Computer Boom in Ukraine
Quasar Micro analysts summed up this year, focusing on the information technologies market situation and trend. Their major finding is that the present GDP and overall economic growth in Ukraine have created favorable conditions for their market.
Strategically, this year saw practically all Ukrainian computer companies thoroughly revise their business models. The top managers were prompted to do so by the unprecedented price drop on the computer components market (after all, Ukraine is part of the world process). It happened contrary to most of last year’s forecasts. As computers became cheaper the whole business’s profitability plummeted, leaving many with the dilemma of staying in the computer production market, dwindling profits notwithstanding, or giving other lines of business a try. For the first time they felt what real competition on the computer market was all about and had to act accordingly, says Quasar Micro Vice President Maksym Aheyev. Inexorably dropping computer prices did not scare away new market operators; a great many small-time assembly companies appeared in 2001 (as a rule, each has 3-5 persons on payroll, daily putting together 10 to 100 PCs). Mr. Aheyev believes this a positive factor and a direct consequence of national economic growth. Some 85% of all computers sold in Ukraine are domestically assembled. Quasar Micro experts expect 400,000 PCs to be sold this year. 22-25% annual increment on the PC market is especially impressive compared to production declines in the United States and Western Europe, and there are no signs of slackening in Ukraine.
The notebook market proved especially thriving, albeit still insignificant in terms of absolute measurement. For the first time the amount of such computers sold has exceeded 10,000 and the most cautious estimates point to a 60% increment during the year. The number of notebook vendors has increased five times. The servers market has registered commendable growth (35-40%) for the second year in a row, with current supply in the neighborhood of eight to nine thousand. Until recently it was believed that the enterprise resource planning (ERP) system showed a real boom in 2000. “We can see now that it was just a warm-up, because most Ukrainian enterprises became interested in automating their business process this year: it’s beyond imagining,” says Mr. Aheyev. He considers that Ukraine’s traditional lagging behind Russia in terms of ERP will no longer be the case in the a year and a half to two years.
Western brands are becoming active in Ukraine this year as never previously, as evidenced by marketing, aggressive price-setting, contracts made, and the number of top managers visiting Ukraine. Western companies are attracted by the growing market and moneymaking opportunities. Experts, however, point also to the unprecedented activity of the public sector on the information technologies market.
Simultaneously, Ukraine badly needs applied high school software, which is too bad now that the entire domestic software industry is forced to go to the mat or work for the West. There is an idea of a computer alliance. This is becoming increasingly popular and Mr. Aheyev says, “We are working on this project in collaboration with several computer companies.” This alliance is aimed primarily at lobbying for Ukrainian programmers; the state must finally pay attention to them and order applied high school software, stresses Quasar Micro President Yevhen Utkin, adding that participation in the computerization of the educational system is one of Quasar Micro’s strategic projects for next year.
The experts are seriously concerned about the idea of mass purchases of second-hand educational hardware in the West. This idea is supported by many, but, apart from the questionable technical aspect, buying used computers elsewhere will deal an excruciating blow to the domestic computer industry. Last but not least, Mr. Aheyev insists, using obsolete hardware in school is prohibited by law.
Another remaining problem this year is the nationwide usage of pirated software (some estimates point to 90%). Regrettably, law enforcement authorities have tried to take the problem in stride, closing down computer clubs en masse. Mr. Utkin says NSDC Yevhen Marchuk had to step in to ease the tension in the complex situation that developed. Under the circumstances, Microsoft turned out unprepared to make timely and sufficient deliveries of licensed products to Ukraine. As a veteran exponent of licensed software, Quasar Micro suggested to Microsoft that it issue temporary licenses. They agreed, and Quasar is ready to supply such licenses to Ukrainian users having problems legalizing their software.
The business picture of the year drawing to a close would be incomplete without mentioning the Internet development rate. Mr. Utkin says the worldwide web’s external channel capacities have increased approximately twofold in 2001. Last year about two million Ukrainians have visited its sites at least once. There are 260 providers and the Ukrainian Internet capacity is approaching $50 million.
