Computer Software and Services Data Table ($ millions)

2006 (base year) exchange rate: $1 = EUR 0.796

Note: The above statistics are unofficial estimates

Source: IDC Austria

In 2005, the total packaged software sales reached approximately $1,432.8 billion (EUR 1,141.1 billion) of which application software represented $639.1 million (EUR 509.0 million).

System infrastructure software represented  $431.5 million (EUR 343.3 million).  Application development and deployment software accounted for $362.5 million (EUR 286.7 million).

In 2005, the value of IT Services totaled $3,511.0 billion (EUR 2,796.3 billion).  Of this total, system integration accounted for $1,257.5 billion (EUR 1,001.5), outsourcing $1,285.7 billion (EUR 1,024.0 billion), support and deployment $823.2 million (EUR 655.6 million), and training $119.1 million (EUR 115.2 million).

The expected annual growth rate is 6.1 percent for software products and 7.3 percent for services. 

In 2005 the top four vertical markets (combined finance, combined manufacturing, combined government, and telecommunications) accounted for 66.4 percent of IT services expenditure in Austria. The combined finance sector was the biggest spender on IT services with a share of 22.7 percent in 2005. This sector, including banks, insurance companies and other financial institutions, increased its expenditure by 6.0 percent year-on-year. IT spending in the financial sector continued to be spread among a large spectrum of services and solutions, ranging from hardware and network infrastructure development to systems integration and outsourcing.

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. 

German software is rapidly becoming a determining factor in the development of the country’s 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.

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”.

IT spending is expected to increase in 2006. Leading drivers will include spending on security solutions, streaming media, digital identity services, and the wireless rollout.  Linux will experience a banner year, but web services will have less of an impact in the short term.  Windows XP will experience rapid growth but will not have the impact of previous Windows evolutions.  Overall, industry experts forecast that 2006 will be a better year for the industry than 2005 was.

Service providers will increasingly implement offshore services into their business models in order to be competitive.

IT services accounted for 45.8 percent of all IT spending in the country, and should remain the main force behind IT market growth in the coming years despite higher investment in packaged software applications.  The IT Services market in Austria expanded by 1.3 percent year-on-year in US dollar terms in 2005 and grew from $3.2 billion to $3.3 billion vis-à-vis 2004. It even declined when measured in Euros. The Austrian IT services market can be characterized as a very mature market with no clear drivers in sight.

Saturated and intensifying competition characterized the Austrian IT services market in 2005. The number of new large-scale projects plummeted compared to the previous year, and thus every project was fought over with vendors lowering prices to capture the deal.

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.

Enterprise security remains a fundamental aspect of a company’s IT infrastructure, and is reflected in spending on IT services around security.  Nevertheless, it is difficult to determine exact security budgets, as expenditure is spread across many departments within a company.  Themes such as physical security, information and transaction security and business continuity are being taken seriously, which creates a market for contingency planning, needs assessment, risk assessment, and management services.

The year 2005 saw 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 10.5 percent from 2004 to 2005, reaching $65 million. The market is expected to achieve $122 million in revenues by 2010, representing a compound annual growth rate (CAGR) of 13.4 percent.

Best Products/Services

Demand for multifunctional security solutions and security software is rising significantly. 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.

Opportunities

The best opportunities for sales of U.S. software in Austria appear to be in the Internet systems engineering and applications consultancy, data bank and communications software/office automation, education, CASE, CIM and quality control. The primary end-users are industry, financial services, public administration, trade, health, energy, production, distribution, and electronic banking.

1952 T'bird alumnus Fred Koppl in Koppl, Austria @ Thunderbird European Reunion @ Bad Ischl