Overview
IT usage in Latvia is increasing on a daily basis but lags behind Estonia. The use of computers in Estonia for example has been described as being "probably one of the most significant revolutions in Estonia in the first half of the 1990's." (28) The number of internet users in Estonia is is reported as having increased more than tenfold in just four years with the major breakthrough occurring in 1994 - 1995. By 1998, 36% of computer users (116,000) had used the Internet and Estonia is noted as one of the most extensively "interneted" countries in Eastern Europe. According to industry experts, Estonia has more websites per capita than any country in Eastern Europe with the exception of Slovenia. Estonia also leads a number of European Union countiries. (29)
Over 1/3 (37% by 1997) of the population in Estonia (ages of 15 to 74) had used a personal computer sometime in their lives. Students are the largest group of users. Specialists and the self employed are considered heavy computer users. Men predominate the use of computers, but the number of women users is increasing. As you will find in the following IT Usage report, Latvia is still developing its infrastructure and economy to bolster IT usage among its people and statistics on usage among the people was scarce.
Driving Force
The government has been and continues to be the driving force behind IT development in Latvia through educational opportunities and the facilitation of networking and partnering opportunities for outside investors and technology businesses. A national program of “Informatics” is one of the programs initiated by the government to increase IT educational opportunities, increased deployment of data networks and transmission, and the promotion of competition among data communication providers.
User Information
The computer market in Latvia is part of a growing IT market of $150 million in 1998 compared to $120-130 million in 1997. According to estimates, more than 45,000 PCs were purchased in Latvia in 1998. The hardware division represents approximately 55% of the market, whereas packaged software and services are 12% and 33% of the market respectively. There is no local production of computers in Latvia other than assembly.
Latvian end-users are price sensitive. Thus, locally assembled PCs still dominate the market. They are functional and much cheaper than the imported brand names. About 40% of all sales of PCs and PC servers in 1998 were imported. These sales came from the following companies: Hewlett Packard - $5.2 million, IBM - $4.5 million, Compaq - $3.4 million, Dell - $2.1 million. This represents an increase of 30% over 1997.
The telecommunications, public, education, and transportation sectors are the greatest consumers of computer equipment. The financial sector consumption of PCs may drop due to the Russian crisis, while the telecommunications sector will continue to be the biggest consumer of PCs. The small office-home office (SOHO) market is also developing rapidly (12).
Software Development
Software development is a major stimulus of IT development in the country due to the demand made by the banking industry on IT businesses. Latvian software developers are working with companies like IBM, Siemens, Unisys and large banks on IT development projects. Additionally, the government and state institutions are large clients of software development. In 1998, almost 20 million U.S. dollars were invested in new government projects. The larger government entities requiring IT development include: state post office, state revenue, state treasury, finance ministry, bureau of census data, railway agency. The banking industry also has a strong need for software development.
Eighty seven percent or 156,600 of the PCs used in the country are used by business entities. Households comprise only 2.4% of the PC market and the number of PCs per person is .06. These statistics indicate that growth is limited to business and government development.
Business
Businesses demand for IT solutions will continue to grow globally and will likely affect the development of Latvia’s IT sector to assist in meeting the demand. To meet this demand, a skilled workforce must continue grow. A number of the global software and technology firms including Lotus, Oracle, Microsoft, and IBM are assisting the government in developing training programs to meet the demand. The cost to train Latvians is very low compared to other countries in the World and therefore creates incentive for global firms to invest in the country.
Domestic Customers
The Latvian population is highly literate and many are educated above
a primary level of education. Domestic customers are becoming more
sophisticated in terms of information technology and the purchases they
make. However, the ability to purchase hardware and software products
is still low due to price and distribution challenges the market faces.
The demand for software at the domestic level is primarily for language
tools like dictionaries, fonts, and spellchecker tools along with office
programs.
This site was created by MBA students at the American University in
Washington, DC.
Fall 1999
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Information Technology Landscape in Nations page.