Sunday, January 24, 2010

A software perspective

At the beginning of the new year, as in the last few weeks of last year, IT-community, Russia and the CIS countries are actively discussing the short and medium term regional markets. However, most not so much of the software market as the entire software industry in the FSU. Interestingly, the various participants in the debate sometimes come to opposite conclusions.

In 2007, Russia's retail software market grew by 35%. According to experts, the turnover of Russia's software distribution software market in 2007 - m amounted to $ 3.7 billion, the turnover of Russian companies in the world - $ 1.7 billion in 2008 Russia's software market has grown to five billion dollars. To obtain similar figures for the CIS as a whole, is enough to increase Russia's performance in half. The structure of the net sales of packaged software in 2008, according to a study association of independent software developers ISDEF, is as follows: 65% of software sales account for corporate customers, 20% - on the public sector, and only 15% of software products acquired private users. And the progress - a few years ago, private (home) users provide less than 5% of the market - piracy is the norm, though gradually yielding its positions. However, all these figures from experts attitude is ambiguous. So, for example, Famatech CEO Dmitry Kurashev believes that "objectively estimating the actual size of the software market is not easy: the financial information of most IT-companies were not disclosed.

However, the concern of market participants something else. In the very structure of the software market, as well as the reasons for its rapid growth in the past few years laid, as experts say, "mine, ready to detonate at any moment." The fact that the mechanism by which grew sales of software was completely identical to the mechanism of growth of the commodity component of Russia's economy. Head of Sales Department of the company Softline explains these mechanisms as follows: "Growth in sales of licensed software depends on many factors. Of course, one of the key factors are income redistribution from the primary market, ie companies, earning more willing to spend more, including the purchase of licensed software. Now, in times of crisis (and the fall in oil prices), deprived of crazy oil money, private, corporate customers can sharply curtail purchases. And that 65% of the market. It is about 70% of Russian enterprises have taken anti-crisis measures, and many of them, including saving and upgrading the existing IT-infrastructure. Of course, representatives of the software market believe that just to save on software certainly can not. So, CEO of Alawar Entertainment Lyskovsky Alexander (he is chairman of the association ISDEF) said, that "to reduce costs by eliminating the proprietary software - all the same, that is not to save." Well, as CEO of Internet supermarkets Softkey Felix Muchnik sure, "Reducing the cost of IT in the firm - is the same, that the dismissal of a cook in a restaurant. "But not only corporate clients reduce the cost of software - from the private users are not left behind. This indirectly contributes to the fact that in 2008, according to experts, some moved the process of Russia joining the WTO. And with this decreased and the activity of law enforcement in protecting intellectual property, including the fight against piracy. Private users feel more secure that there is a negative impact on sales of software for home PCs. Another trend is even more interesting: as noticed by the experts, private consumers started, where possible, use free software, replacing the expensive commercial programs for-profit counterparts, have a smaller but sufficient functionality. That is to say that the level of technical literacy of the average user is increasing along with its legal awareness.

Summarize all the above. 2008 financial plan was the most successful for software companies in Russia and CIS countries in the history of this market. But by the end of the year the situation was very serious, close to critical. And now companies are seriously thinking about how they survive at all in 2009. About how to implement a huge growth potential of the software market, participants in this market have to think about later. However, the most farsighted begin to act now. Russia Softline company has launched a venture fund volume of $ 20 million fund will invest in small companies engaged in software development. In Softline believe this area is very promising, noting at the same time that the financial crisis is difficult to look for new projects.

For information: company Softline operates in the market since 1993. The main sphere of activity - sales of software. Also Sofline engaged in IT consulting and training. The company's turnover in 2007 amounted to $ 292 million, exceeding three times compared to 2006.

Subsidiary Venture Fund Softline Venture Partners (SVP) is planning to invest in software developers in Russia and CIS. This unit told the head of corporate finance Softline Igor Chekunov. Initially planned to use their own funds, and a total fund intends to invest in start-up to $ 20 million Igor Chekunov said: "The company is considering investing in startups in software development, which have interesting developments in various fields of IT market. We would wanted to make first investment in the first half of 2009. " Softline is now considering the possibility to attract funds from the fund "Russia Venture Company and other investors. The investment in one project is planned at an average of $ 500 thousand - $ 1 million return of the Fund will be at least 35%. However, other market participants are not confident in the success of Softline Venture Partners. Top-manager of one of the largest Russian venture funds, said: "IT start-ups found in the current difficult conditions - is now almost no new projects being created. On the other hand, existing startups poumenshilis appetites - they are ready to negotiate with venture investors for a much more favorable Funds for the conditions. According to the director of venture financing investment company Troika Dialog, Artem YUKHIN, upon availability of funds to invest in IT - one of the best ways to invest money. In turn, investment director of venture fund ABRT Nicholas Mityushin sure that the project venture fund Softline can be successful, as the company invests its own money into the project. Mityushin said: "Investing in good software companies so that they are almost immediately profitable and saves money. Example - a company engaged in virtualization".

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