Boston, MA -- (SBWIRE) -- 09/24/2013 -- BMI View: The economic environment continues to present significant challenges for vendors in 2013, although we expect growth to remain in positive territory due to momentum within the IT market. The IT market has been hit by contractions in real GDP and private final consumption in 2012 and 2013 as households and enterprises delay spending. Despite these challenges, the dispersal of EU funds, modernisation by Hungarian enterprises and demand for tablets and notebooks has helped keep growth in positive territory. Looking ahead, we expect a boost in growth to occur due to deferred investments during recent economic difficulties. Further, household spending on hardware has potential over the medium term, with PC penetration relatively low in Hungary - particularly for mobile PC devices such as notebooks and tablets.

Headline Expenditure Projections

Computer Hardware Sales: HUF258.6bn in 2012 to HUF266.1bn in 2013, an increase of 2.9% in local currency terms. In 2013 sales are limited by weak consumer sentiment; however, the market has mediumterm growth potential due to Hungary's relatively low PC penetration.

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Software Sales: HUF157.7bn in 2012 to HUF166.9bn in 2013, an increase of 5.8% in local currency terms. Upgrades to Windows 8 and enterprise software investments are supportive of spending but business confidence is vulnerable to further economic weakness.

IT Services Sales: HUF214.4bn in 2012 to HUF230.6bn in 2013, an increase of 7.9% in local currency terms. Cloud computing services uptake by enterprises and the public sector will be the key growth driver, while uptake of outsourcing services will also provide growth.

Key Trends And Developments

Shipments of notebooks and desktops declined across Central and Eastern Europe in late 2012 and early 2013, and Hungary was no exception. The economic environment and high PC penetration have both contributed to declining sales volumes; however, the greater effect has been from the rapid shift in consumption to tablets. In Hungary we believe the wider availability of low cost tablets running Google's Android OS is resulting in rapid increases in penetration as consumers turn away from notebooks.

Previously the price of tablets limited sales to mass market Hungarian consumers, but with increased competition the Hungarian tablet market has deepened considerably. However, there is evidence arising from other markets that ultra-thin notebooks and hybrids/convertibles are gaining traction with consumers, which could undermine the growth momentum of tablets.

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