technology market, each sector has had to cope with revenue reductions. In the mobile phone 

sub category the market has shrunk by about 11%. Only the telecommunication services market 

could count on an increase of 5.5% on average in 2002. The most affected sub categories of the 

information technology market are the PC hardware and data communication hardware segments 

which registered an average loss of 10.3% (BITKOM, 2002). 

TABLE 8  ICT Market Development, 2002 

ICT market 

Market volume (in $ billion) 

Annual growth rate 

1999 2000 2001 2002 99/00 00/01 01/02 

Information technology

a

71.2 68.2 66.3 66.2 

10.5% 0.3% 

 3.4% 

Telecommunication technology

b

 58.1 57.1 57.2 59.8 

13.4% 3.4% 

 1.1% 

ICT 

total 

129.3 125.2 123.5 126.1 11.8%  1.7%  1.3% 

Notes:

a

 PC hardware, office equipment, data communication hardware, software, IT services.

b

 end devices, network infrastructure, telecommunication services. 

Source: BITKOM update 2002, data calculations in annual exchange rates $ to  . 

In spite of the large investments made in the ICT and e commerce infrastructure and extensive 

efforts in making this infrastructure ubiquitous during the last decade, the ratio of IT 

expenditures as a percent of GDP is still relatively low in Germany (Figure 1). In comparison to 

other industrial nations such as the US, UK or France, Germany does not spend as much on its 

ICT equipment. This may be explained by the fact that Germany starts from a high level of ICT 

development with an already broad based and widely dispersed telecommunication 

infrastructure. Nevertheless, Germany risks losing this position when newer, state of the art 

technologies are not implemented.  

FIGURE 1  IT Expenditure as Percent of GDP 

6

5.4

5.6 5.6

5

5.2

5.2 5.3 5.5 5.3

5

4.8 5

4.7 4.8

4.8

4.3

4

4.2

4.1 4.3

4

3.6

3

2 2.2 2.4 2.5

2

1

0

Germany

Denmark

France

Italy

UK

USA

1998

1999

2000

2001

Source: Eurostat Structural Indicator, IT expenditure 2002. 

Both consumer and corporate spending in the IT sector are suffering due to the widespread 

emphasis on cutting costs and investing cautiously. All major market segments are affected by 

this trend. A similar view is provided in Table 9 where the IT budget as a percentage of 

establishment revenue by firm size and affiliation is described. While the IT budget of all 

14