Information Technology Landscape in

ESTONIA

                              Hardware Manufacturing

Estonia's hardware industry started in a situation, where every ministry had its own Computer Centre developing the information infrastructure of the branch. The first private companies started as soon as it was permitted - at late 80's. At the beginning there were mostly small co-operatives. Most of the information processing projects used Soviet-made IBM 360/370 compatible computers and the corresponding software. Then, at the beginning of Estonian independence (in 1991-1993) a lot of large IT projects in public administration sector were started and a number of private hardware companies were established.

Today's Hardware Market.

The Estonian computer hardware market is small but very dynamic and open. The average annual growth of the total market hovers around 13% and there are no signs of saturation yet. The government encourages ICT development and supports both public and private sector efforts in creating a well functioning information society.

Over 250 computer firms were started in the very beginning of private sector activity, By now, numerous mergers and acquisitions have reduced that number to between 50 and 100, and companies are becoming more specialized. About half of these companies produce new software for export and local use, while the rest manufacture computer hardware or distribute computer systems made by foreign companies. Assembly of computers and office equipment makes up 12 percent of the total output of Estonian electronics industry. (Market Access and Compliance US Chamber of Commerce)

The majority of Estonian hardware makers began by reselling imported computers or assembling computers using imported parts, but they later they acquired OEM (Original Equipment Manufacturer) licenses to be able to manufacture their own competitive and legal hardware. With their local knowledge and skilled workforce, Estonian manufacturers have been able to capture 80% of the local market for computers. Local production dominates the personal computer market, leaving only 20% for foreign competitors. The U.S. has a 12% of the market, mainly by supplying multi-processor servers, web hardware and components. Local computer assemblers attract customers with low prices, good quality and well-functioning service. As a consequence, local assembly of computers exceeded 30,000 units in 1999. The largest computer companies are:

 Together they control about 70% of the domestic market. Competition has helped keep prices for computers fairly low. (Market Access and Compliance US Chamber of Commerce)

Statistics (from Statistical Office of Estonia)

Import of computers and computer supplies amounted to USD 62 million in 1998. Computers were mainly imported from Finland, Japan, Netherlands and the US. The export value from the US amounted to approximately USD 7 million, which increased by 30 percent from 1997.

Estonia exported computers and computer supplies mainly to Latvia, Lithuania, Ukraine and Finland worth USD 15.6 million in 1998, i.e. 45 percent increase over 1997.

ICT Market

Estonian ICT market is one of the smallest ones in Central and Eastern Europe but nevertheless comparable with other European countries in terms of rapid growth, dynamically improving quality and constantly broadening prospects. In 1999, the total spending on hardware, software, services and telecommunications reached USD 415 million.

With one of the highest fixed-line and mobile telephony penetration rates in the region, the largest share of ICT revenue in 1999 came from telecommunications equipment and carrier services, while the most specific demand was for personal computers and related technologies