Analysis:

Domestic production in the IT industry is primarily dominated by the software market. However, although there are a number of firms that are leading in market share as producers of business systems, regardless if these systems are small, medium to large, they are simply not very profitable. Although Swedish business software is a large and growing segment, it still doesn't compare with its foreign competitors. There have also been problems with Swedish companies that produce consumer software, simply because the Swedes have a reputation for business software and are not known in the consumer marketplace. However, there is still demand for niche software, "Swedish companies have built up a world leading position in the segments of entertainment, e.g. games and gambling software; aerospace industry software support; production critical software; and not least IT security software with biometrics. Strong segments are also software for wireless applications; intelligent home communications; applications for the health; process control, automotive (i.e.telematics); and forestry sectors." (16)

Hardware:

The Swedish hardware market has been a lot less successful than its software counterpart. There are very few PC manufacturers that can be considered major players, and the following companies, Network, EDU Teknik, Vice Computer and DGC, have been losing market share, despite the increase in PC sales. According to Tradepartners (16), there was an increase of 24% in PC sales from last year, which represents approximately 331,000 PCs sold. I believe that this increase, if the upward trend continues, will lead to a better future for Swedish hardware producers.

However, Sweden is the home of Ericsson, a major player in the telecommunications industry which manufactures products. Ericsson is involved in mobile and broadband internet communications and is active in producing a 3G product portfolio. They currently conduct business in over 140 countries. Ericsson remains the market leader in Swedish hardware.

Software:

Brief Overview -

"The software sector - including both software products and software services - large in proportion to the population and by international standards, is now estimated to represent as much as 40 - 50% of the total IT sector, i.e. SEK 290,000 milllion. It is also still one of the nation's most successful growing industry segments. There are approximately 500 software companies in Sweden. Exports account for about half of all sales. Imports mainly stem from Germany, the US and the UK ." (16)

As with many statistics, I found some slightly different numbers representing the software industry in the Country Commercial Guide (CCG) (17), published by the US government in 2000. The CCG states that there are approximately 600 software companies; the total market size is US $1,277 million (SEK 10,982 million), total local production is US $958 million, total exports is US $97 million, and total imports is US $976. The total market size from these two sources is vastly different, likely due to the fact that Tradepartners included international companies that are located in Sweden, whereas, I believe that the CCG only included domestic Swedish firms.

What is behind the growth and development of software in Sweden?

Some of the research I found explains the advanced software industry as a result of the relatively large proportion of multinational companies to its small population. The presence of these large companies drives demand for continual improvements in the efficiency and capacity of their software applications. Thus, software suppliers in Sweden are always competing to provide the best solutions to these IT demanding multinational companies. This naturally spurs the development of advanced software technology in order to survive in this competitive industry. Another interesting point that I found, was that software developed in Sweden for these multinational companies was designed for use in many different nations, and therefore with different languages and regulations incorporated in the design. This gives the software developers the advantage of having a wider market to sell their product to. Some of the noted areas of strength for Swedish software companies include wireless technology, optronics, man/machine interface development and industrial design. (16)

Source: http://www.tradepartners.gov.uk (16)

Importing Software and Hardware

Some of the major players that import hardware into Sweden include Dell, Sun Microsystems, IBM and HP/Compaq, while Microsoft dominates the software market. These companies are also being affected by the decreased prices that are hurting Swedish firms, and there are talks about increasing taxes on some of these foreign products. However, there is still high demand for servers and computer storage products which has the potential to counter some of these negative forces.(16)

Resellers and wholesalers

There is currently a lot of turmoil being experienced with distributors and resellers. Apparently some of the major players (Martinsson and IMS) have recently merged and one of them, SMG is up for sale. It is difficult to be successful because due to small and decreasing margins, these players are reliant upon very large volumes. However, the E-commerce area in terms of B2C is growing rapidly. Overall, there are approximately 150 distributors and 4,000 resellers throughout Sweden.(16)