Baltic enterprise server market thrives on EU IT development support

The enterprise server market in the Baltic States is expanding rapidly, fuelled by foreign direct investment, the inflow of EU structural funds, massive investments in IT infrastructure by the government and SMEs, as well as by a favourable exchange rate to the U.S. dollar.

According to a recent study by IDC, enterprise server shipments in Estonia, Latvia, and Lithuania are expected to accelerate to almost 18% YoY growth in 2007. In 2006, server shipments expanded 16.3% YoY to nearly 9,600 units valued at $46 M. The expansion was marked by heightened demand for midrange and high-end servers, both categories of which rebounded after a two-year slowdown. In 2006, 7 high-end servers were sold in the region, comprising 8.7% revenue share, up from just 2.8% the year before. Compared to the previous year, shipments of midrange servers rose 11.7% in 2006 to constitute 1.2% unit share (33.1% value share). Shipments of volume servers grew by 16.3% YoY in 2006 and accounted for almost 99% of total server shipments in the Baltic States. The top 3 vendors on the Baltic enterprise server market in 2006 were HP, IBM, and Dell. Their products accounted for almost 70% of total shipments.

On the demand side, large and very large enterprises in the telecommunications, finance, and utilities verticals were the biggest spenders on midrange and high-end servers in the Baltic States in 2006. In Latvia and Lithuania in particular, server sales were fueled by public institutions that utilized EU funds for IT development. This trend should continue over the next few years, as all three Baltic States have plans to launch e-government initiatives and improve their IT infrastructure.

For the period 2007-2011, IDC projects that the Baltic enterprise servers market will remain on a path of healthy growth, rising by 11.3% annually on average.