Moscow, April 3, 2006 – The Russian IT market experienced another exceptional year of growth in 2005, expanding 25.4% to reach more than $12 billion in user spending. According to IDC, though growth will slow in 2006 and 2007, it will hover around 19% annually for the next five years and total spending will more than double by 2009.

"The boom in consumer IT spending and telecommunications spending that we saw in Moscow and St. Petersburg in the first three years of the decade is spreading to the rest of the country," says Robert Farish, Vice President & Regional Managing Director, IDC Russia. "Nevertheless, the market as a whole is still underdeveloped and the opportunities are not as obvious as one might think. For instance, while vertical sectors like telecommunications, government, banking and process manufacturing are already making major IT investments, we are still waiting for the imminent boom in sectors like healthcare, education, and utilities."

The combined hardware market is the largest segment of the Russian IT market and accounted for nearly 70% of spending after growing nearly 30% last year. According to IDC, PCs continued to dominate the hardware market and notebooks are expected to drive revenue growth as desktop prices continue to plummet. Disk storage was and will remain the fastest growing sub-segment, as rapid implementations have resulted in a massive influx of data and memory-hungry implementations. PCs are still the major driver of the market and will remain so in the foreseeable future, with home and government users dominating purchases and sales growth. "The level of spending on hardware is emblematic of the market's relative youth," says Yury Goldaev, Research Analyst, Systems, IDC Russia. "Still, hardware systems are being established and this is laying the foundation for services and software adoption as well as creating many opportunities for those who know where to look."

Accounting for just under one-fifth of IT spending in 2005, IT services will be the fastest growing IT area in Russia in 2006 and for the foreseeable future. Although implementation services dominated the segment, spending on operations management will jump more than six fold over the next five years. "Rapid growth doesn't mean it will be smooth sailing," says Elena Semenovskaya, Program Manager, Software Research, IDC Russia. "Vendors still face the formidable hurdle that many Russia companies, especially SMBs, are reluctant to use external providers because of security concerns."

Packaged software was the smallest IT area in Russia. The segment expanded an impressive 19.6% in 2005 and accounted for 10.6% of spending. According to IDC, growth will be around 20% annually through 2009, with most new business for packaged software coming from small and medium-sized organizations. "Implementation quality and customer interests are becoming crucial to tapping unmet demand," says Semenovskaya. "The demonstration of strict and timely implementation schedules and overall product effectiveness through channel and client education will greatly assist vendors in generating new business."

IDC issues a variety of IT studies and trackers covering the Russian market. Annual studies include in-depth analysis of the markets for IT services, business services and infrastructure management, outsourcing, PCs, enterprise servers, disk storage, imaging and hardcopy peripherals, EAS, IT security, IT storage software, vertical markets, telecommunications, mobile services, and IP services.