

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THE NETHERLANDS

Capital: Amsterdam Population: 16.5 million Languages: Dutch. English is widely spoken as a second language Monetary Unit: Euro Exchange Rate: $1= EUR 0.69 GDP per Capita: $43,200 (2007 est.) Local Market Commercial Specialist: Alan Ras U.S. and Foreign Commercial Service American Embassy Lange Voorhout 102 2514 EJ The Hague The Netherlands Tel: +31-(0) 70-3102420 Fax: +31-(0) 70-3632985 E-mail: alan.ras@mail.doc.gov Web: http://www.buyusa.nl

Market Overview The Netherlands is strategically located in Europe, bordered by Germany to the East, across the North Sea from the United Kingdom and Belgium to the South. It is a founding member of the European Union (EU), and, although small in size, plays an important role in the EU at all political and governmental levels. About the size of the state of Maryland, the Netherlands is densely populated with a total population of about 16.5 million people, and almost 7.1 million households. There is an active working population of 7.04 million people and some 120,000 registered companies with a staff of five or more people. The economy is open and the country is technologically advanced, with an excellent transportation and telecommunications infrastructure. It offers a compact market which is used by many Information and Communication Technologies (ICT) companies from abroad as a pilot market and a major transportation hub for distribution of products and services throughout Europe. The country depends heavily on foreign trade - it is the eighth largest importer from the United States and has a well-deserved reputation as the "Gateway to Europe". The ease of doing business makes it an attractive market for both new-to-export and new-to-market U.S. exporters. The combination of logistical expertise developed from centuries of international trade, the fact that almost everyone speaks English, and the Dutch acceptance of U.S. products and services makes the Netherlands a prime destination market and the leading location for European distribution centers. The Dutch government stimulates R&D and innovation in the development and use of advanced technology products. It supports entrepreneurs in starting up new businesses and developing innovative high technology products. The Marketplace for Business Process Technology The software segment grew by 9,5 percent in 2007, caused primarily by increasing integration in business and production processes. This segment continues to be the fastest growing segment within the Information Technology sector. The software market primarily depends on imports. Local software development mostly concentrates on business applications and custom products.

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Exports of Dutch products are limited. Most exports consist of re-exports by local subsidiaries of non-Dutch producers. U.S. companies are the largest suppliers (e.g. Microsoft and other multinational software producers) followed by European software producers. The total market is almost equally divided into applications software and systems software. Windows is the standard in the business market, although the use of Linux is gaining ground. While UNIX, closely followed by Windows, is still the most commonly used operating system for servers, Linux market share is estimated at about 15 percent and growing. The Dutch government promotes the use of Open Standards and Open Source Software within the government. The government and financial sectors traditionally have been major end-users of all types of software products. The business market, with an increasing need to streamline business processes, has also been a significant user. More recently the SME market has begun to emerge as an attractive new market for ICT suppliers. Increasing demand from SME companies as well as the healthcare sector contribute to further expansion. The consumer market has grown rapidly in recent years due to increasing use of the Internet, games and online gaming. The Dutch IT services market grew by 7.4 percent in 2007, to an estimated $9.8 billion. This market is expected to continue to grow and benefit from the implementation of new technologies and increasingly complex systems that require the expert knowledge of specialists. Driving factors also include lack of in-house capacity, focus on core business, security concerns, as well as quality, cost and efficiency considerations. The growing use of the Internet and its applications are expected to increase demand for external services, e.g. in the areas of CRM and procurement implementations. The Netherlands has a large number of IT services firms ranging from small to large, and from hardware vendors to management consultants. Local production is considerable, but it includes services provided by local subsidiaries of companies headquartered outside of the Netherlands. U.S. firms have successfully established themselves in this market, primarily with subsidiaries and through acquisitions. They play a prominent role and are expected to continue to do well, as others successfully enter the open Dutch market for the first time. There is an ongoing tendency for larger Dutch services firms to merge or acquire other service companies and become more international. While offshore IT is growing, there is still expected to be a shortage of highly qualified IT staff within the next few years. IT services are provided almost exclusively to the business market. Important end-users include financial institutions, government, healthcare, and utilities The Marketplace for Communications Technology In 2007, the total Dutch telecommunications market grew by 1.4 percent, to around $25 billion. Within the sector, expenditure on data and network equipment grew by 4.7 percent while expenditure on data services grew by 6.9 percent. Expenditure on fixed telephony decreased by 4.5 percent in 2007 and this trend is expected to continue, with a further decrease of 4.7 percent predicted for 2008. Around 85 percent of the total market consists of services, while the remainder is telecommunications products and equipment. The telecommunications services market was worth an estimated $20 billion. The business segment represents approximately 65 percent of the telecommunications services market. The increased use and availability of broadband, the expansion of business and mobile communications, and the rollout of new networks will drive growth in the sector. KPN Telecom, the former PTT, continues to be a prominent player in the overall market, and is active all areas of telecom. The country is one of the more liberalized markets in Europe, and proactively promotes competition. OPTA, the Dutch independent regulator, closely watches and stimulates competitive developments. The Dutch market for mobile telephony (GSM) is saturated. There are now more than 17 million subscribers and there is strong competition between the four major operators. The Dutch government auctioned five IMT-2000/UMTS frequency licenses in 2000. Cable density is more than 90 percent in the Netherlands. Several cable companies offer telephony services, and cable is increasingly used to access the Internet. The Netherlands has one of the highest broadband connectivity rates in the world and more than 65 percent of Dutch households use a broadband connection. Data communication service is a growth area and is expected to

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gradually overtake voice telephony services in importance. The market for wireless networking is growing.

The Marketplace for Digital Equipment & Systems The total hardware market grew by 6.4 percent in 2007 to an estimated $5.5 billion. Within this market, sales of pc's, printers, servers and storage media grew by 7 percent, while sales of office equipment like multifunctionals for networks grew by only 0,7 percent. Growth in the hardware segment in 2008 is predicted to be 5,2 percent. The business market for desktop PCs still is primarily a replacement market while the notebook market continues to grow. Growing use of the Internet and larger software applications have increased sales of small to medium-sized servers. While the number of printer units sold many of them multi function printers - gradually increased over the last few years, the market did not show significant changes in the last year, mostly as a result of continuing price decreases. U.S. manufacturers are leading providers of PC and peripheral products. Although prices continue to decrease and margins are low, it is expected that hardware sales will continue to grow over the next few years. Government, financial services and other business segments are the main endusers. The SME sector, and consumer sector are still growing in importance. The Dutch market for audiovisual (AV) products and services experienced dramatic growth between 2005 and 2006, measured at 14 percent. 2006 Sales were valued at $3.8 billion. Sales of flat-screen televisions were a major contributor to growth, with a 40 percent market share of total sales. In 2005, 29 percent of TVs bought were High Definition. In 2006, this rose to 70 percent. Another area of strong growth has been a DVD recorders with hard drives, contributing one-third to total sales of DVD recorders in 2006. Home cinema is the largest segment in the audiovisual market, good for 38 percent of sales. DVD sales dropped by 20 percent in 2006, a natural consequence of the growth in sales of hard drive recorders. Sales of mobile DVD sales are on the increase, due to a trend of increased mobility. Camcorder sales have remained stable with slight growth in sales of products with hard drives and built-in DVD recorders. Sales of digital cameras are also static. The home audio market dropped by 11 percent in 2006, with home cinema the only growth sub sector. The personal audio market has also grown steadily in recent years, stimulated by the popularity of the MP3 player. Sales of solid-state MP3 players accounted for 84 percent of the personal audio market in 2006. The auto market grew 23 percent in 2006, primarily due to sales of navigation systems. This market has doubled every year in the Netherlands since 2004, and 60 percent of all vehicles now have a built-in or portable navigation system.

Future Prospects in the Netherlands Standard software applications, networking software and network security products, e.g. intrusion detection and prevention products, development tools, storage management software, Customer Relationship Management (CRM), Enterprise Resource Planning (ERP), application management and content management products, and game software for the consumer market are expected to offer good prospects for the coming years. In the services segment, IT outsourcing - desktop and network management, application hosting and implementation, Business Process Outsourcing (BPO), security services (assessments and scans), network consulting and integration, support/training and all types of Internet and ECommerce related consulting and services are expected to grow. In the telecom sector, mobile (value-added) data services, all types of Internet related

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communication services, outsourcing and maintenance of infrastructure installation, VoIP services for the business market, security applications for mobile communications, entertainment applications, multimedia services and applications will remail good prospects. In the hardware sector the following growth areas are forecasted: data storage equipment, laptops/notebooks, small/entry level servers, TFT and LCD screens.

Important USDOC Resources in this Market The U.S. Commercial Service has offices at the U.S. Embassy in The Hague (http://www.buyusa.nl). The U.S. Commercial Service assists exporters of U.S. products and services in entering or expanding their export sales to the Netherlands. Services cover a range of products, including market research, agent/distributor searches/appointments, company promotions/product introductions, contact lists, company profiles, trade missions, seminars, and more. The main ICT trade events in the Netherlands are held at the RAI Exhibition Halls in Amsterdam (www.rai.nl), or in the Jaarbeurs in Utrecht (www.jaarbeurs.nl.) The Netherlands is hosting the 2010 World Congress on Information Technology (WCIT) in Amsterdam.

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NORWAY Capital: Oslo Population: 4,627,926 Language: Norwegian Monetary Unit: Norwegian Krone Exchange Rate: $1 = 5.43 Krone (Jan. 2008) GDP per Capita (in US$): $55,600 (2007 est.)

Summary The Norwegian market for ICT services and goods has been growing at a steady pace over the last few years and this is expected to continue. Most market segments will enjoy high revenue growth and solid profit margins. The consumer market is fueled by low cost production in China, whereas B2B products and services, on the contrary, are increasingly driven by higher cost of labor there is practically no unemployment in this sector. Outsourcing and systems integration of enterprise software are strong segments in the service market. Especially, Customer Relationship Management systems, IT security and other enterprise software are expected to generate high revenues. This growth period is expected to last at least until 2009, although some uncertainty is related to the possible impact of a declining U.S. market.

Market Overview The Norwegian market is relatively small, but technology-savvy, innovative and largely homogeneous, and often one of the first to try and adopt new technology. This makes Norway, together with its Nordic neighbors, a good entry point into the European market for many U.S. companies. Statistics Norway indicates that the overall ICT market in Norway is valued at more than USD 60 billion. The Norwegian ICT market is in a high growth period, and is expected to remain so for a few more years. Some ICT market segments have enjoyed growth rates of 15%, according to Statistics Norway. Overall ICT growth has been in the 5-6% range on an annual basis. The market analysts IDC expects the Norwegian software market to grow by an annual growth rate of 7.1% for the period 2007-2011. Vertical Industries and ICT spending Norway is the worlds third largest exporter of crude oil and natural gas and many of the ICT companies serve this increasingly high-tech market. For example, Norways largest oil companies have some of the highest computing capabilities available on the market to solve complicated sub-sea geological challenges. One of the companies, Statoil, last year upgraded to 12 teraflops capacity (from HP), which enable them to cut down calculation time by weeks. Processing of geological data is just one example of many sophisticated needs. Shipping, fisheries and other maritime industries also make significant contributions to Norways GDP. An IBM Research study shows that the finance, insurance and media market has the highest percentage of total cost related to ICT (36%), whereas manufacturing (20%) and the public sector (13%) come in at number two and three, respectively. A Statistics Norway survey shows that the ICT market related to manufacturing is the fastest growing sector.

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Market Trends IDC has summarized the growth trends in the Nordic region with GDP forecasts above the European average, falling number of bankruptcies, high IT investments, and few signs of fundamental, negative change, despite the recent fluctuations in the U.S. financial and housing markets. Most analysts seem to believe that the positive status of fundamental economic indicators will keep the Norwegian economy healthy. However, a prognosis by ICT Norway and Visendi published in September 2007 indicates that investment levels by companies in 2008 are somewhat uncertain. Fewer companies expect an increase in systems integrations and application developments compared to the peak years 2006 and 2007. Hardware External trade with ICT goods is growing. Imports of ICT goods are dominated by computers and related equipment while exports are dominated by telecommunication equipment. Consumer electronics is still a hot commodity. The server market segment grew several times faster than the rest of the market the last few years and may be worth around USD 250 million. Demand for server consolidation (larger and fewer servers) is expected to increase, and server architecture is expected to be more sophisticated. IBM is the market leader, closely followed by HP, with about one-third of the market each. Intel processors equip more than half of the servers, and Unix is the fastest growing platform with a 34% market share. There has been an annual increase in storage capacity of 50%. The price of gigabytes is dropping, but costs related to administration, cooling, space and electricity are growing. Virtualization and dynamic assignment seems to be the current buzzwords and these solutions come with the highest price tags. E-business The major online electronics retail stores also report higher revenues. One of the largest retailers, Komplett, reported a 25% increase in revenues in 2005 and 22% growth from August 2006 to August 2007. Komplett is now one of the largest online retailers in Europe. Komplett recently acquired another large market player, MPX.no, which had a revenue growth of 45% in 2005. Flatscreen TVs and monitors are still popular and have experienced increased sales lifecycles due to high definition capabilities. Online purchases are increasingly common, largely due to widespread broadband Internet access throughout the country. Unfortunately, because the Nordic countries are in the forefront of broadband development, they are also struggling with illegal downloading of pirated movies, games, various types of consumer software and music. Swedish-operated Pirate Bay is in part to blame for this, and Nordic governments are yet to implement effective countermeasures. Norwegian consumer demand for e-commerce is high. The value of e-commerce in Norway has increased from USD 290 million to USD 610 million according to the analyst firm MMI. The increase in e-commerce may be a result of more diverse and higher quality goods on offer, that consumer confidence and IT skills see are developing, and that ever more suppliers of products and services use the Internet as a sales channel. The vast majority of Internet users have ordered products and services online at some time, TNS Gallup reports. Books, travel, IT equipment and clothing are still the best-selling products on the Internet, while films, tickets and books have the highest growth rates. Air travel makes up 83% of travel booked online. Software and services (B2B) IDC has projected a 7.1% growth rate for the software market between 2007 and 2011.

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ICT outsourcing and systems integration services experienced a significant growth period in the business-to-business market in 2005 and 2006. These are also leading sectors and currently the services that generate the highest revenues in the industry. Hardware support and application development are market segments that may expect slower growth in the Nordic countries, whereas software support and network and desktop outsourcing (NDOS) are expected to grow at a faster pace. Application management (AM) and hosted utility services are by IDC expected to be the fastest growing sectors in the ICT business-to-business sector in Norway and the Nordic region. Norway is in the forefront of adopting hosted software (hosted on servers outside the enterprise), and AMR Research estimate that these so-called on demand software solutions account for about 10% of the market today. See Figure 1. Major product categories such as EPR (Enterprise Resource Planning) and CRM (Customer Relationship Management) systems experience higher sales and good business opportunities for the vendors and integrators. Although a popular technology, a recent Gartner survey of 300 Norwegian companies indicated that as much as 70% of the CRM-implementations failed, and only 26% had a clear target as to what to expect financially from the implementation. Better business analysis (of their customers) could help justify/improve the investment and prepare the company for a rainy day. Nevertheless, Siebel Norway recently stated that the market for CRM is boiling. SAP and Oracle also report higher sales. The reasons for implementing comprehensive enterprise systems in companies also seem to shift from a cost-cutting focus to profit-generation. IDCs Enterprise Technology Trends Survey for 2005 show that companies in 2004 considered that their primary motive for ICT investments was to contribute toward cost-cutting (65%), and that increasing revenues was secondary (35%). In February 2005, the ratio was 50/50. A need for more sophisticated storage solutions in Norwegian enterprises creates opportunities. Systems Integrators offering these solutions in Norway report of 60-70% storage growth annually. Some clients need to increase their capacity by as much as 200%. This expansive growth requires differentiating cost of data storage based on usage. U.S. vendors and service providers can profit from this market opportunity by offering analysis services, applications and hardware. Consolidation among system integrators seems to be a trend in 2007 and 2008, where the largest players try to get a solid representation throughout the Nordic region. This is driven by the profile of their customers, who also get a pan-Nordic outreach. IT Security (B2B) One of the most promising ICT sub sector is IT security for the enterprise market. This market develops much faster than other parts of the industry, as threats seem emerge at a rapid pace. Empirical data from all vertical industries show that companies have big holes into their critical and sensitive data wherever that data may be. The health, banking and telecom sectors are among the most vulnerable as they have the greatest challenges handling the most sensitive type of data. Larger companies with higher revenues and larger IT budgets tend to be more secure than smaller companies, but far from secure enough. A survey of the largest Internet banking solutions in Norway revealed that not a single bank had satisfactory security features implemented. At least six financial institutions have had direct losses as a consequence of hostile attacks, or hacking. Part of the problem in some banks are related to the security level with their customers (their equipment and habits), whereas some banks suffer from a mix of ad hoc security solutions overlapping each other. This is not only unsafe, but also user-unfriendly. The survey showed that most banks had a satisfactory user identity setup, as well as a good SQL injection. Some of the banks failed on cross-site scripting, likelihood of virus/trojans, and transaction verifications. The largest global suppliers such as Microsoft, Norton and McAfee are now rolling out their all-in-one solutions in the Norwegian

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market, but it is unclear how this will address the specialized needs in the various vertical sectors. IP telephony and related services are good examples of products that are difficult to secure. U.S. security vendors with niche products should consider Norway and the Nordic region. Value added resellers (VARs) and systems integrators are on a constant lookout for new features to secure their customers. The U.S. Commercal Service will in March 2008 host a PowerNetworking event in all four Nordic countries where vendors will have a chance to meet with a wide range of pre qualified end users and integrators over four days. See http://www.buyusa.gov/norway/en/powernetworking.html for more information. According to Statistics Norway 47% of companies in 2007 have a dedicated IT security person, up from 39% in 2006. Interestingly, the share of companies with an educational focus on IT security decreased from 34% to 28% from 2006 to 2007. The penetration of anti-virus software and firewalls is high and stable, with 92% and 89% of companies with more than ten employees having implemented these technologies. This is an indication that U.S. suppliers of mainstream products will have a hard time penetrating the market with an unknown product. 11% of the companies encrypt confidential correspondence.

Other indicators The job market in the ICT sector has improved significantly over the last few quarters. Unemployment rates for ICT are practically zero, driving up salaries and eventually prices of services. For example, it is not uncommon for experienced SAP-consultants to have annual salaries of USD 160,000. Some analysts compare this to the situation in 2000 and 2001, and point out that it is hard to be profitable with salaries at this level. Figure 1. Source: IDC

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Import Market Norway is to a great extent dependent on foreign trade and importing ICT hardware. Imports of ICT goods amounted USD 5.3 billion in 2005, according to Statistics Norway. Note that the table does not account for services and software Table: Import and export of ICT goods. Mill NOK. Source: Statistics Norway Currency: 1 USD = 6.5 NOK. Final 2006-figures not yet released. 2003 Export Exports Imports Exports Imports Imports s 11 950 34 683 11 236 33 814 10 459 28 003 706 1 603 1 801 4 392 3 449 6 161 14 509 3 220 7 246 3 547 635 1 613 1 504 4 378 3 107 5 308 14 131 3 225 7 825 3 324 545 1 850 1 608 3 451 3 005 4 515 11 968 2 544 6 139 2 837 2005 2004

ICT goods, total Audio and video equipment Computer and related equipment Electronic components Telecommunications equipment Other ICT goods

Competition The market consists of systems integrators of all sizes, a few large regional telecom providers, the major global software and hardware manufacturers (Microsoft, SAP, IBM, Dell, HP, etc.) and numerous subcontractors and outsourcing companies supporting these market segments. There are also many related sub-sectors, such as AV manufacturers, distributors and integrators, four to five major retail chains for electronic goods covering the entire market, and a few manufacturers of micro chips and various other types of hardware. A few national application developers are also performing well, within CRM, game development, and software development for mobile devices, to mention some. Like in the United States, the vast majority of companies are small and medium sized private businesses. Only the largest are traded on Oslo Stock Exchange. The Norwegian Government has direct and indirect ownership of some companies, especially within telecommunications. The level of competition varies greatly for each market segment and over time. For example, companies offering IP-telephony in the private market had a great first-mover advantage in 2004, while experts today expect consolidations and reductions in this market. In 2007 and 2008, innovative security companies offering unique features in the enterprise market may find a good market in Norway.

End Users With an overall population of 4.6 million, the Norwegian market is small. However, Norwegian end-users are technology-savvy, innovative, largely homogeneous, and are often among the first to try and adopt new technology. Norway is often used as a test market for foreign manufacturer to effectively measure the potential of their new products. Figures 2 and 3 show the adoption of some of the most common innovations, as well as access to PCs and Internet connections.

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Figure 2 and 3. Source: Statistics Norway

Market Entry Similar to in the United States, physical presence over time, a good track record and reliable service and follow-up is critical when selling enterprise software in Norway. U.S. companies interested in penetrating an established market should be patient, seek sound market advice and try to establish some solid sales references before expecting to sell in higher volumes. Alternatively, M&As could of course jump-start the market, but this requires time, money, risk and insight. Niche products could have a much faster track. U.S. exporters seeking general export information and assistance or country-specific commercial information should consult with their nearest U.S. Export Assistance Center or the U.S. Department of Commerce's website www.export.gov. Information on services offered by the U.S. Commercial Service in Oslo can be found at http://www.buyusa.gov/norway.

Opportunities for Profile Building ICT Norway A leading membership organization in the Norwegian ICT sector. Website: www.ikt-norge.no Abelia Association of Norwegian ICT- and knowledge based enterprises. Trade and employer association with 400 members. Part of the Confederation of Norwegian Enterprise. Tel: +47 23 08 80 70 Website: http://www.abelia.no The Norwegian Computer Society Special interest society for information technology (IT) in Norway. Open, independent forum for Norways IT professionals and advanced IT users. Website: http://dataforeningen.no/FgdLS4k.ips American Chamber of Commerce in Norway The American Chamber of Commerce in Norway is a business networking, information and assistance organization promoting the interests of its members. Tel: +47 22 54 60 40 Website: www.amcham.no

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Upcoming Trade Shows and Events Elektrofil 2008 Exhibition of consumer electronics. Will be hosted in the last week of March 2008. Web site only in Norwegian. Website: www.elektrofil.com Lyd, Lys og Bilde 2009 A relatively small trade show for the B2B AV industry. Next show scheduled for 2009. Website only in Norwegian Website: www.llb.no Java Zone 2008 Miniature of JaveOne with 2500 participants. September 2008. http://www4.java.no/web/show.do?page=152&articleid=5053 Nordic IT PowerNetworking 2008 Hosted by Commercial Service for U.S. IT security vendors to meet with end users and VARs http://www.buyusa.gov/norway/en/powernetworking.html

For More Information The U.S. Commercial Service in Oslo can be contacted at: Heming Bjorna Embassy of the United States of America Henrik Ibsens Gate 48 - N-0244 Oslo - Norway Tel: + 47 21 30 87 60 - Fax: + 47 22 55 88 03 E-mail: heming.bjorna@mail.doc.gov

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POLAND

Capital: Population: Languages: Monetary Unit: Exchange Rate: GDP per Capita (in US$):

Warsaw 38.1million Polish zloty (pln) $1 = pln 2.46 $14,880 (2006)

Local Market Commercial Specialist: Maria Kowalska, Commercial Specialist U.S. Commercial Service ul. Poznanska 2/4, IPC Building 00-680 Warsaw, Poland tel. +48 22 625 4374 fax +48 22 621 6327 email: Maria.Kowalska@mail.doc.gov

Market Overview With over 38 million people, 2007 GDP expected growth of 6.5%, a solid economic outlook for the next few years, Poland offers a good potential for American companies in most industry sectors. Poland is the sixth largest EU market and it has become an attractive gateway to Europe for an increasing number of American suppliers. At the same time Poland maintains strong ties with the United States and welcomes American companies and products. On December 21, 2007, Poland joined the European border-free Schengen area, which now consists of 24 European countries. The participation in Schengen facilitates travel and eliminates customs clearance requirement for transporting products throughout the Schengen area. Despite positive economic indicators, Poland has not yet made a decision about adopting the Euro which is now expected no sooner than in 2012. The Polish currency, the Zloty, appreciated steadily against the dollar in 2007 due to the generally positive state of the economy, the favorable investment climate across the Central European region and U.S. investors increased interest in emerging markets. The telecommunications and information technology sectors are open to U.S. companies and, in general, offer the same regulatory environment as traditional European markets, including market entry regulatory regime, custom duties and taxes. There are also no barriers to electronic commerce activities in Poland. The Office of Electronic Communications (UKE), established in 2006, maintains all market regulatory functions for telecommunications (www.uke.gov.pl) and the Ministry of Infrastructure is in charge of overall telecom policy issues (http://www.mi.gov.pl/.) The Ministry of Interior and Administration (http://www.mswia.gov.pl/) oversees IT/telecom development in the public sector. The Ministry of Economy (http://www.mg.gov.pl/) and the Ministry of Regional Development (www.mrr.gov.pl) oversee the use of EU funding, which are administered by appointed institutions responsible for specific programs.

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The Marketplace for Business Process Technology The Polish information technology sector is very competitive. Most major hardware and software suppliers have a direct presence and many companies have decided to invest in Poland in production, R&D, software development or business process outsourcing. American investors include IBM, Dell, Hewlett-Packard, Google and others. By projections, in 2010, 80% of LCD panels sold in Europe will be produced in Poland. At the end of 2006, the value of the Polish information technology market was estimated at $7.5 billion, indicating 12.4% yearly growth. Software and services are the fastest developing segments in the sector. Public sector investments are driven by the development of e-government services required by the European Union. The government is planning to spend almost $1 billion on the state IT projects. It investments in the private sector are supported by EU funding available through a variety of programs. Applications software currently represents 52% of the market. The most popular business application software sold includes Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), document and content management and e-commerce. Growing demand for Business Intelligence (BI) solutions indicates the maturing and growing sophistication of the market. As middle size companies have become the major group of buyers of ERP applications, the local developers who were traditional suppliers for this segment of the market, are facing growing competition from international vendors offering integrated solutions. The awareness of IT security issues in fast developing e-commerce, especially e-banking, creates great demand for information and transaction security products and services. High-end users, especially from the financial/banking sector, telecommunications and large enterprises, usually invest in the latest, enhanced security solutions. Individuals and small companies still need to make up for years of neglected investments in IT security tools. While the security segment is still small, it shows very strong revenue growth rate. The market for data storage equipment is also driven by the internet and e-commerce development and keeps increasing at over 10% a year.

The Marketplace for Communications Technology

The Polish telecommunications market was completely liberalized already in 2002 and there are no restrictions on foreign investments. In most cases licensing has been replaced by a simplified registration procedure at a nominal fee. Poland continues to strictly regulate the use of its frequency spectrum with open tenders and licensing for the use of restricted frequencies. Number portability, in-country roaming for cellular operators, new regulations for the access to local loop and a framework offer for interconnection have resulted in a significant reduction of fixed-to-cellular connection prices. The UKE continued stimulate competition in all market segments in 2007, introducing more effective market regulations for unbundling local loop, facilitating bitstream access and market entry of mobile virtual operators. Despite many achievements, Polands telecommunications sector lags behind most European countries. Poland still has not fully implemented the countrys 112 rescue system. Not satisfied with market competitiveness, the UKE has announced plans to analyze a feasibility of dividing TPSA into two companies, to separate infrastructure management from providing services. Decisions are expected late in 2008.

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At the end of 2006, Polands telecommunications services market was estimated at $15.2 billion, indicating 4% growth over the previous year. Market growth was driven by cellular operators and internet development. All fixed line operators are struggling to maintain their margins through new services, including triple-play, to make up for diminishing income from traditional voice services. Telekomunikacja Polska S.A. (TPSA), the former monopoly, remains a major player in all segments of the market. Privatized with France Telecom as a strategic investor, TPSA still holds over 80% of fixed-line telecommunications services but is loosing position in international telephony, the most lucractive market segment. TPSA owns a majority of the telecommunications infrastructure in Poland. Fixed line voice services currently claim 10.5 million users, over 1.5 million less than last year. Cellular telecommunications is the most competitive segment of voice services. There are almost 40 million active cell phone cards, 70% of users are in the pre-paid segment. All cellular operators offer services in GSM and DCS standards as well as UMTS, which is still limited in terms of territory and scope of services. There are four existing cellular operators, PTK Centertel, Polska Telefonia Cyfrowa, Polkomtel and P4. In addition, two new operators, Tolpis and Centernet, were granted licenses and are expected to begin operations in 2008. There are over 100 registered virtual operators (MVNO) but only a limited number of them have so far launched their services. As voice services are increasingly available from cable television operators and Internet service providers, over the last two years the market has become quite competitive. VoIP has become very popular and by mid 2006 some 41% of Polish internet users were estimated to use voice services, mainly computer-to-computer free of charge services such, such as Skype and GaduGadu. VoIP is currently used by 23.1% businesses. There over 14 million Internet users in Poland, 48% of the population 16-74 years old. At the end of 2006, there were 1.65 million internet access lines, 60% more than the previous year. 28.5% of Internet users shop for products or services regularly and over 55% claim to have on-line purchases at random. The value of e-commerce B2C transactions represents only 1% of retail turnover in Poland and is still in the early stage of development. Nevertheless, the value of ecommerce is expected to $6 billion in 2010, representing 40% year-to-year growth.

The Marketplace for Digital Equipment & Systems The market for digital consumer equipment and systems has been growing significantly as the result of an improving economy, EU membership, continuing IT education and general availability of new technologies. The demand for digital photography and supplies have grown almost threefold in 2006 and preliminary estimates for 2007 indicate more than 3 times growth. Most Polish consumers are determined to buy consumer electronics for the lowest possible price. The demand for mid and high-end equipment is quite limited. There are, however, growing opportunities for high-end digital equipment, especially audio and visual, purchased by the financial and banking sector, and the technology sector.

Future Prospects in this Market Technology convergence and digitalization are the dominant trends in Poland, directly reflecting new market opportunities for suppliers of products and services. The European Soccer Championships in 2012 to be held in Poland and Ukraine will be a driving force for the Polish economy in coming years. It will facilitate the development of the ICT infrastructure and enhance a demand for all kinds of ICT products.

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Even though Poland continues to spend only 2.0% of its GDP on IT investments, the market potential is good due to additional funds available through EU programs. Polands access to EU funds will further stimulate growth in coming years to support needed infrastructure development as well as the competitiveness of Polish businesses. The best prospects in the Polish telecommunications sector are the development of mobile telephony and the content for mobile phones. There are good prospects for all kinds of wireless technologies, especially the equipment in the 2.4 GHz and 5.4 GHz standards, which do not require a license (there are some limits on the equipment type and range). Best prospects for American suppliers exist in all segments of the Information Technology market and include all kinds of specialized software, internet and e-commerce solutions and the security area. Good prospects also include networking equipment and computers, storage systems, components and peripherals. American firms face strong competition both from European companies as well as suppliers of cheap products from the Far East. The importance of a direct presence in Poland cannot be overestimated. U.S. firms can also increase their competitive edge by cultivating the market, committing to strong after-sales service and support and offering pricing and financial terms consistent with Polish industry standards. The most effective means of selling in Poland is through a distributor who maintains relationships with dealers and systems integrators. Polish partners expect that vendors will share the market entry cost and actively support them in marketing campaigns.

Important USDOC Resources in this Market The U.S. Commercial Service provides American exporters with general information on Poland and its business climate, market research reports on the industry sectors and selected segments of industries, identified as best prospects. Our commercial staff is available for counseling on company specific interests. We work with other U.S. Department of Commerce and state offices and industry organizations on Trade Missions of American companies to Poland. We also assist U.S. companies through several fee-based services, such as Gold Key Matching Service, International Partner Search and Single Company promotion. Please see http://www.buyusa.gov/poland/en/ for detailed information on our activities and programs.

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PORTUGAL

Capital: Lisbon Population:10,600,000 Languages:Portuguese Monetary Unit: Euro Exchange Rate: $1 = .69 Euro (Jan. 2007) GDP per capita: $23,464 Local Market Commercial Specialist: Srgio Neves

Market Overview Mainland Portugal, along with its semi-autonomous island regions of the Azores and Madeira, offer American exporters a market of approximately 10.6 million people in a country roughly the size of the State of Indiana. As one of the charter members of the European Union (EU), it is fully integrated with the EU, uses the Euro currency, and follows directives from the EU Commission in Brussels. As with all EU countries, Portugals borders and ports are completely open to the free flow of trade with other EU member countries. U.S. firms are playing increasingly significant roles in Portugals economic expansion, particularly in the automotive, pharmaceutical, ICT and retailing sectors.

The Marketplace for Communications Technology Data transmission services are fully liberalized in Portugal. Mobile telephone service was privatized in 2000 and fixed line telephone service at the beginning of 2001. Portugal Telecom, the former Government telecommunications monopoly and the largest market player, became a private entity. After the full liberalization of the Portuguese telecommunications sector, most of the new fixed operators are now out of business and Portugal Telecom controls 92 percent of the market. New private operators blame the failure to privatize the fixed net on GOP mismanagement, especially regarding the lack of access to the local loop, the last link in the fixed telecommunications net that permits access to the final customer. Some of these operators have suggested mergers to create new companies, which could compete with Portugal Telecom in the fixed telecommunications business. Many experts feel that only one strong competitor can exist with Portugal Telecom in this small market of 10.6 million people. The Portuguese mobile telephone market keeps growing. In 2006, revenues generated by the three major Portuguese operators were over four billion dollars. Actual mobile phone market penetration is over 99 percent of the population (roughly 10 million people).

The Marketplace for Internet and Computer services The number of Internet users in Portugal has been increasing. At the end of the second quarter of 2006 there were nearly 1,538 million Internet access service users in Portugal, giving an increase of about 16.4% percent compared to the second quarter of 2005. The number of broadband customers reached 1,331 million by the end of the first quarter of this year, 58.ooo more users

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than in the previous quarter. This figure is an increase of 29.2% percent compared to the same quarter of last year. Smaller companies, those with employees between 10 and 49, use Internet or email technologies at roughly 79,8%. While larger companies with over 250 employees have a remarkably strong rate of Internet and email usage, at a rate of 99,8%. Portuguese companies are increasingly aware of the need for security to protect their data. The large majority of companies are now using some type of information security. More than 79% of companies with 10 or more people have at least one security appliance installed. 99% of large corporations use information security appliances while at least 94% of medium sized companies have security appliances installed. The growing number of Internet users, both public and private, in Portugal provides a significant opportunity for U.S. companies that wish to enter the Portuguese market in terms of partnerships or equipment supply. Portuguese have an appreciation of U.S. technology and understand the need to partner with suppliers and service providers.

Future Prospects in this Market The telecommunications market in Portugal is expected to continue to grow. Imports constitute 61% of the total market and the U.S. real share is much higher than the 9% reported because most U.S. exports to Portugal often come through other European Union countries. There are many opportunities for American companies to expand their business in this area. The most promising sub-sectors within the industry and corresponding market size are: Digital TV, Cellular terminals, switching equipment and Fixed terminals

Important USDOC Resources in this Market Local Market Commercial Specialist Srgio Neves Commercial Service, U.S. Embassy Lisbon - Portugal 1600-081 Lisboa Tel: +351 21 7702529 Fax: +351 21 7268914 Email: Sergio.neves@mail.doc.gov Web: www.buyusa.gov/pt

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RUSSIA

Capital: Moscow Population: 142,200,000 Languages: Russian Monetary Unit: Ruble Exchange Rate: (publisher to insert at press time) GDP per Capita (in US$): 9.279 (2007F) Local Market Commercial Specialist Elizaveta Minyaeva, Commercial Assistant Phone: 7 495 737-5030 Fax: 7 495 737-5033 Email: Elizaveta.Minyaeva@mail.doc.gov

Market Overview Russia represents a growing and dynamic market for IT industry suppliers. The Ministry of Telecommunications estimated the Russian IT market at $13.6 billion in 2006 with real market growth of 17% from 2005. In 2007, the IT market is expected to increase to $17.3 billion and to grow by 21% in real terms. This growth is due to a favorable economic situation in general, strong ruble, and high demand for IT market services in the government and corporate sector, including oil and gas, metallurgy, financial services, telecommunications and retail. Many major U.S. companies are already present in the market and their products are available either directly or through representative offices or distributors. At the end of 2006, the total number of computers in Russia exceeded 23 million, with the number of regular Internet users totaling 25 million, and their units are forecast to reach 35-40 million in the next five years. The Russian telecommunications market continues to demonstrate strong growth, in part driven by Russia's steady economic performance, the need to upgrade the telecommunications infrastructure throughout the country, and the continued interest of investors in the telecommunications market. In 2006, the Russian telecommunications market reached $30.7 billion in sales. In 2007, the market is forecast to grow and total $36 billion. Average annual growth of the sector for 2004-2007 is 25%. But market dynamics looks more attractive because of the weak dollar and strong ruble. The Marketplace for Business Process Technology Core IT market segments include hardware (67%), software (11%), and services (22%). As in previous years, the hardware segment is key to the structure of the market. In terms of growth laptops have the best prospects in the hardware segment (71% in the first quarter of 2007). The leading manufacturers on the Russian PC market in 2006 included Acer, HP, DEPO Computers, Asus, and Kraftway. Although the hardware segment dominates, it is expected that services become the fastest growing segment of the IT market (23.2% growth rate in 2006). Accurate figures for software are difficult to determine due to the high level of pirated products available on the market. Currently, industry sources estimate that up to 84% of all software is pirated. However, Russian law enforcement is more engaged in stopping copyright infringement.

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According to the Russian Ministry of Interior, 6,432 criminal piracy cases were initiated in the first 10 months of 2006, with 3,082 individuals sentenced, twice the number of cases initiated during the whole of 2005. In spite of these efforts the impact on the availability of pirated computer software is still not noticeable in the market. Included in the recent U.S. Russia Bilateral Market Access Agreement are requests for actions to address piracy and counterfeiting and improve protection and enforcement of intellectual property rights before Russia completes its accession to the WTO. This binding Agreement also requests that Russia establish a much more transparent system for the import of electronic goods with encryption, a major U.S. export. For additional information on the Agreement and IPR in particular see the side letter at: http://www.ustr.gov/assets/World_Regions/Europe_Middle_East/Russia_the_NIS/asset_upload_fi le148_10011.pdf Anti-virus protection continues to be the sector where Russian software companies are very competitive and have had export successes. Kaspersky Lab company is in the top-ten of global sellers of anti-virus software. The distribution network of Kaspersky Lab includes over 60 countries. Another example is internationally known Russian company ABBYY, working in the field of development and marketing of document recognition and natural language processing applications. The Marketplace for Communications Technology The cellular segment accounts for more than 45% of the telecommunications market, and is very concentrated with 90% of total revenue earned by three major national cellular operators: MobileTeleSystems (MTS), VimpelCom and MegaFon. By December 2007, the total number of registered SIM-cards in Russia reached 169 million. The number of active mobile subscribers being estimated at only half the number of SIM-cards, leaves good potential for cellular market growth. Mobile operators' revenues amounted to $14.7 billion in the first nine months of 2007 and are expected to reach $20 billion by the end of 2007. ARPU by the end of 2007 is only $8, which is motivating mobile operators to look for new technology and/or value added services, as well as expanding into Russias regions and CIS countries to increase revenues. In 2006, sales of telecommunication equipment reached $4.1 billion. The market for mobile network equipment is one of the largest sub-sectors of the telecommunications equipment market in Russia. Three generations of mobile networks are currently represented in the Russian market (1st, 2nd and 2.5). GSM (the standard) covers more than 90 % of the cellular market. Three 3G licenses were allocated through tender offerings in accordance with the Commission's decision. As expected, licenses were won by Beeline, MTS and MegaFon. The launch of commercial 3G projects in Russia is planned for 2008. Further development will depend on the cost of voice services and what consumers are willing to pay. In 2006, the number of Internet subscribers increased by 18% reaching 22 million, placing Russia in eleventh place among the countries with high Internet penetration. The Internet market was worth $1.8 billion. In 2008, it is expected to rise 50% to $2.7 billion, mainly due to the growth of broadband access, which market showed the fastest growth in 2006, estimated at 90%. Though the broadband market size is still not large, the potential is huge; there are currently 2.6 million users, which are expected to increase 130% to six million by 2008. Total 2006 revenue for fixed-line connection services increased 33% to $13.6 billion, up from $10.2 billion in 2005. The process of market liberalization, which was formalized in 2005 and 2006, resulted in 22 long-distance licenses being issued in two-year period. In 2006 most of mergers and acquisitions in telecom occurred in the fixed-line segment witnessing an active privatization of federal operators. This privatization will dramatically change the balance of forces in the market. However, currently only two operators, MTT and Rostelecom, can be considered active market players.

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The Marketplace for Digital Equipment & Systems As Russias market economy gains strength, a solid customer base is developing as an increasing number of large, well-financed and well-managed firms are in the market for more sophisticated computer systems. The IT hardware segment increased by 30% in 2005, it now comprises 70% of Russian IT market spending. Disk data storage systems remain the fastest growing sector. Desktops are the driving force in the market due to increased sales to home and government consumers. The volume of desktop computers continues to dominate the market, fueled by large company, education and government sector projects. However as desktop prices decline, laptop computer revenues may take the lead. Laptop computer sales increased by 84% in 2005, with record 1.2 million units sold. IT services reported sales of $2.4 billion in 2005, increased to $3 billion in 2006, with system and network integration, installation and support, software development and deployment services in highest demand. The focus on servers is on high performance equipment. The Russian server market is far from saturation and is considered to be one of the most promising, projected to reach 120-140 thousand units or about $40-50 million in 2006. Growth in the Intel architecture server segment surpassed the market average in 2005, where HP and IBM have secured 44% of the market share. IBM is targeting a vast array of potential customers from small and medium enterprises, to blade servers and hi-end solutions. Sun is a leading supplier of UNIX systems aimed at the telecom, financial and government sectors. HP has been successful supplying hi-end servers to the Russian government. The number of entry-level servers that are sold mostly to the SMEs accounts for half of the total number of units sold by HP. Active work with service partners, good support and spare parts depots has earned HP a solid customer base in the regions. Blade server sales are growing faster than others, with HP selling about 500 units every quarter. The blade server market is expected to double in 2006, estimated at 7,800 units. In 2005, fifteen inch CRTs essentially vanished from the Russian market, with 17 LCD monitors assuming the lead. Russian consumers are getting accustomed to 19 LCD monitors, and as the price decreases (now at $300), are eying the wide-screen models. According to the industry specialists, in 2005 the total volume of the Russian monitor market was 6.9 million units or $1.9 billion. There is growing interest in multi-function devices, high-volume and color laser printers in the corporate sector. The near saturation in the market of the low price dot matrix, inkjet and laser devices was felt distinctly in 2006. Future Prospects in this Market In 2006, IT services were the fastest growing segment of the IT market, including IT consulting (50% growth), development and customatization (29%), education and training (25%), outsourcing (24%), deployment and support (23%), and integration (21%). Software in conjunction with services is also showing positive dynamics. According to 2005-2006 sales results, the best prospects in the software segment are specialized productivity software (60% growth), ERP (54%), business intelligence (45%), and security (40%). Continuing growth in the number and purchasing power of small and medium-sized private enterprises is driving demand for legally imported operating systems, software application packages and enterprise management software. The notebook computer market grew by 84% in 2005, and sold a record of 1.2 million units. According to industry specialists, the notebook computer market accounted for 19% of the IT hardware market in 2005. In the first part of 2006 notebook computers accounted for 23% of the personal computer market. The highest market growth in telecom is expected in the broadband access sub-sector. Residential broadband (using Ethernet, ADSL, etc.), now booming in Russia, is estimated at $380

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million in 2006 and $500 million in 2007, a 32% increase. Growth in the regions is lagging Moscow, with a market volume of $200 million, but is expected to increase in the near future. The most promising locations for broadband development are Moscow and the Moscow region, St. Petersburg and other cities in the Northwest Federal District, Ekaterinburg, Novosibirsk, Samara and other cities in the Volga Federal District. Paid TV is another locomotive of the Russian telecom industry, represented by cable, DHT, and IPTV. This category includes broadband access via DOCSIS and HFC (Hybrid Fiber-Coaxial) technologies. Cable TV networks are being actively developed and are showing steady increase.

The best opportunities for sales of U.S. manufactured hardware are: data storage systems, data center solutions, servers, networking equipment, communicators/PDAs and Internet mobile technology. The best telecom equipment sales prospects are high-speed, broadband technologies, multi-service and multimedia solutions and digital equipment. Companies entering the market should be prepared to compete with major European and Asian equipment manufacturers and deal with a complex regulatory environment.

Important USDOC Resources in this Market For more information on FCS Moscow services and the Russian ICT market please visit our web site at: http://www.buyusa.gov/russia/en/ or contact: Elizaveta Minyaeva, Commercial Assistant Phone: 7 495 737-5030 Fax: 7 495 737-5033 Email: Elizaveta.Minyaeva@mail.doc.gov Web Resources Ministry of Information Technologies and Communications of the Russian Federation http://english.minsvyaz.ru/enter.shtml The Federal Agency for Technical Regulations and Metrology http://www.gost.ru/ Russian Center for Tests and Certification (Rostest) http://www.rostest.ru Federal Special Programs http://www.programs-gov.ru/cgi-bin/index.cgi Russian Standard, general representative of ROSTEST for North America http://www.rosstandard.com Trade Events Svyaz ExpoComm Moscow May 12-16, 2008 http://www.svyazexpo.ru/eng, http://www.expocomm.com/moscow/ InfoCom Moscow October 22-25, 2008

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http://www.infocomtech.ru/eng/ Cable & Satellite TV, Teleradiobroadcasting and Broadband (CSTB) Moscow February 5-8, 2008 http://www.cstb.ru/ Mobile & Wireless Moscow October 25-27, 2008 http://www.inconex.ru/mw/eng/ Interop Moscow April 23-24, 2008 http://interop.ru/?page=index&language=eng Cardex & IT Security Moscow September 24-26, 2008 http://www.cardexpo.ru/eng/ Infosecurity Russia Moscow October 7-9, 2008 http://www.infosecuritymoscow.com/index.en.html Storage Expo Moscow October 7-9, 2008 http://www.storage-expo.ru/index.en.html Documation Moscow October 7-9, 2008 http://www.documation.ru/index.en.html

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SERBIA

Capital: Belgrade Population: 6.5 million Languages: Serbian Money Unit: $1/DIN70 GDP per capita: $5,500 Local Market Commercial Specialist: Zorica Mihajlovic U.S. Embassy Belgarde Commercial Service 11000 Belgrade, Kneza Milosa 50 Tel: +381 11 306 4800 e-mail: zorica.mihajlovic@mail.doc.gov

In 2007, the IT market in Serbia reached a value of around $500 million. Hardware comprised 70.% of the total market, while software constituted 16.5% and IT services the remaining 13.5% share. Independent experts expect IT spending in Serbia to rise 17.2% year-on-year in 2008, and at a Compound Annual Growth Rate (CAGR) of 11.6% over the next five-year period. In 2010, the value of the IT market is envisaged to stand at $ 812.33 million. Market Overview The ICT sector is probably the most dynamic component of Serbias economy, and definitely one that is receiving priority attention from the government. Over the last five years, it has experienced impressive growth, offering Serbia the latest technologies in most branches of telecommunications. Although the ICT sector has a high annual growth rate of 16.3% and projected five-year compounded annual growth rate of 15%, its further development to reach the level of developed economies requires urgent improvement of regulatory environment. Expected changes in the regulatory and business environment in the next two years will bring greater than average value gorwth. IT consumption per capita of $ 50 in Serbia is much lower compared to the neighboring countries in the region. However, the IT market in Serbia is still in the process of reconstructing itself along with the entire economy. Major attention is still focused on the development of basic infrastructures with hardware purchases at the core of this development. Only when these infrastructures are in place and have a chance to function for some time, will attention begin to shift to IT services and software solutions aimed at maximizing initial investment. As most companies do not have defined IT budgets, cash flow problems and a sluggish economy make IT one of the first areas cut from investment plans. Telecom sector already contributes with around 2% to Serbian Gross Domestic Produce (GDP) and is growing fast. Serbia currently has 7.5 million mobile phone numbers and the figure is expected to reach eight million by mid 2008. State telecom provider Telekom Srbija, which currently has 4.15 million subscribers, plans to increase the figure to over five million by 2008. Telekom has more than 600,000 post-paid customers but its goal is to double the number because post-paid users are a more reliable source of revenue. The company launched Serbias first 3G network, and it already has 20,000 users, adding that around 2,000 video calls are made each day. For now, only post-paid subscribers can use 3G services but Telekom intends to

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enable its pre-paid users to use the network as well. The other mobile operator, Telenor, launched its own 3G network in June 2007. The Norwegian company, which entered the market in 2006, after buying Mobi 63 for EUR 1.51 billion, currently has some 2.8 million customers in Serbia. The third operator, Mobilkom Austria, which bought a license in late 2006 for EUR 320 million, launched a mobile network in June 2007 and and is performing aggressive marketing campaign. Rapidly growing cable television sector also provides opportunities for investment, particularly cash-starved KDS. There are also telecommunications equipment manufacturers with innovative solutions for the particular problems of undeveloped countries: low-cost solution for line doubles (party lines); low cost small scale digital exchanges; home grown ADSL solutions, etc. Mostly European companies are present in this sector (Siemens, Alcatel, Ericson), while there is enough space for US products presence. Internet The 53 Internet Service Providers (ISPs) operate in an active, open, competitive market. Two have been taking steps to develop infrastructure independent of Telekom Serbia. The cable industry offers, with 29 TV cable operators, some of which provide cable Internet, could provide strong, viable competition to TSs ADSL, if the cable companies upgrade their systems and become better organized. However, geographic distribution of internet users is uneven. Belgrade, the capital city accounts for 60%of the internet customer base. The Marketplace for Digital Equipment & Systems The emerging and still immature PC market of Serbia offers great growth potential in the long term. The national government is major customer for ICT products and services, and the National Investment Plan is about to increase demand significantly. Municipalities also have growing interest in e-government applications. Driving the IT market will be the restructuring and modernization of the economy, together with privatization, foreign aid, and the inflow of FDI. The low purchasing power of the population has been the biggest constraint to rapid growth of the PC market in Serbia. The key market driver in 2003 and 2004 was the government's decision, to eliminate the tax on the purchase of new PCs (as well as on selected lower-end PC components). The price declines that followed the decision fostered new demand among home users. In 2006 and 2007, international brand name vendors present in Serbia and Montenegro together shipped more than 40,000 personal computers, to control approximately 25% of market volume. In addition to Dell and HP, successful brands included IBM, Fujitsu-Siemens, and Toshiba. Local assemblers dominated the market in terms of revenue, together accounting for some two-thirds of total market value. Microsoft Windows was the most popular operation systems in Serbia and Montenegro over the period of five years, accounting for 96.8% of total PC shipments. In 2006, around 20% of new PC units delivered in the union did not have any operation system installed, confirming that high level of piracy still exist in Serbia. Linux was sold on only 3.0% of new PCs shipped in 2007, while all other operation systems accounted for a negligible portion of the total market. International vendors need to consider the possibility of developing a local presence in Serbia and Montenegro. At the moment, due to the relatively small size, the market is dominated by relatively small local companies, assemblers, and value added resellers. Vendors will require onthe-ground expertise to understand the unique characteristics of this developing market. Local vendors should prepare and be ready to adjust to new market conditions as new competitors enter the market. The Marketplace for Business Process Technology Transparent market for computer software is slowely positioning in Serbia. Almost all major software manufacturers have a presence in Serbia (i.e. Microsoft, IBM, SAP, Oracle, etc). Local

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system integrators offer a broad scope of IT related services, which indirectly genratesan increase in demand for computer software for industrial and business needs. It is hard to measure a size of the computer software market in Serbia, since it is a subject of the shadow economy and piracy. Some independent experts estimated Serbian software market at US$250 million in 2007, with the growing annual rate ranging from 25% - 30%. Local software manufacturers are quite successful, but their business is a small skale. Imported software is dominant for the office software market, software solutions for the government (e.g. for Tax Revenue Administration), for the business and industry, as well. Windows and Microsoft Office programs are currently the most widely used office software in Serbia. Good opportunities and immediate sales prospects for U.S. companies exist in the Serbian software market in the following market segments: - Database management systems, including ERP systems. There is growing interest in office automation, growth in the number of medium-sized businesses and a rising number of individual end-users. - Services: project services including reengineering and training services. Project services are not susceptible to piracy and growth in this segment is expected to continue. - Internet applications, including e-business, entertainment, trading and banking. Serbia became a low cost site for high quality software development. Microsoft opened a Development Center in Belgrade during 2005, its fifth of this type in the world, to continue expanding language support for handwriting recognizers within Microsoft Tablet PC technology and develop recognizers for the languages of Central and Eastern Europe (CEE). Industry experts believe that computer software development, software services, embedded systems, technology licensing, etc. could be one of driving force for the economic growth of Serbia, with the governments clear intention to provide the environment for this development. U.S. companies hold a significant share of the Serbian market. This position and positive trends should remain in the following years. Future Prospects in this Market Mostly European companies are present in this sector, while there is enough space for US products presence. The best market prospects are for Internet-related equipment such as routers, switches, access servers, equipment for mobile telephony, cable operators equipment for transmission and fixed wireless equipment. There are also lucrative business opportunities for U.S. companies with technical skill and expertise in Internet applications. In particular, as GPRS usage becomes widespread and UMTS cellular telephony is introduced, there will be good prospects for the business-to-consumer market for publishing via internet. Clear opportunities exist for U.S. firms as equipment providers or subcontractors for ICT solutions on behalf of major multinational oil firms active in Serbia, which with financial support of international financial multipliers tend to computerize their outdated communication networks. Procurement of telecommunication equipment is usually conducted based on tender procedure with representatives of international financial multipliers that finance the project monitoring selection process. U.S. companies are advised to check for the latest tender announcements at http://www.buyusa.gov/yugoslavia/en/, the U.S. Government's primary market information center for U.S. companies exploring business opportunities in Serbia. End Users and Market Entry The use of agents and distributors is an important method for US companies to enter the Serbian market. Many American firms have found that it is more efficient and cheaper to hire a good local agent or distributor than to conduct direct sales. Selling to state-owned companies and other state entities depends on establishing your company or product creditability. Internationally financed public procurements offer the best opportunity for transparent purchasing decisions.

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Serbias private sector should be targeted. Private sector growth augers well for western businesses that are accustomed to selling products based on pricing, product quality and servicing ability. The government states that the private sector accounts for more than 50 percent of GDP. Marketing techniques will not vary greatly with this business segment.

Sources and Contacts: http://www.export.gov/marketresearch.html CHAMBER OF COMMERCE AND INDUSTRY OF SERBIA Association of ICT Director, Aca Aleksic Terazije 23, 11000 Belgrade Phone: (381 11) 3304 558; Fax: (381 11) 3304 556 e-mail: aca.aleksic@pks.co.yu

MINISTRY OF TELECOMMUNICATIONS AND INFORMATION SOCIETY Ms. Aleksandra Smiljanic, Minister Mr. Nebojsa Vasiljevic, Deputy Minister for IT Address: Nemanjina 22 11000 Belgrade Tel: +381 11 3616 273 Fax: +381 11 3616 273 E-mail: nebojsa@mtid.sr.gov.yu Web site: http://www.mtid.sr.gov.yu/ Telecom Serbia Mr. Drasko Petrovic, General Manager Address: Takovska 2 11000 Belgrade Tel: +381 11 3616 273 Fax: +381 11 3616 273 E-mail: mjojic@ptt.yu Web site: www.ptt.yu Serbian Agency for Telecommunications RATEL Mr. Jovan Radunovic, President of Managing Board Address: Visnjiceva 8 11000 Belgrade Tel: +381 11 241 786 Fax: +381 11 241 805 E-mail: ratel@ratel.org.yu Web site: www.ratel.org.yu For more information on market entry strategies contact: E-mail: zorica.mihajlovic@mail.doc.gov

Association of ICT -- JISA: 11000 Belgrade, Zmaj Jovina 4/VI Tel:+381 11 3281 727 E-mail: jisa@jisa.org.yu Web: www.jisa.org.yu Information Society of Serbia 11000 Belgrade, Kneza Milosa 9

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Mr. Nikola Markovic, President E-mail: nimar@afrodita.rcub.bg.ac.yu

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SINGAPORE Capital: Singapore City Population: 4,680,600 (2007 est.) Languages: English, Malay, Mandarin, Tamil Currency: Singapore Dollar Exchange Rate: $1 = 1.41 SGD (Feb. 2008) GDP per capita: 39,952 (2007 est.)

Summary Singapore is a mature and sophisticated market for ICT products and services. The country is dependent on imports and U.S. products are traditionally well received in Singapore as the United States is seen as the source for state-of-the-art technologies. Singapore also serves as a major distribution center for companies interested in selling to the region as reflected by re-export data. Over 60% of ICT goods imported into Singapore are re-exported for third-country consumption. The Singaporean government is the key catalyst in promoting the industry and the ICT market is expected to enjoy good growth over the next few years. The current ICT infrastructure is being upgraded through government initiatives that promote broadband, ubiquitous wireless Internet connectivity, digital technology, HDTV and IPTV. Many international IT, telecom and media service providers have established offices in Singapore, using the island city-state as a regional hub. There are excellent opportunities for U.S. vendors to sell new applications and solutions to the domestic market and through Singapore to the Asian region. Areas of best prospects include content, equipment, technologies and services for broadband, wireless, 3G, IPTV, and HDTV.

Market Demand Singapore is one of the most wired countries in the world with a nation-wide network of fiber optic cables. There are more than 6,200 public Wi-Fi hotspots islandwide, which means there are more than 22 wireless LAN hotspots for every square mile of the country. 'Cyber cafes' are popular, and Internet connections are available in most hotels. 3.5G networks based on the HSDPA standard as well as WiMAX networks are being progressively deployed in the country. According to the 2006 survey carried out by the Infocomm Development Authority (IDA) of Singapore, 77% of Singaporean households owned at least one home computer and almost 9 in 10 households with school-going children had access to a home computer. Seventy-one percent of households had home Internet access and in these homes, almost all (97%) used computers as the mode of access while 9% used Internet-enabled cell phones. Usage of computers was 100% in businesses with more than 250 employees but the usage level declined to 62% for companies with less than 10 employees. Usage of infocomm network technologies was similarly higher for larger companies. Details on infocomm usage in households and by individuals as well as businesses can be found at http://www.ida.gov.sg/Publications/20061205092557.aspx

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Major Telecom Indicators Fixed-Line # Of HH P SS Rate (%) Cellular Phone # Of P Rate SS (%) Dial-Up Internet # Of P Rate SS (%) Broadband Internet # of SS HH P Rate (%) 75.7

Population/

Household s 4.48m/1.12 1.85m 95.3 5.34m 114.1% 1.07m 22.9% 2.97m m Notes: M - Millions, SS - Subscribers, P - Penetration, and HH - Households. Statistics on telecom services can be found at http://www.ida.gov.sg/Publications/20070815141811.aspx

The Government of Singapore plays an active role in the ICT sector through its many initiatives in developing the industry. In early 2005, the Singapore telecom regulator issued six Wireless Broadband Access (WBA) spectrum rights in the 2.3GHz and 2.5 GHz frequency bands. In June 2006, the government announced iN2015 (http://www.in2015.sg/), a 10-year masterplan for infocomm implementation across industries estimated to cost S$4 billion (US$2.6 billion). Most significant is the Next Generation National Infocomm Infrastructure that includes a Next Generation National Broadband Network (NBN). Following a pre-qualification exercise in which 12 companies and consortia were selected, the Request for Proposal (RFP) was called on December 11, 2007. The RFP is now open to all interested parties to submit their bid to design, build and operate the passive infrastructure layer of the Next Gen NBN by March 25, 2008. The IDA is expected to award the winning bid in the third quarter of 2008. Details can be found at http://www.ida.gov.sg/News%20and%20Events/20071211184512.aspx?getPagetype=20 The NBN also called for a wireless broadband network (Wireless@SG), which went online in December 2006. While the tender has already been awarded for this network, there are other wireless technologies the government is also pursuing. See http://www.ida.gov.sg/Infrastructure/20060816192935.aspx Major Broadcasting Indicators TV Household s # Of HH 1,122,120 P Rate (%) 80.0* Cable TV # of HH 499,00 0 P Rate (%) 44.3 Satellite TV (DTH/DBS) # Of HH 0 P Rate (%) 0

*estimate Sixteen satellite broadcasters have either set up base in Singapore or are up-linking from here. Singapore homes receive six terrestrial free-to-air channels provided by MediaCorp TV, the countrys only terrestrial broadcaster. StarHub Cable Vision is the main provider of subscription television in Singapore. At end of September 2007, 499,000 households had cable TV -- a market penetration of 44.3%. TV Mobile is the only provider of outdoor digital television, mainly broadcasting to public transport buses. In July 2007, SingTel began an IPTV service delivered over a broadband connection called mio TV, currently the only pay-TV competitor to StarHub. Singapore adopted the European standard DVB-T for digital TV along with all other ASEAN countries, and Eureka-147 Digital Audio Broadcasting System. Singapore, like other ASEAN members, will deliver all channels digitally in the next 3 to 8 years. A decision on a specific year for analog cut-off has not been made, but the Singapore government is encouraging manufacturers to bring more digital set-top boxes and TV sets into the market. The Singapore radio industry is already upgrading from analog to digital technology.

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Over the next five to ten years, Singapore plans to move into the forefront of broadcasting, while the Government of Singapore will continue to take a proactive role in encouraging the growth of the broadcasting industry. The government is working closely with key industry players in the country to promote HDTV and IPTV. In January 2007, StarHub launched the first commercial HDTV channels (National Geographic and Discovery) in Singapore. SingTels new mio TV service offers 6 HD channels with more to be introduced. The Media Development Authority (MDA) estimates that there were 140,000 HDTV-ready TV sets in Singapore households in 2006 and expects more than 210,000 new HDTV units to be sold in 2007. Internet Protocol Television (IPTV) is another segment that is projected to experience growth over the next few years. In 2006, the MDA issued trial IPTV service licenses to 6 companies (MediaCorp, OBSTV Asia, Singtel, Anytime, ReeltimeTV, M2B). Singnet, a subsidiary of Singtel, is currently the only company with a nation wide subscription TV license to provide IPTV services covering at least 100,000 subscribers. In January 2007, the MDA announced a new two-tier license framework for IPTV that aims to facilitate the growth of IPTV services in Singapore. More information can be found at http://www.mda.gov.sg/wms.www/thenewsdesk.aspx?sid=770. By 2015, the goal is to reach a 90% penetration rate of homes using broadband. Singtels recently released IPTV service, mio TV, can currently reach 85% of Singapores households with existing infrastructure using ADSL2+ technology. Another sector with opportunities is mobile TV. Three local companies have been granted trial licenses by the MDA to operate mobile TV in Singapore. PGK Mobile has begun a trial program using the European DVB-H standard, which is currently the favored standard for eventual adoption. PGK Mobile is backed by NCS, Nokia, CNBC, ESPN Star Sports, and other industry participants. GoMobile and Innoxius Technologies, the other 2 licensees, are in the process of starting trials. SingTel launched its mio TV service on 3G-enabled mobile phones in August 2007. MediaCorp has been conducting broadcast trials on hand-held devices and plan to eventually launch a service.

Market Data According to the latest survey by the IDA, total domestic infocomm revenue in 2006 grew by 3.9% to S$16.44 billion (about US$11 billion). Except for telecommunications services and hardware, the other segments (software, IT services and content) saw strong growth. Details can be found at: http://www.ida.gov.sg/doc/Publications/Publications_Level2/20061205092557/ASInfocommIndust ry06.pdf We expect to see steady growth in the next few years as government initiatives come on stream and over 6,000 multi-national corporations in Singapore (as well as leading local companies) continue to invest in ICT. Consumers are expected to continue purchasing new IT equipment and gadgets. Singapore is dependent on imports and U.S. products are traditionally well received in Singapore as the United States is seen as the source for state-of-the-art technologies. Singapore also serves as a major distribution center for companies interested in selling to the region as reflected by re-export data. Over 60% of ICT goods imported into Singapore are re-exported for third-country consumption. They include neighboring countries in Asia such as Indonesia, Malaysia, China, Hong Kong, India, Philippines, Thailand, Japan, Vietnam, as well as Australia.

Best Prospects There are excellent opportunities to sell new applications and solutions to Singapore as the country is the leading adopter in the region. Best prospects include equipment, content, software and technologies for broadband, wireless broadband, 3G, IPTV, and HDTV.

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The Singapore governments announcement of its plans to build a next generation national broadband network and pervasive wireless broadband network offers U.S. vendors the opportunity to participate in developing the new telecom infrastructure in Singapore. The Singapore broadcast market is expected to import more equipment due to major upgrades in the television industry. Besides the ongoing upgrading at its current facility, MediaCorp is building a new S$100 million (US$64 million) broadcasting facility that will be completed in three years. It is expected that small/medium companies will overhaul and upgrade their current studios as well. Demand for both HD and mobile TV content will increase significantly as infrastructure is expanded in both industry segments.

Key Suppliers In the telecom market, major U.S. suppliers that have set up operations in Singapore include Motorola, Verizon, Lucent, Cisco, and Linksys. Vendors from other countries include Alcatel, Nortel, Samsung, ZTE, Nokia, Huawei, Ericsson, and Agilent. Many of these offices have regional responsibilities. In the broadcast market, the U.S. is dominant in providing the key editing and production equipment desired in both the radio and television market. Equipment such as non-linear editing software/systems, audio production equipment, news scripting systems, and microphones are among the areas where American products are dominant. Key companies competing in the market include Avid, Harris, Tektronic, Mackie, Associated Press, Omneon, Belden, Dolby, StorageTek (Sun MicroSystems), Wohler and RCS. The U.S., however, does not dominate all aspects of the broadcast market. Japanese suppliers are the leaders in cameras and videotape recorders. Companies from other countries have also found their niche in the market.

Prospective Buyers The Singapore government will increase spending on ICT in FY 2007. It announced S$730 million (US$481million) worth of new IT tenders for the fiscal year (April 2007 March 2008) and as in previous years, it is expected to spend more than estimated. A major program under iGov2010 (http://www.igov.gov.sg/) is a government-wide Standard ICT Operating Environment (SOE) to be implemented by the 4th quarter of FY2010 across 60,000 seats and 87 different agencies. It will comprise a standard desktop operating environment, a standard messaging and collaboration environment, and a standard network environment. On June 21, 2007, four pre-qualified consortia submitted bids for the SOE, all of which include one or more Usbased companies. The final contract, estimated to be worth S$1.5 billion (US$1 billion) over eight years, is expected to be awarded in 2008. More information on SOE program can be found at http://www.igov.gov.sg/NR/rdonlyres/FE46DD55-92C7-4A72-B9D21D11A7055539/0/SOE_Factsheet_12July07.pdf There are excellent opportunities for U.S. equipment manufacturers to supply to the telecom service operators in Singapore. Existing service operators not only have recurring expenditure but are also making new investments in order to compete with existing and new market players. A list of the existing operators can be found at: http://www.ida.gov.sg/Policies%20and%20Regulation/20060424172641.aspx and http://www.ida.gov.sg/Policies%20and%20Regulation/20060424160337.aspx. Vendors of broadcast equipment and technologies can also expect increased investments from MediaCorp, other broadcasters, pre-production, production and post-production houses. A list of such organizations can be found at the MDA website, http://www.mda.gov.sg/wms.www/media_biz_mediadirectory.aspx.

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Market Entry A good way for equipment manufacturers to enter the Singapore market would be to work with local distributors and system integrators who are well versed with local conditions. U.S. global telecommunication service providers should consider collaborating with the service providers in Singapore who can provide them with interconnect related services, domestic and international leased circuits, network infrastructure and local marketing expertise. Alliances eliminate heavy investment in infrastructure outlay as well as provide immediate marketing reach due to their existing networks. This is an attractive approach which most foreign companies adopt to penetrate and reach end-users in Singapore. With the liberalization of the Singapore telecom market, U.S. service providers can now apply for licenses directly from the IDA. U.S. media companies may also apply for licenses directly from the MDA. There is no special legislation in Singapore covering agency agreements. Mercantile laws in Singapore are based on English laws. The contract sets the terms of agreement between vendors and buyers. The parties involved draw up a satisfactory contract that determines the conduct of both parties during the contract period including the terms of cancellation. U.S. firms interested to enter the Singapore and Asian markets might want to consider participating at CommunicAsia and Broadcast Asia, -- the largest ICT show in Asia -- it attracts over 50,000 visitors and more than 2,000 exhibiting companies annually. CS Singapore will actively support and provide value added services to the U.S. exhibitors at the show that will be held from June 17-20, 2008. More information on the two shows can be found at www.communicasia.com and www.broadcast-asia.com.

Market Access & Obstacles Singapore is generally a free port and an open economy and maintains one of the most liberal trading regimes in the world. However, individuals are not allowed to import satellite-receiving dishes. There is no duty on the import of ICT products into Singapore. Telecommunication equipment suppliers are required to register their equipment for sale and use in Singapore. Details are given in the document entitled "Guide for Registration of Telecommunication Equipment" that is available online at http://www.ida.gov.sg/doc/Policies%20and%20Regulation/Policies_and_Regulation_Level2/2006 0421172414/EQRG uide.pdf Singapore became the first country in Asia, and the third in the world (after the European Union and Canada), to operate a Mutual Recognition Arrangement (MRA) on telecom equipment certification with the United States of America. The MRA provides for direct entry of telecommunications into either market without the need for additional testing and certification. Under the Asian Pacific Economic Cooperation (APEC) Telecommunications MRA implemented between the US and Singapore, products can be tested and certified in the United States for conformance with Singapore's technical requirements. A list of the recognized U.S. testing and certification agencies can be found at: http://www.ida.gov.sg/Policies%20and%20Regulation/20060609145118.aspx. U.S. suppliers will still require a local representative (dealer) who will be responsible for the import and sale of telecommunication equipment in Singapore. For security purposes, voice scramblers, military equipment, scanning receivers/transmitters that could be used by unauthorized persons for unlawful transmissions, interception and jamming of signals are prohibited from entry into Singapore unless prior approval by the IDA has been obtained. The IDA is the government regulator authorized to establish standards, codes and regulations to be observed by operators of telecommunications systems and services and to regulate the conduct of telecommunications licensees in the provision of telecommunications systems and services. Information on the various Acts and regulations can be found at http://www.ida.gov.sg/Policies%20and%20Regulation/20060418214814.aspx.

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The IDA is also responsible for the management, allocation and use of the radio frequency spectrum. Singapores spectrum allocation chart and the master spectrum allocation plan can be found at: http://www.ida.gov.sg/Policies%20and%20Regulation/20060421164253.aspx The media industry in Singapore is regulated by various legislation and codes of practice and they can be found at the MDA website, http://www.mda.gov.sg/wms.www/devnpolicies.aspx?sid=153. Media businesses or professionals need to be licensed in order to provide services in Singapore. The various types of licenses required can be found at http://www.mda.gov.sg/wms.www/devnpolicies.aspx?sid=218. Currently, the MDA issues the TV Receive-Only (TVRO) System licenses to organizations that need to access time-sensitive information for business decisions. Direct-to-home (DTH) transmission is not allowed. The U.S. Singapore Free Trade Agreement (USSFTA) went into force on January 1, 2004. This agreement, the United States first FTA with an Asian nation, makes Singapore one of the strongest Intellectual Property Rights (IPR) regimes outside of the United States thus giving strong IPR protection to American firms doing business in Singapore. The USSFTA includes state-of-the-art protection for trademarks, including government involvement in resolving dispute between trademarks and Internet domain names; extended terms for copyright protection; strong anticircumvention provision to prohibit tampering with technologies that are designed to prevent piracy; criminal penalties for companies that use unlicensed software; and protection for encrypted program-carrying satellite signals. The USSFTA also includes special provisions dealing with electronic commerce, competition policy and state enterprises, and customs cooperation. In addition, the agreement contains provisions for transparency and dispute settlement. Information on the USSFTA can be found at http://www.ustr.gov/Trade_Agreements/Bilateral/Singapore_FTA/Final_Texts/Section_Index.html

Trade Events CommunicAsia/BroadcastAsia, June 17-20, 2008, Singapore http://www.communicasia.com, http://www.broadcast-asia.com ITU Telecom Asia 2008, September 2-5, 2008, in Bangkok, Thailand (http://www.itu.int/ASIA2008) VietnamTelecomp 2008, November 26-29, 2008, in HCMC, Vietnam (http://www.2456.com/vnc)

Resources & Contacts Infocomm Development Authority of Singapore www.ida.gov.sg Singapore Infocomm Technology Federation http://www.sitf.org.sg/marketplace/bizopp.aspx Association of Telecommunications Industry of Singapore (ATiS) http://www.atis.org.sg Market research portal http://www.export.gov/market_research/index.asp

For More Information The U.S. Commercial Service in Singapore can be contacted via e-mail at: sweehoon.chia@mail.doc.gov; Phone: 65 6476-9403 Fax: 6476-9080 or visit our website: www.buyusa.gov/singapore.

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SWEDEN Capital: Stockholm Population: 9,000,000 Language: Swedish Monetary Unit: Kronor Exchange Rate: $1 = 6.28 SEK GDP Per Capita: $47,846 Local Market Commercial Specialist: Gunilla LaRoche U.S. Embassy Dag Hammarskjolds vag 31 SE-115 89 Stockholm, Sweden Tel: +46 (0) 8 783 5353 Fax: + 46 (0) 8 660 9181 gunilla.laroche@mail.doc.gov

Market Overview Like other small nations, Sweden with nine million inhabitants is highly dependent on international trade to maintain its high productivity and high living standard. Its economy is very diversified with traditional industries still playing an important role, but with an increasingly important high technology sector. Sweden is in the forefront in terms of wireless communications, software development, microelectronics, telematics and photonics. The Swedish business sector is also at the forefront in transforming operations and improving performance by using ICT. The Swedish public sector has improved its efficiency by widespread use of ICT. The Swedish ICT market consists of around 1,200 companies and employs around 250,000 people. The country has adopted the EU resolution on implementing the eEurope Action Plan with a view to promoting development toward an information society for all. The action plan includes e-government, e-learning services, e-health services, a dynamic e-business environment, widespread availability of broadband access at competitive prices and as well a secure information structure. The government has established an IT advisory group to discuss future challenges in terms of IT use among small companies, IT skills among employees, how egovernment should be organized, etc. The group will be active until December 31, 2008. The high level of IT maturity and easy entry into the market, have attracted a broad spectrum of players, from multinational telecom operators, computer companies, systems integrators and niche companies. The 2006-2007 Networked Readiness Index published by the World Economic Forum ranked Sweden number two after Denmark. The Index measures the propensity for countries to exploit the opportunities offered by information and communications technology. Sweden is the largest market in the Nordic region. It is seen as a leader in adopting new technologies. Market penetration is fast, and, therefore, Sweden is considered an excellent test bed for new technology. Swedes welcome new technology that is user friendly, stable and is provided at competitive prices. The country has a large number of multinational companies with headquarters in Sweden, the highest per capita in the world. These companies rely heavily on state-of-the art technology for their operations.

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The Marketplace for Business Process Technology The Swedish software market is sophisticated with skilled domestic software development companies. Sales are around USD 3 billion and the market is expected to increase by 6% in 2008 to reach sales of USD 3.2 billion. The Swedish software market consists of global software development companies and small, innovative niche-oriented companies. There are around 800 Swedish software development companies in Sweden, many of which specialize in systems software for communications, business systems (tax and accounting packages with local applications), and applications software for telecommunications. Security software is also a dominant segment among Swedish software developers. Swedish customers are sophisticated IT users and are looking for the latest solutions that will increase customers service, cost savings and also enhance business processes. Demand is expected in the following segments: solutions for business intelligence, information management, applications for increased mobility, e-business, and information security. U.S. products are well received and 75-80% of imported packaged software is of U.S. origin. The market is highly competitive and customers are looking for products that will make business processes efficient, robust, and flexible.

The Marketplace for Communications Technology TeliaSonera and especially Ericsson have been the driving forces to put Sweden on the telecommunications map in general and wireless communications in particular. TeliaSonera is the largest provider of fixed telephony followed by Tele2, and Telenor. The mobile phone penetration is extremely high in Sweden, over 100%. There are three GSM carriers that have their own infrastructure; TeliaSonera, Tele2, and Telenor. Third generation (3G) services are provided by four operators; 3 (Three), TeliaSonera, Tele2, and Telenor and reach 90% of the Swedish population. All told, there are over 20 service providers in the mobile telephony market. IP telephony is gaining ground in the Swedish market, both in the corporate and consumers markets. It is estimated that around 3.4 million mobile phones were sold in Sweden during 2007. The share of 3G phones is increasing steadily. The market for mobile broadband is booming. Operators are offering mobile broadband with increasingly higher speed, which will boost the market for PC cards, USB modems and high capacity mobile phones. Phones with music players and more advanced camera phones will continue to see increased growth in the Swedish market. Internet penetration in Sweden is very high. In the age group 15 to 75, around 85% have access to the Internet at home and 47% have access to broadband. ADSL is the dominating form of broadband access, followed by CaTV and LAN. Use of W-LAN is expanding in Sweden. The largest operator, Telia Homerun, has more than 15,000 hotspots throughout the country. Other service providers are Defaultcity, Powernet, Glocalnet, and The Cloud Nordic. Fiber optic infrastructure covers some 200 metro networks in more than 100 towns. These networks are open and neutral, i.e. they offer capacity to any service provider under equal terms, which benefits consumers as they can pick any service provider they wish instead of being locked in with one provider. Around four million households in Sweden have access to at least one television set. Broadcasts are provided via terrestrial, cable or satellite means. The Swedish Parliament decided in 2003 that Sweden will discontinue analog TV broadcasting and shift to digital. The process started in 2005 and was completed during the fall of 2007. Consequently, all terrestrial TV broadcasting in Sweden is now digital.

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The Marketplace for Digital Equipment & Systems The Swedish market for digital equipment and systems is slowly picking up again after a few years of generally negative or no growth. Investment in IT solutions follows the trends of the general economy and the Swedish economy is doing very well with a GDP growth at its highest since the turn of the century (4%). Consequently, there is now increased demand for investment in new equipment especially as the aging IT infrastructure needs replacing. It is forecast that the hardware market will increase by around 2% in 2008 with a value of USD 4.5 billion. The largest growth will be in the laptop segment, which represents around 60% of the market. That market increased by around 10% in 2007. The market for desktops will be decreasing compared to previous year. Despite this, there will be a slight growth during 2008. The server market is expected to remain the same with just a slight increase in sales. Peripherals are expected to increase by around 17% during 2008. The consumer electronics market will continue to see steady growth. The market for flat television screen is booming with an estimated growth in 2007 of 42%. The flat screen market is expected to see continued growth during the next few years. Part of this demand will be as a result of the fact that terrestrial broadcasts are digital only since the fall of 2007 and consumers will wish to replace their old television sets. Home cinema equipment as well as residential network equipment are segments that are in great demand and will continue to sell.

Future Prospects in this Market Economic growth is very strong in Sweden and is expected to continue to be so at least through 2008 resulting in increased investment in new technology. The communications market is changing rapidly. Traditional services are increasingly being challenged by new technologies. There is strong convergence between data communication and telecommunications and IP-based services are emerging rapidly. There is a pent-up demand for hardware, software and services, resulting in increased sales during 2008 and beyond. Customers will look for business process outsourcing, allowing outside companies to handle applications, software and development. Other major areas of growth will be mobile solutions and services with the expansion of 3G technology, IP telephony, IT-security, investment in new systems, business intelligence, systems integration, and e-solutions. Sweden ceased broadcasting analog television during the fall of 2007. This will result in increased sales of new television sets that can handle the new technology. A large majority of those will be flat screens. Blu-ray, HD-DVD players will be added to the screens to make home movie systems. The convergence between IT and the entertainment industry will continue to create business opportunities, especially in the consumer segment. With the expansion of broadband services, more users will be able to take advantage of a wider selection of services online. Triple play (TV, Internet, and telephony) will continue to be in demand. The public sector represents around 30% of ICT sales in Sweden. The Swedish Administrative Development Agency (Verva) is responsible for carrying out the procurement process. Procurement is planned within the following sectors: data communications networks, IT consultancy services, servers, storage solutions, mobile communications, and communications equipment for voice. It is forecast that the public sector will increase its IT purchases by around 3% in 2008. Information in English is available on Vervas website http://www.verva.se.

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Important USDOC Resources in this Market Please visit our website for information on our services http://www.buyusa.gov/sweden Other useful links: IT Sweden: http://www.itsweden.com/ Invest in Sweden Agency: http://www.isa.se/ Ministry of Industry: http://www.industry.ministry.se/ The Swedish Post and Telecom Agency (PTS): http://www.pts.se Stockholm International Fairs: http://www.stofair.se/Common/Category.aspx?id=1

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SWITZERLAND

Capital: Bern Population: 7,523,024 (2007, world-gazetteer.com) Languages: German, French, Italian, Romantsch (English) Monetary Unit: Swiss Frank (CHF) Exchange Rate: 1.12 CHF (as of December 2007) Gross National Income (GNI) per Capita: US$ $54,930 (2006, World Bank) Local Market Commercial Specialist Maria (Lupita) Pamich Commercial Specialist Jubilaumsstrasse 93 3005 Bern Switzerland Tel: +41 31 357 7345 Fax: +41 31 357 7336 E-Mail: maria.pamich@mail.doc.gov Web: www.buyusa.gov

Switzerlands ICT Market Overview Switzerland offers an outstanding market for the Information and Communication Technology (ICT) Industry. The total Swiss market demand for telecommunications services and equipment is valued at about USD 20 billion annually (SICTA). Furthermore, Swiss residents spend more per capita on ICT goods than any other nation in the world. The high penetration of ICT in Swiss households compared to other countries provides a good basis for further development of online commerce. Defined as the penetration of traditional fixed lines, broadband access lines, mobile phones, PCs, Internet users and Internet servers per million population, the ICT infrastructure of Switzerland is among that of the top ten countries in the world (IDC Corp.). Other factors in this ranking include Switzerlands high quality of Internet connections, level of e-business development, of online commerce and of Internet/web literacy. Furthermore, Switzerland offers affordable of Internet access, telecom market competition, security of the Internet infrastructure, government support for ICT development, laws governing the Internet, strong ICT skills of the workforce and high quality of ICT supporting services. Switzerland has an advanced telecom market, with one of the highest Internet and broadband penetration rates in Europe. Broadband has replaced telephone communications as the main growth area since 2004 (over 69% of internet users have a broadband connection), and DSL networks have overtaken cable as the principal technology for broadband access. In light of the explosion of technological developments in the telecommunications sector, the Swiss telecommunications market has been liberalized with the aim of improving services and enhancing competition. Once a monopoly, Swisscom is no longer the sole supplier of telecommunications services and now operates in an environment of free competition. In November 2007, Sunrise installed its telecommunication equipment in the first local exchange station it shares with Swisscom. Through such stations, Sunrise will soon be able to provide costeffective telephone and Internet access, a step towards the long-awaited liberalization of the telephone network. Cablecom also provides telecommunications service over its cable infrastructure.

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The Federal Office of Communication (BAKOM) is the executive agency for telecommunications and broadcasting (radio and television), and it carries out the decisions of the Swiss government, including the Swiss Federal Communications Commission (ComCom). Bakom licenses providers of fixed-network services without a tender procedure. However, ComCom licenses for the provision of mobile telephone and other radio services based on invitations to tender. Licenses are required for service providers who operate their own network infrastructure in Switzerland, but not for those who operate exclusively via interconnection. The implementation of a system for compiling statistics for the telecommunications sector is being rendered difficult for various reasons. One is the highly evolutionary nature of the market and a second is that private companies, subject to the laws of competition, are reluctant to provide details of their commercial operations. In addition, with liberalization there is no longer just one single supplier of data (the former state monopoly) but data coming from many sources, requiring harmonization. Attempts to address this issue have been to follow the approach used by international organizations (ITU, OCDE, EUROSTAT) to make use of comparative statistics, putting the emphasis on various indicators. In addition, it should be noted that the Federal Office of Communications (OFCOM) has decided not to destroy the data that already exists prior to liberalization. The following graph provides an idea of the growing importance of the ICT industry in Switzerland in terms of household use of ICT equipment. ICT equipment in Swiss household by category (2005) % of households

Categories: Television sets, private cell phones, stereo systems, PCs, printers, modems, desktops, magnetoscopes, DVD readers, scanners, laptops, camescopes, copiers and faxes, game consoles, satellite dishes, electronic planners, CD-ROM readers, ZIP.

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The Swiss Market for Business Process Technology Business Process Technology refers to software tools that make business processes faster and cheaper. Business Process Technology is of vital importance to the Swiss Industry because Switzerland is a high labor cost market, continuously seeking to become more efficient and increasingly quality-oriented. Business software applications are in high demand in practically every sector of the economy, including the banking and finance sector, the chemical and pharmaceutical industry, the large multi-national companies and International Organizations headquartered in Switzerland. Currently, some of the largest market players include: SAP, Elca, Bedag Informatik AG, Oracle, Bison, Wilken, Microsoft, Abacus Research, Sunbay Software, Compuware and Simultan. There is continued strong interest in the latest software products and upgrades for security, Customer Relationship Management (CRM), financial control, Enterprise Resource Planning (ERP), Supply Chain Management (SCM), Enterprise Application Integration (EAI), document and content management, storage solutions, application service, and E-procurement. More growth in demand is also anticipated in financial applications, CAD/CAM software, systems security software and eGovernment solutions. The Swiss Market for Communications Technology Switzerlands market for Communication Technology offers its customers leading edge and high quality communication applications. Either cable or DSL connections with access speeds of up to 4 MB/sec are available to over 90 percent of the Swiss population. In 2006, imports of telephone hardware and components amounted to US$ 536 million, whereas exports totaled US$ 278.4 million. Switzerlands mobile penetration in 2007 was on a par with the European average. Mobile telephone users in Switzerland spend an average of CHF 62 per month on the services they use (Sources: MIS Trend, BAKOM). Switzerlands triopoly of service providers (Swisscom, Sunrise and Orange) all provide 3G services while a fourth competitor, 3G Mobile, had its licence revoked in April 2007. Operators were allowed to share 3G network resources, while GSM spectrum was also allocated for 3G use. Broadband Internet is now available in virtually all cities and suburbs via a cellular phone or cellular PCMCIA cards in laptop computers. The current monthly charges for high-speed Internet connections start at USD 8, making it affordable for home businesses and small and medium enterprises (SMEs) to upgrade from their existing ISDN connections and invest in the latest technology network infrastructure. This trend will be further accelerated thanks to the recent deregulation of the last mile of telephone network, aimed at encouraging competition among the communication service providers. In September 2007, Swisscom Broadcast was awarded a national mobile TV license using the DVB-H standard, and it is required to provide all TV broadcasters and telephone companies with equal access to the platform.

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Telephone infrastructure in Switzerland (1990-2005)

Internet Use in Switzerland (1997-2006)

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Internet Use and Population Statistics: YEAR 2000 2004 2005 Users 2,134,000 4,589,279 4,944,438 Population 7,407,700 7,452,101 7,488,533 Penetration (% Pop.) 28.8 % 61.6 % 66.0 % 67.8 %

2006 5,097,822 7,523,024 Source: ITU and Nielsen Net/Ratings

High-Speed Internet Lines in Switzerland (2000-2006)

The Swiss Market for Digital Equipment & Systems In 2006, the market demand for personal computers suffered a loss of approximately US$ 154 million (exchange rate: 1.16 CHF/1 USD), primarily due to a drop in sales of 7.6%, as well as of a drop in prices, thus pushing revenues back to 2003 levels. The hardest hit segment was that of the mobile home systems, which suffered a 7.6% loss. Low-end servers also suffered losses of about US$ 29 million, representing a 7.7% decrease in demand. An increase in demand of 5.5% is expected for 2007, mainly for equipment with the new Vista operating system. Swiss imports of hardware (computers, keyboards, mice, scanners, printers, monitors and storage disks) in 2006 amounted to US$ 3.5 billion, of which approximately US$ 300 million came from the US. Software imports totaled US$ 99.8 million. With regard to the major players in the PC market, HP managed to consolidate its leadership position; whereas Dell, Acer and Fujitsu-Siemens suffered losses. For 2007, unit sales for laptops are expected to reach the same level as those of desktops. Due to their higher prices, however,

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revenues for laptops are expected to surpass those for desktops. Assembly companies should anticipate a decline in revenues for both desktop and laptops, also due to declining prices.

Market for desktop and laptop computers (from 2001 to 2006) In thousands of units Total: 1,057 1,013 1,117 1,307 1,486 1,373

Source: 2007 Weissbuch, Robert Weiss Consulting Sales of IT equipment In millions of USD dollars (exchange rate: 1.16 Swiss Francs per USD) 2006 PC 2,180 Desktop/Laptop 1,728 Servers 453 Periphery 1,923 Printers 207 Displays 319 Total 4,103 Source: 2007 Weissbuch, Robert Weiss Consulting 2005 2,372 1,882 491 2,055 194 304 4,440 Variation -8.1% -8.2% -7.7% -6.4% 6.7% 4.8% -7.6%

While the data storage market demand has not moved significantly since 2001, market insiders now report an expected growth of five percent in 2007. Most promising in the data storage market are the SME and consumer market segments where data needs are virtually exploding. It can also be expected that large enterprises and government agencies will continue to expand their storage solutions. With growing demand for mobile data access, providers of high quality and high security storage outsource and/or mobile data access solutions will find an attractive market in Switzerland. Manufacturers of leading edge digital equipment and systems will find a sizeable customer base in Switzerland. Switzerlands typically strong digital graphics market is being further boosted by a high demand for leading edge digital equipment. With consumers turning to digital picture and video equipment, bundled with the latest flat panel displays (either plasma or TFT) and color laser printing, retailers are reporting new growth stimulated in an otherwise sluggish IT hardware market.

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A snapshot of the Swiss photo market reveals a steady decline in demand for traditional film development. However, the steady rise in demand for digital cameras and digital video equipment is filling the gap and more. Sales of digital cameras, photo paper and over-the-Internet development rose by approximately 30 percent in 2006. Demand for the latest cameras, offering resolutions of up to 15 mega pixels, is ensuring continuous growth, especially in the professional photo market segment. Digital cameras currently represent an estimated 90 percent of Swiss camera sales. Continuous strong growth is expected in demand for products and technologies for the communication backbone infrastructure, mobile computing, server and desktop systems, network storage solutions and WIFI network equipment. The largest market players in the information technology sector are Hewlett-Packard, Sun Microsystems, Dell, EMC, Cisco Systems, Brother, NCR, Fujistu Siemens, StorageTek and Panatronic. Future Prospects in this Market Best prospects in the Swiss information and communications market include the following products and services: Desktop, Laptop, Server, security and storage hardware and related software Enterprise software and tools Mobile communication hardware and software IT consulting and outsourcing IT hardware and software for federal, state and local government Advanced web applications and services

Important USDOC Resources in this Market Local Market Commercial Specialist Maria (Lupita) Pamich Commercial Specialist Jubilaumsstrasse 93 3005 Bern Switzerland Tel: +41 31 357 7345 Fax: +41 31 357 7336 E-Mail: maria.pamich@mail.doc.gov Web: www.buyusa.gov

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TURKEY Capital: Ankara Population: 70,586,256 Languages: Turkish Currency: New Turkish Lira Exchange Rate: $1 = 1.2 TRY (Feb. 2008) GDP per capita: $9,100 (2007 est.) Overview Turkeys Information Technology (IT) market size is estimated to have reached $5.3 billion in 2007 and the total ITC industry (with telecommunications) is estimated at 23.80 billion USD (ref. Interpro). ICT market increase estimated at 15% for 2008. The break down of the ICT market gross revenue is as follows: 68% Carrier Services (GSM operators), 11% hardware sales, 10% telecomm equipment, 7% services (maintenance, set up, network security etc.), 3% software, 1% consumer goods. With over 7 million personal computers in Turkey and 16.5 million internet users (according to TNS Piar), pc sales are still the main driver for gross IT sales. As anticipated with the ADSL (Asymmetric Digital Subscriber Line) leap of Turkish Telecom, internet speed is has increased up to 50 times versus the normal dial up used frequently by small businesses and households. This in turn boosted e-commerce and expenditure via the Internet. Presently there are 4.0 million ADSL broadband internet subscribers. The boom of the internet have brought with itself new opportunities regarding hardware and software sales. PC and notebook sales boosted by ADSL increased sales in accessories. Speakers, wi-fi modems, bluetooth USB sticks, digital music archives, storage and many more gadgets have enjoyed market increase. The Turkish information technologies market is dominated by hardware sales. The market has experienced double-digit growth over the past five years except during 2001 when the economic crises affected IT purchases across the board. Hardware market for Turkey estimated at 2.64 billion USD for 2007. An estimated 2.6 million PCs were sold in 2007, half of this figure was in notebooks. Notebook sales are expected to increase as hotspots and wireless networks and applications become more available. Turkeys population of 70 million is relatively young and given the current demographics of computer and internet users, it is evident that the computer market is far from reaching the saturation levels, increased internet speeds and other enhancements will continue to boost PC sales further, especially notebooks. A recent trend, especially through offsets in the defense sector is having software contracts outsourced to Turkish subcontractors. The increased know-how and experience of these Turkish firms is leading to further activities between U.S. and Turkish firms. According to Tubisad (www.tbd.org.tr) software market in Turkey with an increase from the previous year of 20% was 650 million USD. Imports into Turkey totaled 90 million USD and exports totaled 15 million USD. The U.S. IT hardware and software manufacturers will find that due to time commitment, cost, and complexity of the regulatory and commercial environment, it is essential to have local representation. Although many people in the larger urban commercial centers understand English language may be a serious barrier in rural areas. It is therefore imperative that marketing information and user guides be written to the consumers own language. To win over the local customer, a Turkish language web site would be extremely useful. Having a local representative or partner could help in translating your advertising so as to catch the eye and interest of the Turkish consumer.

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For companies seeking to gauge market receptivity, exhibitions and conferences are excellent product launch vehicles. Reconfiguring the user interface and software would not be necessary in the initial market fact finding stages and that once market interest is determined and confirmed can the U.S. company and its local partner look at packaging the hardware and software to meet the needs of the Turkish consumer. Software translations may not be needed for professionals, however software products for the general consumer are necessary. Best Products/Services Audio Visual Equipment Audioo Visual Broadcast Equipment Consumer Electronics Wireless equipment / services Notebook PCs

The audio visual and the consumer electronics market is also seen as a future prospect as smart homes, LCD/plasma TVs, digital cameras, removable data storage and pdas are in demand. As was the case with the immense growth rate of mobile phones now reaching 43 million users, Turkeys young and fast growing population will be the most outstanding factor in the expected increase of the AV and consumer electronics market. Turkeys construction market is still on the rise and as a result smart homes and smart buildings are in fashion. Most control room technology is US originated and this trend is expected to continue as new hotels, resorts, concert halls and theatres are built. According to the Carmel Group estimations, there will be around 30 million subscribers for the digital satellite market in the year 2008. Regarding the number of TV channels, Turkey ranks second worldwide behind USA. Market research shows that 97% of Turkish families see television as their prime source for entertainment and news. As can be seen from the consumer trends, large screen LCDs and Plasma TV sales are on a roll as well as free satellite receivers. Although High Definition Television is not yet available in Turkey, according to a study made by Hannover-Messe Istanbul, all of the television channels in Turkey are expected to invest at least US $ 30 million in transmitting systems, US$ 10 million in electricity generating groups and another US$ 10 million in studio modifications in the next few years. Total amount of investment needed for the AV industry to move to digital broadcasting, reconstruct studios, change transmitters will be approximately US$ 5 billion. Industry contacts have a consensus that the next big market opportunity for ICT firms in Turkey is wireless broadband, audiovisual products and accessories thereof. Hot spots in airports, cafs and other public locations are in the rise. Wireless connectivity devices such as PCMIA cards, bluetooth hardware, edge technology, gprs, gps, internet via satellite are increasing in popularity and sales. Wireless connectivity is also boosting notebook pc sales as people seek mobility and connectivity at the same time. Buyer Profile Turkey has a population of 72 million with a 1.4% population growth rate (highest among OECD). Land area is 779.452 sq km and GNP per capita is 5,000 USD (2005). International trade in 2005 was 73.3 billion USD exports, 116.5 billion USD imports. The nation has 14 million TV homes, 1 million cable TV subscribers, 1 million ADSL broadband Internet subscribers, 15.5 million internet users with a total of 7 million pcs and 1.250 million notebooks in country. Digital broadcasting is projected to reach 3.5 million homes by 2008. Second youngest population in OECD, 29.4% below age of 15 years, 55% below age of 30 years, 70% under age of 40 years. Urbanization as of 2005 is 79.7% and in the increase.

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Bridging Europe and Asia, Turkey is located in the heart of a region with a population of more than 1 billion.

Major Competitors Vestel (www.vestel.com.tr), Beko (www.beko.com.tr) and Arcelik (www.arcelik.com.tr) are the main producers in Turkey. Almost all-multinational competitors such as Sony, Toshiba, Philips, Samsung, and Creative are competing for market share. Turkey is the only country in Europe to produce notebooks with Vestel. Overwhelming portion of consumer electronics equipment is imported to the market. Barriers Standards and Import Regulations - CE mark is an issue. Since Turkey has adapted full acceptance of the regulations due to its European Union Customs Union membership, IT products need to meet the European Union directives on low voltage and electro magnetic compatibility. IT products need a CE mark to be able to imported into Turkey. European Union (EU) Waste from Electrical and Electronic Equipment Directive (WEEE) and Restriction of Hazardous Substances Directive (RoHS) also an issue. Language barriers do pose a challenge for U.S. companies, hence a Turkish partner, distributor and/or agent is strongly advised. U.S. partners and products perceived well and favorably amongst business circles and consumers. Apart from electro-mechanical standards, IT producers must ensure that all electronics be compatible with the radio-frequency levels of the Turkish national standards on frequencies. Products manufactured prior to 1 January 2000 cannot be imported. This is an outstanding regulation attributed to hinder problems related to the Y2K bug. No secondhand IT equipment is allowed into Turkey unless the equipment is an integral part of a machine used in manufacturing. Trade Promotion Opportunities in Turkey Cebit Bilisim Eurasia, Istanbul, Turkey. IT and Telecom solutions trade fair. This event is an U.S. Department of Commerce certified event. Details: www.cebitbilisim.com Cebit Broadcast, Cable and Satellite Eurasia, Istanbul, Turkey. Satellite and broadcast technologies trade fair. This event is an U.S. Department of Commerce certified event. Details: www.cebit-bcs.com/eng/index_en.htm For More Information The U.S. Commercial Service in Ankara, Turkey can be contacted via e-mail at: Ihsan.Muderrisoglu@mail.doc.gov . Phone: +90 (312) 457 7167; Fax: +90 312 457-7302 or visit our website: www.buyusa.gov/turkey

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UNITED KINGDOM Capital: London Population: 60,776,200 (July 2007 est.) Languages: English Monetary Unit: British Pound (Sterling, GBP) Exchange Rate: $1 = 0.5032 GBP GDP per Capita: $ 35,300 (est. 2007) Local Market Commercial Specialist: Richard Stanbridge Senior Commercial Specialist U.S. Commercial Service American Embassy 24 Grosvenor Square London W1A 1AE United Kingdom Tel: +44 (0) 20 7894 0419 Fax: +44 (0) 20 7894 0020 E-mail: Richard.stanbidge@mail.doc.gov Web: www.buyusa.gov/uk Market Overview This report is intended to give the reader an overview of the Information and Communications Technologies (ICT) sector. As this is such a large sector, it will focus on the more dominant themes and give information in a generic context. The main themes cover the Internet, telecommunications, broadband and wireless. The United Kingdom is the dominant market for ICT in Europe, thanks in part to public sector spending and the outsourcing boom. The sheer size and strength of the UK ICT market over 130,000 UK companies operate in the sector and over one million people are employed in ICT demonstrates its importance to the UK. The ICT sector accounts for more than 6 percent of GDP. At over $60 billion in 2007, the UK software and computer services sector is the largest in Western Europe. Londons ICT corporate base is unrivalled in Europe making it a key center for knowledge-driven activities. The network of telecommunications, telecommunications services and computer equipment companies in London is the largest in Europe. In addition, there is a network of welldeveloped early stage venture capitalists and incubators that can meet the investment needs of growing ICT businesses. Londons diverse and vibrant quality of life, along with a common language and cultural familiarity makes it a favorite destination for North American expatriates. Britain is home to the Internet's biggest data hub. At peak times over 200 gigabits per second of data regularly pass through the London Internet Exchange. This is where the UK's net firms (over 96% of UK internet traffic) swap data between each other's networks. This huge volume of traffic puts the UK net hub ahead of similar exchanges in the U.S. and Japan. The UK has a strong science and technology base, with world-class design, research and development disciplines. Many UK universities and scientific institutes take part in joint research projects with businesses. The UK as whole has over 30 million skilled and adaptable workers with

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generally high standards of education, particularly vocational education and training. Labor market regulations in the UK, including working hours, are among the most flexible in Europe, and staffing costs are highly competitive. The Marketplace for Software and Computer Services The Software and Computer Services (SCS) sector in the UK was worth over $60 billion in 2007 and employed 249,000 people. The UK excels in this area and produces some of the most cutting-edge and innovative products and solutions in the world. Britain is particularly strong in the areas of e-technologies, parallel computing, artificial intelligence (AI), virtual reality and multimedia software products. Software and services account for two thirds of UK total IT spending. Growth averaged around 8% per annum from 2001-2006. The UK currently invests 1.9% of its GDP in software. The SCS sector has, however, been branded the worst performing business sector of 2007 after 43 firms issued profit warnings. All but one of the warnings were from companies with less than $400 million turnover, citing the credit crunch as the main impact on corporate profit and loss. The driving force in the UK software market is the trend for web-enabled integrated enterprisewide solutions and e-technologies in the workplace. In addition, 95% of UK residents live in areas capable of delivering fixed broadband Internet connectivity, over 80% of all UK businesses have websites and a quarter are using their online presence for trading. The UK is also famous for its leisure software. One driving force behind this is the popularity of computer games in the UK. Britons are voracious game players. The UK is the third largest global market accounting for up to one third of global games software sales, a market currently growing at over 20% a year. Three of the top-selling games in the world were created in the UK. In industry rankings, 11 of the top 14 European software developers and six of the top 13 global software developers are British companies. This market is worth over $2.7 billion per year in the UK. There are approximately 150 million gamers worldwide, but many analysts predict that the market could potentially grow by up to 50% over the next 4 years. Leading software companies in the UK include: Eidos, with its Tomb Raider series of games has conquered the gaming world. Digital Bridges have enjoyed international renown for their games products. Symbian, born out of the electronics pioneer, Psion, is a leading player in the market for mobile phone operating system software. Sage, based in the North of England, is a major force in the world of accountancy software. Autonomy, based in Cambridge, pioneered the use of sophisticated algorithms to search and categorize information. Its software is used around the world by large organizations, including the U.S. Government Centers of excellence abound. Cambridge, in the East of England, is home to Microsofts first research and development center outside the U.S. In Bristol, in the South West, Hewlett Packard has a substantial research facility, and IBM has an impressive R&D presence in the South East of England. The Thames Valley, stretching from Swindon in the West to London in the East, is home to hundreds of high-tech businesses, many of which are household names on both sides of the Atlantic (Computer Associates, Oracle, EDS, etc). The Marketplace for Communications Technology Total revenue in the UK telecommunications sector reached almost $100 billion in 2006, a less than 2% increase on 2005. The average household spend on communications fell slightly in 2006 from $187 to $184 per month. UK consumers spend an estimated 50 hours per week on the phone, surfing the Internet, watching television, or listening to the radio. Average daily Internet use in 2006 was 36 minutes,

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up 158% from 2002. Time spent on mobile phones averaged 4 minutes, up 58% over the same time period. Time spent watching TV fell 4% to 3 hours and 36 minutes, listening to radio was down 2% at 2 hours and 50 minutes, and fixed line telephony was down 8% at 7 minutes. Take-up of consumer digital services continued to increase over the year. By March 2006, 18.3 million UK homes subscribed to digital TV services, 53% of UK households had broadband connections, and there were around five million 3G subscribers. The perceived availability of 3G services within the UK was 82% in urban areas and 68% in rural areas. In 2005 and early 2006 a number of converged services came to market including various internet TV (IPTV) offerings, television to mobile devices, and new voice over IP (VoIP or internet telephony) products. In addition, operators are increasingly bundling their services into triple-play offerings, with fixed line/broadband/TV bundles becoming particularly widespread. As of April 2007, 40% of consumers took these services in bundles. The Marketplace for Digital Equipment & Systems The UK is a leading market for ICT hardware, which encompasses computer hardware and peripherals, as well as other communications equipment and infrastructure. Britain continues to produce groundbreaking technology, which makes the UK one of the most innovative and fast moving players in the world. The market continued to grow during 2007, with PC shipments exceeding 2 million units. Growth will, however, come to a halt, however, as companies scale back investment plans following the credit crunch in late 2007. The consumer PC market experienced another strong performance in 2007, characterized by a continuation of fierce competition between the retail and direct consumer channels, with the latter gaining the upper hand. The pattern of consumer spending on IT in December 2007, suggests that the days of the high street PC retailer are numbered. Future Prospects in this Market The UK ICT market is expanding and there is growth across all sectors, although growth will slow significantly, as tighter credit conditions bite in 2008. Outsourcing of ICT functions is increasingly seen as a smart method of handling the issues associated with running an IT system risk is passed to the contractor and the costs are defined over the life of the contract. Businesses appear to be buying new systems, IT departments rolling out Windows Vista should make an impact soon as a corporate platform, incorporating .net and other middleware to bridge technologies, or replace legacy components. Broadband penetration is accelerating. Ninety five percent of the UK domestic and commercial addresses are capable of receiving broadband at speeds of at least 512 kbit/s. UK businesses now lead in the adoption of wireless LANs and are among the leaders in the uptake of Voiceover-IP and desktop video conferencing. 3G technologies are currently trying to drive the sort of wide spread technology upgrade last seen prior to Y2K. The technology is probably too young at the moment, with mainly early adopters and the technologically curious changing their platform. The UKs longstanding adoption of number portability makes the changeover straightforward. Bluetooth technologies are becoming more pervasive in everyday life and changes in regulations for mobile telephone use in cars has driven the widespread adoption of Bluetooth headsets. In summary the UK is a good destination for U.S. ICT companies wishing to expand internationally. The common language and close cultural ties help foster good relationships across the Atlantic. The UK ICT consumer, either in business or in a personal capacity, is a sophisticated buyer, educated and often buying their third or fourth generation of a particular technology. The UK is not ideally suited to late-coming generic products, but new innovative

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technologies that can solve a defined need, or produce tangible ROI are likely to succeed in this country. Important USDOC Resources in this Market Trade Shows: Focus on Imaging February 24-27, 2008 Location: Birmingham NEC. www.focus-on-imaging.co.uk/ Channel Expo 2008 May 21-22, 2008 Location: Birmingham NEC www.channelexpo.co.uk/ Trade & Industry Contacts: Office of Communication (Ofcom) www.ofcom.org.uk/ Intellect - The trade association for the UK hi-tech industry: www.intellectuk.org/ UKita - The UK IT Association, a group of SME resellers and consultants: www.ukita.co.uk/

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UKRAINE

Capital: Kiev Population: 47 million Languages: Ukrainian Monetary Unit: Hryvna (UAH) Exchange Rate: $1/UAH 5.05 GDP per Capita: $1900 (estimated) Local Market Commercial Specialist: Ruben Beliaev Contact info: U.S. Embassy Kiev Commercial Service th 4, Hlybochytska St., Artyom Business Center, 4 floor Tel.: (38044) 490-4058, 490-4018 (38044) 490-4046 E-mail: ruben.beliaev@mail.doc.gov

Market Overview Ukraine is an emerging market economy at the crossroads of EU, Russia, Central Asia, and the Middle East and holds great potential as a new market for U.S. trade and investment. Ukraine has achieved significant progress in opening its market to exports and investment, particularly in the last few years. Despite some progress in deregulation, domestic and foreign investors continue to be discouraged by a burdensome array of tax, customs and certification requirements, as well as by corruption, the lack of effective corporate governance, and political uncertainty. Exports from Ukraine, reduction of capital flight, growing households revenues, booming retail trade and retail banking have been the main factors behind Ukraine's recent economic performance. Increased consumer confidence is also reflected in the banking sector where household and business bank accounts are increasing. Ukraine plans to join WTO in early 2008. Several major trends are shaping this very dynamic market: The sale of key industrial enterprises to corporate international holdings. The entry of major international banks and insurance companies into the market Booming individual consumption fueled by growing availability of bank credits Growing number of international manufacturers that establish factories in Ukraine to supply European end-users.

U.S. businesses exporting goods to Ukraine will discover that the country's commercial infrastructure, which is still only partially developed, has matured rapidly over the last five years. Logistics and distribution networks have improved dramatically. And international financing, leasing, and licensing to help exports are becoming more common. Although foreigners may find Ukraine's import regime daunting, it is not insurmountable and is comparable to other transitional economies in the region.

The Marketplace for Business Process Technology A more legitimate and transparent market for computer software is slowly taking shape in Ukraine. Enforcement of IPR legislation, steady growth of the Ukrainian economy in 2000-2007,

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and resurrection of local manufacturing industries have generated a substantial increase in demand for computer software for industrial and business needs. The exact size of the Ukrainian computer software market is difficult to measure, because both major subsectors of the computer software market: the imported software and the software development feel a severe impact of the shadow economy. Imported software dominates on the office software market and on the market of software solutions for government, businesses and industry. Illegal imports of pirate office software, illegal use of software licenses and domestic pirate industry production have a severe impact on the size of the legitimate software market. However, most U.S. and international suppliers of software report strong annual sales growth ranging from 15% to 40% for several years in a row. One of the specific features that may indicate a new trend on the market is an impressive growth in sales to households, small and medium businesses. Ukraine is well known as a low cost site for high quality software development. Unofficial estimates indicate that this industry employs 25,000 of programmers and many more specialists of different backgrounds and qualification. American-made security and safety equipment is one of the most promising industrial sectors for export to Ukraine. As domestic manufacturers are unable to meet demand, both in terms of technology and quality desired, U.S. exporters may find that the local market offers many opportunities, especially in the high-tech end of security products. The rapid growth of private banks and corporations, retail supermarkets and warehouses has been accompanied by an increased demand for security software, smoke detectors, sophisticated wireless security solutions for surveillance, perimeter and access control. Ukrainian companies are willing to pay top dollar for an effective security package. The local customs, railroads, airlines, airports, law enforcement agencies and private security companies show a growing interest for high-tech antiterrorist equipment, which is not manufactured locally. U.S. firms should note that the import of security and safety equipment into Ukraine requires certification and licensing from relevant Ukrainian government agencies, which is often a cumbersome process. U.S. exporters should also be aware that export of some security items to Ukraine is subject to the export licensing by the U.S. Department of Commerce (see www.export.gov)

The Marketplace for Communications Technology Telecommunications and IT are important infrastructure sectors in Ukraine. The revival of the Ukrainian economy after 2000, as well as foreign and domestic investments in telecommunications made over the last 15 years, have brought marked changes to the Ukrainian telecom industry, particularly in mobile wireless and data transfer. However, the lack of transparency and slow decision making in licensing and frequency allocation, corrupted procurement practices and continuing delays with the privatization of Ukrtelecom (the national telecom carrier), as well as ongoing disputes between Ukrtelecom and private telecom operators seriously hurt the development of the entire telecom industry. Telecom industry revenues grew over 23% in 2007. Sales in mobile telephony, TV& radio broadcasting, fixed local loop grew 28-29%. Mobile telephony leads among other sectors with 62% market share. It is followed by long-distance and international communications (15%), fixed local loop (10%), and data transfer (4%). Mobile Telecommunications Five Ukrainian GSM operators MTS Ukraine, Kyivstar GSM (majority shareholder: Telenor), Astelit (majority shareholder: Turkcell, trade mark: Life), Golden Telecom GSM, and Ukrainian Radio Systems (majority shareholder: Vympelcom, trade mark: Beeline) are servicing over 51

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million customers (total Ukraines population is 47 million). Reportedly, two leading mobile operators, MTS and Kyivstar have over 20 million customers each, while other operators lag far behind. The market penetration for mobile communications is over 107%. It should be noted though, that Ukrainian operators account their customers based on the number of activated SIMcards not on the number of contracts. With this level of market penetration, growing competition and overwhelming dominance of the voice component in the mobile traffic, the numeric growth of the GSM customer base is no longer a priority, and mobile operators are actively pursuing new strategies to increase their revenues. Specifically, mobile operators report 100% annual growth in mobile content beginning from 2005. In December 2005, regulatory authorities in preparation for Ukrtelecom privatization issued Ukrtelecom a license for 3G (UMTS) mobile network deployment. In November 2007 after repetitive delays Ukrtelecom launched 3G mobile network using Nokia Flexi WCDMA technology supplied by Nokia Siements Networks. Pats of the network also use a comparable technology solution supplied by Huawei. Estimated costs of this project vary from $150 million (Ukrtelecoms estimates) to $1 billion (independent estimates). This far Ukrtelecoms 3G network covers only 7 major Ukrainian cities. Its market share is expected to grow to 5% by 2010. An alternative private 3G operator PEOPLEnet that launched CDMA EV-DO technology based services in early 2007 has less than 0.1% market share. Although other major mobile carriers also expressed their interest to obtain 3G licenses and spectrum resource, their requests have been declined so far. Earlier we reported that some Ukrainian industry executives have viewed WiMAX as a provisional cost effective alternative to 3G in public networks, however, continuing problems with spectrum allocation and equipment availability will most likely limit its use in Ukraine to local loop corporate, industrial and security solutions. In November 2006 the Ukrainian government issued 30 regional WiMAX licenses. In October 2007 Ukrainian-British JV Pan-Wireless bought nationwide WiMAX license for the spectrum band of 5,730-5,760 GHz. Internet Reportedly, as of May 2007 there were close to 5 million Internet users in Ukraine. Unfortunately, the geographic distribution of Internet users is very uneven. Kiev, the capital accounts for over 61%, the share of six other big cities (Dnypropetryvsk, Odessa, Kharkyv, Lvyv, Donetsk, Zhaporyzhzhya) is over 27%, while the rest of the country accounts for only 11% of the total number of Internet users. Google (with 65% market share) and Yandex (with 18%) lead among search engines. DSL and Ethernet connectivity turn into a choice of favor for a growing number of Internet customers. In 2007 the number of broadband customers grew 64% and reached 378,000. The other trend that can boost internet development in Ukraine is the growing internet awareness of households. Cable TV operators play an active role in this process.

The Marketplace for Digital Equipment & Systems Computers & Peripherals The exact size and structure of the Ukrainian computer hardware market is difficult to measure, since local assembly and shadow imports of components remain among the key factors that determine the structure of the market. Sales estimates for 2006 vary from 1.54 million units to 1.3 million or $ 650-550 million in monetary terms. Experts believe that in 2006 the computer market grew 44% . The market for desktop PCs grew 32% while the sales of notebooks increased 118%. At the same time there were only 313,000 notebooks sold in Ukraine in 2006 which is 20.3% of total computer sales. Sales of x86- servers grew 38%. It is worth mentioning that preliminary results of 2007 sales show a strong decline in growth rates for desktop PCs: from 32% in 2006 to 10% in 2007 versus 116% sales growth rate for notebooks. Fifty three percent of the market belong to PCs priced below $400, thirty seven percent to PCs priced at $400-600.

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Although. desktop PCs assembled in Ukraine currently account for more than two thirds of the market their share is steadily declining. Several major local assembly centers have downsized or closed their operation. Import duties and customs fees no longer play a barrier role and leading international brands are slowly conquering the market. The market of servers follows the same trend. Local manufacturers accounted for 49% of the market for x86-servers in 2006. In the first half of 2007 their market share went down to 40%. The share of imported x86-servers grew accordingly. In 2006 sales of x86- servers accounted for 69% of the local market (in monetary terms). The share of RISC servers was 26%, while EPIC servers claimed 5% of the market. The share of CISC servers was 0.5%. One important change occurred in the retail trade of computers and peripherals: supermarkets of consumer electronics sold more computers than specialized computer stores. This factor may totally reshuffle distribution channels and motivate local computer companies to restructure and get rid of their retail divisions. Electronic components Several leading international electronic component manufacturers such as Jabil Circuit Inc., Yadzaki, Flextronic and Tyco Electronics have initiated major manufacturing projects in Ukraine. When implemented at full scale, these projects will turn Ukraine into one of the leading suppliers of electronic components to the European Union electronic industry.

Future Prospects in this Market Issuance of WiMAX licenses and 3G licenses will create good business opportunities for U.S. suppliers of equipment for wireless networks especially in the local loop segment. Further promotion of internet connectivity through digital TV cable networks will lead to huge growth in value-added services and legitimate software sales. The local market offers evidence of a growing demand for high-tech antiterrorist equipment, which is not manufactured locally. It may be expected that government agencies such as customs, railroads, airlines, airports, state law enforcement agencies and private security companies will show a growing interest toward advanced surveillance and access control systems. Ukraine is slowly turning into a manufacturing site for suppliers of electronic components servicing EU market.

Important USDOC Resources in this Market Product Literature Center at EnterEx /ExpoTel IT and Telecom Exhibition, February 19-22, 2008 Product Literature Center at BEZPEKA (Security) Exhibition, October 2008 CS Kiev web site: http://www.buyusa.gov/ukraine/en/

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VIETNAM

Capital: Hanoi Population: 87,375,000 (2007 est.) Languages: Vietnamese Montary Unit: Dong Exchange Rate: $1 = 15,950 dong GDP Per Capita: $3,100 (2007 est.)

Summary With a population of 85 million and annual GDP growth of 8.5 percent- among the highest in the world- Vietnam has become a promising destination for business development opportunities for U.S. exports in the Information and Communications Technologies (ICT) industry, including all IT, telecommunications and broadcasting sectors. Vietnams telecommunications industry is among the worlds fastest growing markets. In 2007, Vietnams ICT growth rate was double that of the average in the Asia region and triple that of the world average. Also in 2007, the cell phone and Internet broadband subsectors experienced market growth of upwards of 200%. The Government of Vietnam (GoV) has articulated its commitment to boosting the development of the ICT industry, particularly in telecommunications and Internet infrastructure development, software production, IT education promotion, and other forms of human capital development. Market Demand With the worlds 12th largest population at 85 million, 65 percent of which are under 15 years of age, Vietnam represents a significant growth market for U.S. exporters of telecommunications and broadcasting goods and services. Coming off of two years of year-on-year GDP growth above 8 percent, Vietnams economy is expected to reach 8.5 percent growth in 2007, its highest growth rate to date. Although per capita annual GDP currently stands at $835, unofficial estimates put per capita GDP in Hanoi and Ho Chi Minh City (HCMC) as high as $2,500, hinting at disposable income levels of a well establish middle-income market and a market on the verge of significant demand growth. To meet the increasing market demand and the tough competition after Vietnams accession to WTO, Vietnamese telecom operators understand they need to enhance their competitiveness by adopting new technologies and enhancing their human resource capabilities. They are seeking considerable transfer of technology and know-how via foreign involvement in the telecom sector, although the market is likely to open at a gradual pace in line with Vietnams WTO commitments. Industry analysts predict that by 2010 Vietnams ICT industries will have a growth rate of 20-30% with annual revenues of US$6-7 billion. Teledensity is expected to reach 40-42 lines (including 14-16 fixed telephone lines)/100 inhabitants, while Internet subscribers is to reach at 8-12/100 inhabitants (of which 30% is broadband subscribers) with 25-35% of the population using the Internet. New market entrants are expected to account for 40-50% of total market share. In 1988, just after the doi moi (renovation/opened door) policies carried out by the Government of Vietnam (GoV), Vietnam had less than 200,000 subscribers with a teledensity of 0.18 lines/100 inhabitants. In 2000, Vietnam grew to approximately 2.6 million fixed-line subscribers and 640,000 mobile subscribers. In 2006, new phone subscribers in Vietnam more than doubled the total number of subscribers added in the 25-year period of 1975-2000, and the number of 18.5 million new telephone subscribers in the year 2007 tripled that of the period of the previous 3 years. According to Vietnams Ministry of Information and Communications (MIC), as of June

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2007, Vietnam has approximately 38.31 million telephone subscribers, with a teledensity of 45.27 lines/100 inhabitants. The chart below demonstrates significant telephone subscriber growth in the period of 2000-2006. The major technologies used in Vietnam include cable, satellite, and wireless cable. Major broadband networks are deployed via ADSL, VDSL, and leased lines. WiFi is no longer a luxurious terminology, and local ISPs are seriously contemplating WiMax as a platform to popularize the Internet nationwide. So far 4 Vietnamese companies- VNPT, FPT, VTC and Viettel- are licensed to provide WiMax services and all have WiMax projects in the pilot stage. In terms of network convergence, voice/data networks are available nation-wide, while triple play networks (voice/data/video) and broadband services have been growing in the big cities. VoIP services are also expanding. Telecom companies own the Internet infrastructure and provide VoIP services. There are also several privately owned VoIP providers, all of which lease lines from major telecom carriers. Such new technologies as 3G, even 4G, WiMax, mobile TV, and NGN have begun to be promoted in Vietnam and will become major trends in the development of Vietnams telecom industry. An important factor for exporting to Vietnams market as this country becomes an official member of WTO is the implementation of tax cuts as the country implements the ITA agreement for ICT products and services. Specifically, categories currently in a 5% tax bracket will decrease evenly to 0% in 2010; those in a 10% bracket will decline evenly to 0% in 2012 and those in a 20-30% bracket will go down evenly to 0% in 2014. Fixed telephone networks As of June 2007, Vietnam has approximately 38.31 million telephone subscribers, with a teledensity of 45.27 lines/100 inhabitants, of which approximately 25% are fixed telephone subscribers (approximately 9 million fixed telephone subscribers.) Telephone access is currently available to all communities nationwide. State owned Vietnam Posts and Telecommunications Group (VNPT) is the major landline telephone carrier in this market. As the traditional PSTN fixed telephone service is no long a cash cow subsector, Vietnams telcos are instead developing wireless fixed telephone service solutions, especially for remote and isolated areas. Cell phone networks In 2006, cell phone subscribers accounted for 61% of total phone subscribers, double that of 2004. Also, in 2007, the cell phone market growth rate stood at 200% with 14 million subscribers. It is predicted that Vietnams cell phone subscribers will reach 20 million and 25 million in 2008 and 2010 respectively, with phone density of 42 lines/100 inhabitants, two-thirds of which will be cell phone subscribers. As of June 2007, Vietnam has 22.87 million cell phone subscribers. Cell phone market share in Vietnam is currently divided between 6 network operators: Vinaphone (by VNPT), MobiFone (by VMS, a VNPTs BCC), Viettel Mobile, and S-Fone (a Saigon Postels BCC with South Korean consortium SLD Telecom), EVN Telecom (by Electricity of Vietnam), and HT Mobile (a BCC between Hanoi Telecom and Hutchison). Viettel accounted for 32.8% market share with 7.5 million subscribers; MobiFone accounted for 28.1% market share with 6.4 million subscribers; Vinaphone accounted for 25% market share with 5.7 million subscribers; S-Fone accounted for 7.5% market share with 1.7 million subscribers, EVN Telecom accounted for 5.3% market shares with 1.2 million subscribers; and HT Mobile accounted for only 1.3% market share. In terms of the technologies used in Vietnams cell phone networks, six licensed mobile network operators run 3 GSM mobile networks (Vinaphone, MobiFone, and Viettel) and 3 operate CDMA mobile networks (S-Fone, EVN Telecom, and HT Telecom). GSM mobile networks presently account for more than 95% of the cell phone market share. Investments by the major cell phone networks are: Vinaphone ($130 million), Mobifone ($456 million), S-Phone ($230 million), EVN Telecom ($630 million), and Hanoi Telecom ($656 million).

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Internet The Internet market has also developed rapidly in recent years. Internet usage has increased in popularity as evidenced by the entry of many Internet service providers (ISPs) into the market. As of November 2007, the number of Internet subscribers in Vietnam stood at 5.12 million, with an estimated 18.22 million people or 21.66% of the population using the Internet regularly and is expected to reach 35% in 2010. Broadband market demand has increased so rapidly that the current market supply doesnt suffice. In 2007, the broadband market growth rate reached as high as at 200% with 1.2 million broadband subscribers. Presently, the countrys total international and domestic connection bandwidth of Vietnam are 10,508 Mbps and 25,412 Mbps respectively. However, Internet density is not equally spread throughout the country; that is, 72.76% of Internet subscribers are in the two big cities of Hanoi and HCMC, 7 other cities and provinces including Hai Phong, Thua Thien-Hue, Quang Nam, Da Nang, Khanh Hoa, and Binh Duong account for 10.48%, while the rest of the 55 provinces account only for 16.76%. So far, Vietnamese authorities have licensed 7 IXPs (Internet infrastructure service providers), 18 ISPs (Internet access service providers), and 25 online service providers. As of the end of 2006, Vietnams Internet market shares of major Internet service providers were as follows: VNPT/VDC (54.21%), FPT (16.81%), Viettel (16.05%), EVN Telecom (4.84%), SPT (3.61%), and others (4.48%). In terms of the Internet broadband market share, 3-top key players are VNPT, FPT, and Viettel with 670,000, 300,000, and 250,000 subscribers respectively. Satellite Vietnam's very first communications satellite called Vinasat was approved by the Government on October 18, 2005. The project will cost a total estimated $200 million, including ground facilities. In May 2006, U.S.-based Lockheed Martin and VNPT held a signing ceremony to award the U.S. firm with a $168 million contract (including satellite, launch vehicle, insurance, ground systems and training). The satellite will be manufactured in Lockheed Martin's Pennsylvania facility.

The satellite, which has a height of 4 meters height, weighs 2.7 tons and has an A2100 frame, is scheduled to be launched into orbit at 132 East degrees by Arianespaces Ariane 5 ECA missile from the French Guyana launching spot on March 28, 2008, and will become operational on April 27, 2008, providing roughly 15 years of service. Vinasat will be a geostationary satellite, employing eight C-band channels and 12 Ku-band channels to provide broadcast and telecommunications service (video, data, voice) to some countries in the Asia-Pacific region such as Vietnam, Laos, Cambodia, India, Australia, Japan, Korea, part of China, and some other East Asia countries. The satellite principal ground station is located in Northern Vietnam (Que Duong, Ha Tay Province), and the back-up ground station is situated in the Southern Vietnam (Binh Duong Province). Broadcasting Vietnams broadcasting industry has been developing rapidly in recent years. At present, Vietnam has one national television station (called Vietnam Television/VTV), one national radio station (called Voice of Vietnam/VOV) and four inter-provincial broadcasting stations. Additionally, each of the countrys 64 provinces and cities has its own local broadcasting station. Apart from these broadcasters, other several new entrants include cable television, satellite (DTH/Direct-to-home) and on-line television providers. In terms of network convergence,

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voice/data networks are available nation-wide, triple play networks (voice/data/video) and broadband services have been developing in the large cities. Moreover, 40% of the countrys broadcasting facilities have been digitalized. The digitization covers up to 40% of countrys technical facilities. The local broadcasting industry plans to reach full digitalization by the year 2010. This emerging market is highly competitive with the strong presence of third-country competitors from Japan, EU, and other Asian countries like China, South Korea, etc. Market growth in 2007 is estimated to reach approximately 28% and is expected to reach 30% in the next 2-3 years. Market size in 2007 is estimated to be valued at US$200 million. Vietnam has developed and maintained a large national transmission network including parallel digital KuBand and C-Band satellite carriages and hundreds of relay stations in order to ensure 90% of coverage of the Vietnamese territory.

Computer Hardware and Software Services Sales in Vietnams ICT industry have been dominated by hardware, which has accounted for approximately 80 percent of total IT spending during the past five years. This focus on hardware reflects, in large part, the widespread piracy of software and lack of effective protection of intellectual property in Vietnam. In 2006, the total value of Vietnams ICT industry (exclusive of consumer electronics and telecommunications sectors) was $1.74 billion, an increase of 22.1% compared to that of 2005. The software and services subsectors growth rate was 32%, higher than the hardware subsector, due mostly to the development of digital content and software outsourcing. In the software and service subsectors in Vietnam, ICT training turnover was $15 million and digital content subsector was $65 million. In 2006, Vietnams hardware imports totaled $1.412 billion (13.9% increased over 2005) and exports reached $1.233 billion (18.3% increased than that of 2005). Vietnams computer software imports increased from $18 million in 2005 to $30 million in 2006. The U.S. export of computer hardware products to Vietnam was ranked 6th in the list of top exporters to Vietnam in 2006 with the value of $41 million. In short, huge market demand from Vietnams telecommunications and broadcasting industries (as well as from other subsectors) in the coming years presents great potential for U.S. exports. Market Entry and Distribution Channels The majority of the imported ICT equipment is sold directly to local telecom service providers or their subsidiaries or to broadcasters. Local distributors must have an import license for telecom equipment or should have an existing relationship with licensed trading companies. Channel education has played a large role in expanding the abilities of these distributors to seek new customers and provide application specific solutions. Foreign principles will need to allocate a sufficient budget to handle the training of distributors. As some of the ICT equipment is new to the market, preparation and training are essential. Professional business-to-business and consumer selling organizations are new to Vietnam, thus periodic supervision and training are important ingredients for success. Selection of the right local partner is essential to maximize business development opportunities. As the high tech industry continues to develop in Vietnam, prices will continue to go down, investment capital will increase and the business environment will become more competitive. By entering the market via the road of equitization/privatization, foreign telcos will best approach this emerging market in a step-by-step fashion.

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However, problems do exist for the industry as it manages growth. Serious problems in network connectivity between the dominant player and the new entrants, while the non-stop price competition campaigns push out profitability timeframes. Competition The anticipated reduction in import costs due to the appreciation of the Vietnamese Dong against the U.S. dollar is expected to stimulate more demand for imported, durable, high-quality products American-made telecommunications and broadcastings. Local consumers are becoming more and more familiar with American telecommunications and broadcastings, particularly with increasing accessibility of product information on the Internet. The reputation for quality of US made products, combined with increased access to information, should further increase the attractiveness of American-made items and give U.S. firms a competitive edge. Barriers to Entry Inadequate intellectual property rights protection causes serious challenges for legitimate exporters to Vietnam. At present, although its piracy rate has been coming down, Vietnam is still among the top-20 countries breaking the IPR protection. According to Business Software Association (BSA)s Piracy Study Report conducted in May 2007, Vietnams software infringement rates in 2004, 2005, and 2006 were 92%, 90%, and 88% respectively. Clones from China have made their way into the local market. Government enforcement of newly passed IPR laws remains woefully insufficient, though the GVN is focused on improving its track record, especially in regards to enforcement. Best Prospects American companies will find tremendous opportunities in almost every sub-sector, from equipment for telecom infrastructure to value-added services to computer hardware products. Many American ICT giants have marketing operations in Vietnam such as Microsoft, Oracle, Intel, Dell, HP, Cisco Systems, to name a few. Software and services are also among best prospects for U.S. IT exporters, especially enterprise applications such as Customer Relationship Management (CRM) and Enterprise Resource Planning (ERP) as Vietnams new membership in the World Trade Organization (WTO) furthers its integration into the global economy. American ICT companies will also find growing opportunities for doing business in Vietnam, particularly in sectors associated with Internet development. Once Vietnam implements an anticipated e-transaction law, e-commerce and other value-added applications and services over the Internet will drive the demand for the equipment and services needed to develop and grow the Internet infrastructure and subscriptions. These applications and services are prioritized into major areas such as e-Government, e-commerce, e-training, and e-healthcare to ensure that the entire population will have ready access to community information and services such as fire and rescue, health emergency, public order, and natural disaster response. The ICT industry offers opportunities for training service providers as well. The Government has drawn up an ambitious plan for the domestic industry that aims at reaching annual sales of $3 billion by 2020. The plan consists of three major programs: the development of IT human resources; the development of a software export sector; and the development of a hardwaremanufacturing base. Currently, Vietnam does not have the capability to execute the Government's plan in any of these areas. In order to do so, significant investment in training and technology transfer must occur a need that could offer significant export opportunities for American ICT hardware and service suppliers. Vietnam will continue to import a significant number of PCs and peripherals. The primary customers for imported equipment are multi-national corporations, large state-owned-enterprises

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and the Government. The computer services market has evolved into a two-tier market, whereby foreign computer firms serve foreign businesses operating in Vietnam and local firms cater largely to Vietnamese clients. For the most part, foreign companies seeking computer services use foreign invested service providers, while Vietnamese companies rely on local computer retailers who offer a limited package of services. Key Suppliers Vietnams telecom and broadcasting sectors are toughly competitive with the strong presence of third-country competitors from EU, Japan, and other Asian countries like China and South Korea. Prospective Buyers American exporters will find tremendous opportunities in almost every sub-sector of the telecom/broadcasting industry. Below are the major buyers for broadcasting equipment and services: - VTV (Vietnam Television) - VoV (Voice of Vietnam) - VTC (Vietnam Multimedia and Communications Corp.) - 64 local provincial broadcasting stations (See http://www.vtv.org.vn/home/vtv/daidiaphuong.html), and other local cable TV, satellite, and on-line broadcasters. Below are the lists of the major buyers for telecom equipment and services: Fixed telephone service operators: - VNPT (Vietnam Posts and Telecommunications Group) - EVN Telecom (Electricity of Vietnams Telecommunications Company) - Viettel (Military Electronics Telecommunications Corporation) - SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation) - Hanoi Telecom (Hanoi Telecommunications Company) International telecommunications service operators: - VNPT (Vietnam Posts and Telecommunications Group) - EVN Telecom (Electricity of Vietnams Telecommunications Company) - Viettel (Military Electronics Telecommunications Corporation) Long distant and international telephone service based on IP protocol operators: - VNPT (Vietnam Posts and Telecommunications Group) - EVN Telecom (Electricity of Vietnams Telecommunications Company) - Viettel (Military Electronics Telecommunications Corporation) - SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation) - Hanoi Telecom (Hanoi Telecommunications Company) - Vietnam Maritime Communications and Electronics Company (Vishipel) Mobile communications service operators: - VNPT (Vietnam Posts and Telecommunications Group) - Viettel (Military Electronics Telecommunications Corporation) - SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation) - Hanoi Telecom (Hanoi Telecommunications Company) - EVN Telecom (Electricity of Vietnams Telecommunications Company) Internet services providers: - VNPT (Vietnam Posts and Telecommunications Group) - FPT (FPT Group) - Viettel (Military Electronics Telecommunications Corporation) - EVN Telecom (Electricity of Vietnams Telecommunications Company)

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- Hanoi Telecom (Hanoi Telecommunications Company) - SPT or Saigon Postel (Saigon Posts and Telecommunications Service Corporation) - OCI (One-Connection Internet Service Joint Stock Company) - Netnam (Netnam Company) Trade Events CommunicAsia 2008 (http://www.communicasia.com) The 19th International Information and Communications Technology Exhibition and Conference. This is the most prestigious event in the ICT industries in the Asia region, to be held from June 17-20, 2008, in Singapore. ITU Telecom Asia 2008 (http://www.itu.int/ASIA2008) ITU Telecom Asia 2008, the leading ICT Exhibition and Forum and major networking platform for players from across the Asia Pacific region, will take place from September 2-5, 2008, in Bangkok, Thailand. VietnamTelecomp 2008 (http://www.2456.com/vnc) The 12th International Exhibition in Vietnam on Telecommunications and Information Technology, to be held from November 26-29, 2008, in HCMC, Vietnam. Resources & Key Contacts Nguyen Dzung, Commercial Specialist U.S. Embassy Hanoi, Vietnam E-mail: nguyen.dzung@mail.doc.gov Vietnams Ministry of Information and Communications (MIC) http://www.mic.gov.vn Vietnams Ministry of Industry and Trade (MOIT) http://www.moit.gov.vn Ministry of Science and Technology (MOST) http://www.most.gov.vn Ministry of Planning and Investment (MPI) http://www.mpi.gov.vn Vietnam Internet Network Information Center (VNNIC) http://www.vnnic.net.vn For More Information The U.S. Embassy Commercial Service in Vietnam can be contacted via e-mail at: Nguyen.Dzung@mail.doc.gov; Phone: (84-4) 850-5000; Fax: (84-4) 831-4540 or visit our website: www.buyusa.gov/vietnam. The U.S. Commercial Service Your Global Business Partner With its network of offices across the United States and in more than 80 countries, the U.S. Commercial Service of the U.S. Department of Commerce utilizes its global presence and international marketing expertise to help U.S. companies sell their products and services worldwide. Locate a U.S. Commercial Service trade specialist in the U.S. nearest you by visiting http://www.export.gov/.

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Disclaimer: The information provided in this report is intended to be of assistance to U.S. exporters. While we make every effort to ensure its accuracy, neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Readers are advised to independently verify any information prior to reliance thereon. The information provided in this report does not constitute legal advice. International copyright, U.S. Department of Commerce, 2008. All rights reserved outside of the United States.

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