Turkey Information Technology Report Q3 2014
Headline Expenditure Projections
Computer Hardware: TRY11.23bn in 2013 to TRY12.02bn in 2014,+7% in local currency terms. The depreciation of the lira is a drag on sales but we expect growth to continue, with consumer purchases and government investment in IT for education being key factors.
Software: TRY1.93bn in 2013 to TRY2.16bn in 2014, +11.9% in local currency terms. Consumer software spending will remain flat in 2014, but we expect ERP spending will grow, particularly among SMEs. Services And Cloud Computing: TRY2.70bn in 2013 to TRY3.01bn in 2014, +11.5% in local currency terms. The outlook is bright across IT services but we highlight increased adoption of cloud computing services as the area with the brightest prospects.
Key Trends And Developments
- Turkey continues to emerge as a regional centre for IT firms - as well as those looking to tap the domestic consumer market. For instance, in April 2014 the first official Apple store opened in Turkey, located in Istanbul at the Zorlu Centre, and is the 424th Apple retail store globally. Meanwhile, Turkey is also developing as a production centre, with reports in April 2014 that HP was considering setting up a printer and cartridge manufacturing plant in Turkey. It already produces 80% of desktops for Eastern Europe, the Middle East and North Africa from Foxconn's factory in Corlu, Tekirdag in north-western Turkey. BMI expects inward investment from firms looking to exploit the Turkish and regional markets will continue to grow in the short-to-medium term.
- The provision of tablets under the FATIH project, the classroom computerisation initiative undertaken by the Turkish government, will boost hardware sales in 2014. In November 2013 the tender for the FATIH project was completed, with the contract awarded to Turkish company Tepla, beating bids from established international vendors such as Samsung and Hewlett Packard, submitting the lowest bid of TRY409mn for 675,000 tablets, 550,000 covers and 125,000 keyboards. Tepla supplied the first batch of 50,000 General Mobile tablets in December 2013, with further deliveries set to take place through 2014. BMI considers the project positive for the modernisation of education in Turkey, and will also boost the hardware market, compensating for declining retail demand due to a weaker lira.
Our core scenario is positive over the medium term, based on a solid foundation of economic growth and modernisation. The inherent demographic profile advantage, coupled with sustained growth and consistent government push towards reforms, lends a bullish, long-term future for the IT sector in the country. Continued investments by multinational sector players, such as Apple, testifies Turkey's IT market is expected to be a regional outperformer over our five-year forecast period to 2018. However, there exists significant downside to this view, from both the vulnerability of the economy to external shocks and the increasing concerns about the domestic political situation.
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