How Are IT Companies Overcoming the Crisis?

Sun Hong Lim, General Director / Samsung Electronics Russia

The word “crisis” has become a feature of our daily lives and the consequences of the economic downturn have been felt across the business world recently. For some the crisis spells the beginning of the end, while for others it represents the start of a new cycle of development. The IT industry as a whole felt the crisis hit in the second half of 2008. According to various estimates, the IT products and corporate services market segments have seen their sales figures reduced to 2005 levels. This happened mainly as a result of a cascading process of cut-backs in state-owned companies and business entities in which spending on long-term investments has been reduced due to the crisis, which then has had a knock on effect on IT equipment sales.

However, this unfortunate downturn in sales has not been observed in all IT spheres. For instance, the market for notebooks and netbooks is seeing steady growth. Today, netbooks already account for 14% of the notebook segment. New hotels have been opening across Russia and the television equipment segment for hotels has grown by 10-12% in 2009 compared with 2008.

In the first half of this year, the computer monitors segment has seen sales decrease almost two-fold in monetary terms compared with the first half of 2008. But Samsung has been able to maintain its good sales figures for its own monitors and even managed to achieve historic sales results, increasing its market share to over 38% in monetary terms.

Prior to 2008, the Russian market for laser printers grew by 25-30% each year. During the first half of 2009, sales for this segment of the market fell by more than 50% compared with the first half of 2008. However, despite the harsh market conditions, Samsung managed to increase its own sales.

IT companies have had to take steps to optimize their businesses and to stabilize their positions in the market. The companies that already had anti-crisis plans in place are coping with this task much more successfully than those who did not.

Since the beginning of the crisis, the rules of a game have been changed. Companies that are prepared to offer customers an entire range of required equipment (including maintenance and services) have come out on top. Here, IT industry leaders providing the customer with a full range of services related to the supply of equipment, its installation and servicing, have been able to reap the rewards. Herein, lies one of the main advantages of Samsung, as the company can build integrated solutions for its own equipment. For instance, having its own warehouse and logistics center, assuming all risks at Customs, complete transition to operations in Russian rubles, its own manufacturing base in the Kaluga region and strong investment in R&D are all advantages.

At the end of the first quarter of 2009, the market clearly experienced an improvement in “spirit and mood” within the corporate segment. During the second quarter, public tenders and competitions for the supply of IT products were conducted and competitive applications from large commercial structures began to be received. This revival of the IT business is primarily connected with the appearance of clear investment programs in state-owned and large-scale commercial structures, as well as encouraging signs of economic stabilization. As a consequence, it is now possible with cautious confidence to talk about the beginning of stabilization within the IT business.