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 
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