2. EITO members and sponsors EITO members EITO sponsors

3. EITO 2004 Presented by Bruno Lamborghini Chairman of EITO

4. EITO 2004 Out of the tunnel! Strengthening signs of growth in the worldwide ICT market, however, recovery is still too slow and uncertain in many European countries

5. Main drivers reinforcing growth in 2004-2005  Broadband diffusion, both wired and wireless  Integrated networks for E-business and E-government  Increased digital convergence in consumer markets  New digital content and services

6. ICT as main driver for productivity gains in the US, but not yet in most European countries Correlation coefficient = 0.66; T-statistic = 3.03 Source: OECD, ICT and economic growth, 2003 Pick-up in MFP growth and increase in ICT investment

7. How to take full benefit from ICT investment OECD analysis certifies Europe‘s need to:  Remove unfavourable market conditions and  Promote „related factors“ such as  Education and training for high quality skills  Reorganisation of labour market and public administration  Effective competitive environment  E-business diffusion among SMEs

8. Europe must not lose momentum at the beginning of a new ICT development cycle  Potential to become a prosperous knowledge society of 500 million people  Should not miss new ICT cycle driven by North America and East Asia  EU enlargement brings new expectations and challenges, both for new and old member states

9. Relaunching Lisbon  Achievements, but also delays regarding the target set in Lisbon for 2010  Need to relaunch the Lisbon programme through:  Focusing more on targets/parameters and defining implementation processes  Monitoring and benchmarking progress  Defining and verifying accountability

10. Enhanced policy actions should be focused on  Human resources as main strategic asset  Main infrastructures: Broadband and DTV  Main professional applications: E-business, Ecosystems and E-government  Main consumer applications: digital content and services

11. Western European ICT market growth 1995-2005, in % Source: EITO in cooperation with IDC Market value 2004: 611 billion Euro

12. Western European ICT market growth by segment 2003-2005, in % Source: EITO in cooperation with IDCMarket value 2004: 611 billion Euro

13. Western European IT market growth by country 2004-2005, in % Market value 2004: 294 billion Euro Source: EITO in cooperation with IDC

14. Western European telecom market growth by country 2004-2005, in % Market value 2004: 317 billion Euro Source: EITO in cooperation with IDC

15. EU enlargement* – IT and TLC markets in 2003 * Excludes Cyprus and Malta Source: EITO in cooperation with IDC Country IT spending in € million IT/GDP in % CAGR 2005/2003 in % TLC spending in € million TLC/GDP in % CAGR 2005/2003 in % Czech Republic 2,6203.38.73,9305.02.8 Estonia2163.16.55247.56.5 Hungary1,9563.510.04,0017.24.2 Latvia2202.59.46707.65.6 Lithuania2571.712.57875.07.8 Poland3,9922.012.010,8165.47.7 Slovakia7572.49.21,2554.02.1 Slovenia5072.18.89784.02.0 Total10,5253.011.022,9615.86.5

16. Web users and web buyers by country, 2003-2007 Web users by country in millionWeb users as % of population Source: EITO in cooperation with IDC

17. Mobile subscriptions by country in thousands, 2002-2006 Source: EITO Task Force 1 Includes also Turkey 2 Geographical demarcation

18. Mobile workers Source: EITO in cooperation with IDC

19. Mobile applications, being available anywhere and anytime  Mobile E-mail  Mobile sales force automation  Mobile supply chain automation  Mobile directories  Mobile cooperative  Mobile customer support  Mobile payment and M-commerce

20. ADSL lines by country in thousands, 2002-2006 Source: EITO Task Force 1 Includes also Turkey 2 Geographical demarcation

21. Consumer Electronics (CE) market in Western Europe in million units, 2003-2004 Product200320042004/03 in % Cathode ray tube TV (CRT TV)24.423.6-3.0 Advanced TV (flat screen)1.43.0112.8 Digital video discs (DVD)24.126.38.8 Video cassette recorders (VCR)8.46.3-25.3 Camcorders (CCR)3.53.60,1 Digital still camera (DSC)15.521.740.1 Set-top boxes and kits5.86.03.8 Digital personal audio13.816.116.2 MP3-format-based digital personal audio sets1.12.3111.1 Home cinema systems3.54.835.4 Audio home systems and separate Hifi elements15.514.5-6.4 Game consoles12.713.13.9 Total value in € billion44.546.34.2 Of which: Digital products52%58%17% Source: EITO 2004 special study

22. E-business as key area for European enterprises  Continuous web-enablement of enterprise applications  Implementation and integration of process-oriented applications (SCM, PLM)  Adoption of technologies based on Internet protocol  Demand for business intelligence tools/solutions  Adoption of Web services standards for connectivity Challenges:  Budget-related constraints  Focus on ROI and cost saving  Search for real value leveraging on existing investment  Pragmatic step-by-step implementation

23. Limited IT services growth due to:  Demand for cost control  Focus on core competences  Outsourcing operations (shift to offshore services)  System integration focused on solid ROI and tangible business value

24. Opportunities and challenges for European SMEs IT spending by company size in 2003:  1-99 employees28%  100-499 employees26%  500 employees and more46% SMEs approach to ICT (20-499 employees):  Laggards36%  Wait and see29%  Fast followers17%  IT-oriented18% Source: EITO in cooperation with IDC

25. EITO 2004 special study: Convergence and the digital world  Current and future technological convergence accelerates the adoption of new applications, devices and infrastructures.  Convergence drives the realisation of a digital world and challenges present and new business players.  New digital value chains are changing traditional business models and processes.  Most effective convergence relates to digital content, services and business processes, mostly aimed at the end user. Source: EITO 2004 special study

26. Convergence and the digital world - definition  The phenomenon by which the evolution and/or the integration of technologies with different origins allows infrastructure, delivery devices and applications to provide existing or new functionality.  Convergence enables providers to satisfy existing demands more efficiently or conveniently or supply entirely new products and services. Source: EITO 2004 special study

27. The digital world value chain Source: EITO 2004 special study

28. Three convergence scenarios Source: EITO 2004 special study

29. Drivers and inhibitors of convergence Source: EITO 2004 special study

30. Convergence in infrastructure  Limited convergence due to different standards and networks  Convergence around seamless digital networks (Internet protocol) with implications for standards definitions and cross-network communication  New investment driven by VoIP and mobile Internet applications Source: EITO 2004 special study

31. Convergence in delivery devices  Limited convergence due to depressed market places and constraints for components (battery life, unit size and cost of new chipsets)  End-user reluctance to accept converged devices  Limited common functionalities  Failure of some products Source: EITO 2004 special study

32. Convergence in communications  Convergence takes place in communications applications, which were historically separated, and will accelerate as soon as IP becomes a dominant network carrier  Present converging killer applications: SMS/MMS and Email Source: EITO 2004 special study

33. Convergence in information and entertainment  High degree of convergence due to  ability to use digital distribution  availability of fast infrastructure connected to an increasing number of delivery devices  Highly successful second generation online music delivery (which will be followed by online video delivery)  Other successful areas: news, Internet browsing and online gaming  Main obstacles: content piracy (music) and end- user reluctance to pay for virtual entertainment Source: EITO 2004 special study

34. Convergence in transactions  Strong area of potential convergence, driven mainly by the business sector while consumers will follow  Few integration constraints and open standards  Benefits  Reduced costs  Improved services  Efficiency  Corporate responsiveness Source: EITO 2004 special study

35. Conclusions  New communication technologies, media and devices as well as the Internet are meeting latent consumer and business needs for seamless, simple and useful digital tools.  An increased number of interested commercial parties, combined with cultural, economic and social changes, will drive the emergence of a true digital world over the next five years.  Plenty of opportunities for digital content and services providers and for digital network operators in Europe.  Need to clarify intellectual property rights‘ rules favouring market development.  Need to promote investment and entrepreneurship exploiting the digital world value chain and opening new market opportunities. Source: EITO 2004 special study