The IT-Market Turkey by Frank Garrelts

ICT market Turkey

PROVOTO – Analysis

by Andriy Bocharov and Olga Cherepanova

I Table of Contents I Table of Contents ....................................................................................... II II Table of Figures ........................................................................................ III Executive Summary ................................................................................... - 1 1 Turkey ................................................................................................... - 3 1.1 General Data about Turkey ......................................................................................... - 3 1.2 Demographic Data....................................................................................................... - 9 2 ICT Market in Turkey............................................................................ - 10 2.1 Telecommunication................................................................................................... - 15 2.2 Information Technology............................................................................................ - 21 2.2.1 Computer Market ............................................................................................... - 22 2.2.2 IT-Services ......................................................................................................... - 24 2.2.3 Software Market................................................................................................. - 24 3 IT trade In Turkey ................................................................................ - 25 3.1 Specific Nature Of ICT Trade’s Landscape.............................................................. - 25 3.1.1 Turkey’s ICT foreign trade ................................................................................ - 25 3.1.2 Affinity To Europe In Construction Of ICT Trade ............................................ - 27 3.1.3 Affinity to Japanese and Korean Entrepreneurships: Technological Structures of Turkish Companies in IT Sector ................................................................................. - 28 3.2 Causality between Technology And Consumption: The magic Triangle Of Turkey - 30 3.3 IT Retail In Turkey.................................................................................................... - 33 3.3.1 Retail Index ........................................................................................................ - 33 3.3.2 Retail Trade Market ........................................................................................... - 33 3.3.3 Wholesale Market .............................................................................................. - 35 4 The Turkish Companies’ Profiles.......................................................... - 38 4.1 Teknoloji ................................................................................................................... - 38 4.2 Koç Holding .............................................................................................................. - 39 4.3 Sabanci Holding ........................................................................................................ - 41 4.4 Index.......................................................................................................................... - 42 5 Conclusion........................................................................................... - 47 6 References ........................................................................................... - 49 -

II Table of Figures Fig. 1: The Republic of Turkey............................................................................................. - 3 Fig. 2 The Republic of Turkey .............................................................................................. - 4 Fig. 3: Ranking outlooks of credit ranking agencies............................................................. - 4 Fig. 4: Economical data......................................................................................................... - 4 Fig. 5: Turkey GDP PPP & GDP Growth Rates, 2003 - 2007.............................................. - 5 Fig. 6: HDI trends, Turkey, Russia and Ukraine, 1985-2005 ............................................... - 6 Fig. 7: IT industry competitiveness Index, 2008................................................................... - 7 Fig. 8: Doing Business in Turkey and Germany ................................................................... - 8 Fig. 9: Obstacles to ICT Adaptation (%)............................................................................... - 9 Fig. 10: Turkey: risk assessment, September 2008............................................................... - 9 Fig. 11: Demographic Data ................................................................................................... - 9 Fig. 12: Turkish ICT market, 2005-2007 ............................................................................ - 11 Fig. 13: Turkish ICT Market (Million USD) ...................................................................... - 12 Fig. 15: Public ICT Investments (on 2006 prices) .............................................................. - 13 Fig. 16: The Information Society Strategy Approach ......................................................... - 14 Fig. 17: Telecommunications Revenue, 2000-2006 .................................................... - 15 Fig. 18: ICT Access indicators, 2000-2006......................................................................... - 15 Fig. 19: Telephone Subscribers........................................................................................... - 16 Fig. 20: Usage of Information and Communication Technologies by Years...................... - 16 Fig. 21: Turkish mobil phone service operators, 2007........................................................ - 17 Fig. 22: Internet Users......................................................................................................... - 17 Fig. 23: Reasons why Internet users* do not use the Internet more (%), 2008 .................. - 18 Fig. 24: Households with access to the Internet, 2004-2008, % ......................................... - 19 Fig. 25: Reasons for not having access to the Internet at home for households (%), 2008 - 19 Fig. 26: Where/how Internet users* obtained Internet skills (%), 2008 ............................. - 20 Fig. 27: Sectoral IT market division in different countires ................................................. - 21 Fig. 28: Turkish PC Marfket in Terms of Main Groups (Quantity) 2006-2007 ................. - 22 Fig. 29: Turkish PC market, in terms of type, 2007............................................................ - 23 Fig. 30: Distribution of sales in terms of sellers, 2007 ....................................................... - 23 Fig. 31: ICT goods trade, 2005 ........................................................................................... - 26 Fig. 32: Turkish ICT Foreign Trade (million USD)............................................................ - 26 Fig. 33: Total GLA per 1000 inhabitants ............................................................................ - 28 Fig. 34: Figures Regional Clustering in Turkey.................................................................. - 30 Fig. 35: GLA per 1000 habitants......................................................................................... - 31 Fig. 36: The structures of sales revenue depended of the region ........................................ - 32 Fig. 37: Global Retail Apparel Index, 2008 ........................................................................ - 33 Fig. 38: The leaders on the Retail market, 2007 ................................................................. - 34 Fig. 39: Main Stores in Turkey ........................................................................................... - 35 Fig. 40: Top 20 ICT companiesâ&#x20AC;&#x2122; sales revenues Ranking, 2006......................................... - 36 Fig. 41: Main financial highlights ....................................................................................... - 39 Fig. 42: Business Partner ................................................................................................. - 40 Fig. 43: Distribution of sales ............................................................................................... - 42 Fig. 44: Global Brands of Index.......................................................................................... - 43 Fig. 45: Structure of Product Supply and Distribution........................................................ - 43 Fig. 46: Subsidaries of the company ................................................................................... - 44 Fig. 47: Product groups by company .................................................................................. - 44 Fig. 48: The main product groups and brands of Datagate ................................................. - 45 Fig. 49: The main product groups and brands of Netex.......................................................- 45 -

III

Executive Summary Turkey is the biggest country and is a founding member of the OECD even though the gap between Turkey and other OECD countries, concerning the economies of scale, innovation, information sharing as well as know-how transfer remains significant. Turkey joined the World Bank in 1947 and the International Finance Corporation (IFC) in 1956. Moreover this country is a member of G20 industrial nations as well as an associated member of EU 1 . Turkey is also seen as a regional power, a bridge between East and West because it is located between Europe and Asia, bordering the Mediterranean, Aegean, and Black Seas. Over 70% of its 73 million people live in urban areas. The Agriculture accounts for some 11% of its GDP, industry for 29.5%, and services for 59.5%. In 2001 Turkey overcame a big economic crisis, which set the country on a path of sustained economic development and contributed to improvements in the living conditions of its people. Therefore the economical, political and demographical development of Turkey appears to have been relatively stable over the last five years. It is known that Turkey belongs to emerging market countries. Looking through the experiences of such countries, it is important to note that the ICT market situation in Turkey is not as different as e.g. in Russia or in Ukraine. On the one hand, these emerging market countries pay much attention to the role of information and communications technology in business as well as in private usage and its effect on operational efficiency. On the other hand, there are many weaknesses that can be seen as obstacles for the effective usage of ICT. These are high costs, skills shortages, poor telecommunication infrastructure and lack of central government ICT strategy. Nevertheless the Turkish government tries to solve these problems in adopting a coherent and transparent plan of actions â&#x20AC;&#x153;eTransformation Turkey Projectâ&#x20AC;?, which is seen as an essential condition of success for the catch-up. This study describes the actual situation in the ICT sector in Turkey and provides with complex numerical and statistical data about Turkish ICT sector and ICT trade. This study is devoted to those who is going to entry the Turkish market and to invest there as well as to those who have already done it and would like to get information about important points in terms of Turkish ICT market. 1

Cp. http://en.wikipedia.org/wiki/Turkey.

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The main goal of the study is to analyse the Turkish ICT market as well as to show significant trends in terms of its development and trade. Special emphasis is laid on the representation of the most successful small, medium and large size enterprises and groups of companies that are considered to be one of the driving forces in ICT market development. Chapter 1 includes some general data about economic and demographical changes and developments in Turkey. Chapter 2 is dedicated to ITC market in Turkey. It describes all spheres of ICT sectors and includes tables with definitions as well as comprehensive data sheets in terms of the Computer market, Software market and IT services. Chapter 3 describes special features of the Turkish trade as well as represents the main geographical clusters in terms of the trade. Particular attention is given to information about retail and distribution markets in Turkey. In chapter 4 we will introduce some small, medium and large size enterprises and groups of companies as well as give an account of their company histories, some economic data, their brands as well as their ratings. In the last chapter we will draw a conclusion in terms of ICT market in Turkey.

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1 Turkey 1.1 General Data about Turkey Turkey, known officially as the Republic of Turkey, is a Eurasian country that stretches across the Anatolian peninsula in western Asia and Thrace (Rumelia) in the Balkan region of southeastern Europe. Turkey borders eight countries: Bulgaria to the northwest; Greece to the west; Georgia to the northeast; Armenia, Azerbaijan and Iran to the east; and Iraq and Syria to the southeast. The Mediterranean Sea and Cyprus are to the south; the Aegean Sea and Archipelago are to the west; and the Black Sea is to the north. The Sea of Marmara and the Turkish Straits (the Bosporus and the Dardanelles) separate Anatolia and Thrace.

Turkey is a democratic, secular, unitary, constitutional republic. It has become increasingly integrated with the West through membership in organizations such as the Council of Europe (1949), NATO (1952), OECD (1961), OSCE (1973) and the G20 industrial nations (1999). Fig. 1: The Republic of Turkey

Source: http://geology.com/world/turkey-map.gif.

Cp. http://en.wikipedia.org/wiki/Turkey.

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Fig. 2: The Republic of Turkey

Source: http://en.wikipedia.org/wiki/Turkey.

In consideration of economic development, the confidence in Turkish economy has increased and high growth rates have been achieved in the short term supported by the EU harmonization process and by other measures. The ranking agencies Fitch, Moody’s and S&P estimate the Turkish economy differently. Using a similar scale, they give the different grades and outlooks according to the Risks and Economy situations. Fig. 3: Ranking outlooks of main agencies Fitch from “positive” to “stable” Moody’s from “stable” to “negative” Standard & Poors’ (S&P) from “stable” to “negative” Sourse: Original illustration

The GDP growth rate averaged 7.4% during the period 2002–2007, which made Turkey one of the fastest growing economies in the world. The World Bank forecasts a 5.4% GDP growth rate for Turkey in 2008. Fig. 4: Economical data 2000 2005 2006 2007 GDP (current USD) (billions) 267.21 483.99 529.93 657.09 GDP growth (annual %) 6,8 8,4 6,9 4,5 Inflation, GDP deflator (annual %) 49,2 7,1 9,3 8,1 Agriculture, value added (% of GDP) 11 11 10 9 Industry, value added (% of GDP) 31 29 29 28 Services, etc., value added (% of GDP) 57 61 62 63 Exports of goods and services (% of GDP) 20 22 23 22 Imports of goods and services (% of GDP) 23 25 28 27 Gross capital formation (% of GDP) 21 20 22 22 Revenue, excluding grants (% of GDP) .. .. 25,0 .. Cash surplus/deficit (% of GDP) .. .. 1,9 .. Source: http://ddpext.worldbank.org/ext/ddpreports/ViewSharedReport?&CF=&REPORT_ID=9147&REQUEST_TYPE= VIEWADVANCED&HF=N/CPProfile.asp&WSP=N.

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Fig. 5: Turkey GDP PPP & GDP Growth Rates, 2003 - 2007

Source: http://www.alacrastore.com/country-snapshot/Turkey.

Concerning the chronically high inflation, it is important to note that it has been brought under control and this has led to the launch of a new currency to cement the acquisition of the economic reforms and erase the vestiges of an unstable economy. As a result of this process, the investor confidence and foreign investments have soared, and unemployment has fallen. The IMF forecasts a 6% inflation rate for Turkey in 2008. Besides, Turkey has gradually opened up its markets through economic reforms by reducing government controls on foreign trade, investment as well as on privatisation of publicly-owned industries. For better understanding the place and significance of Turkey among the other countries in terms of information technology, innovation and other economic factors as well as business indicators, it seems to be important to describe some economical indexes. According to Human Development Index (HDI) that measures the average achievement of the country in three basic dimensions of human development (a long and healthy life, knowledge and a decent standard of living), Turkey is characterised through a positive growth during the period 1985-2005. 3 In 2005 this country accounted for the 0,775 and reached the same value as non-EU countries Russia and Ukraine.

Performance in each dimension is expressed as a value between 0 and 1 (the higher the number the better the result).

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Fig. 6: HDI trends, Turkey, Russia and Ukraine, 1985-2005

Source: http://hdr.undp.org/en/.

In terms of IT industry competitiveness, Turkey accounts for 32,4 composite scores and takes only the 38th place in the rating â&#x20AC;&#x153;IT industry competitiveness indexâ&#x20AC;?. 4 That means that the comprehensive coordination of business activities, scientific and technological research in various institutions, the coordination of human capital and support for IT industry development donâ&#x20AC;&#x2122;t harmonise with the industrial development of the country.

The composite score for each country is based on an index range of 0 to 100, with 100 representing the highest and best possible score. The index is based on six distinct categories of quantitative and qualitative indicators and their weights: overall business environment (10%), IT infrastructure (20%), human capital (20%), legal environment (10%), R&D environment (25%) and support for IT industry development (15%).

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Fig. 7: IT industry competitiveness Index, 2008 2008 2007 Country Score Country rank rank USA 74.6 1 1 Latvia Taiwan 69.2 2 6 Lithuania UK 67.2 3 4 Malaysia Sweden 66.0 4 7 South Africa Denmark 65.2 5 8 Turkey Canada 64.4 6 9 Romania Saudi Australia 64.1 7 5 Arabia South 64.1 8 3 Croatia* Korea Singapore 63.4 9 11 Thailand Netherlands 62.7 10 12 Brazil Switzerland 62.3 11 10 Mexico Japan 62.2 12 2 Bulgaria Finland 61.5 13 13 Argentina Norway 59.7 14 14 Philippines Ireland 59.4 15 15 India Israel 56.7 16 20 Russia New 56.6 17 17 China Zealand Austria 56.1 18 19 Venezuela Germany 55.4 19 16 Colombia France 54.3 20 18 Egypt Hong Kong 54.1 21 21 Sri Lanka Belgium 53.4 22 22 Peru Spain 46.3 23 24 Ecuador Estonia 45.7 24 25 Ukraine Italy 45.6 25 23 Indonesia Slovenia 45.5 26 27 Kazakhstan Portugal 42.2 27 25 Bangladesh* Hungary 40.6 28 28 Vietnam Czech Rep 40.4 29 29 Pakistan Chile 39.6 30 31 Azerbaijan Slovakia 39.5 31 31 Nigeria Poland 39.0 32 30 Algeria Greece 38.2 33 33 Iran

38.1 37.1 34.2 32.6 32.4 32.3

2008 rank 34 35 36 37 38 39

2007 rank 34 35 36 37 39 40

32.3

31.6

31.5 31.0 30.6 30.2 30.1 29.8 28.9 27.7

42 43 44 45 46 47 48 49

41 43 44 42 45 47 46 48

27.6

25.7 25.4 25.3 24.9 24.8 24.5 24.3 23.1 22.9 22.4 21.4 20.9 19.5 19.0 18.5 16.5

51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66

52 51 55 50 54 53 56 57 58 -61 60 62 63 59 64

Score

Countries are scored on a scale of 1 to 100 Source: http://www.finfacts.com/irishfinancenews/article_1014752.shtml.

Looking at German and Turkish Doing Business index 5 examples, we can conclude that Turkey has also some difficulties in achieving better scores, especially in such categories as “Dealing with Construction Permits” and “Closing Business”. Thus the country is more dependent on support of the external sources like government, research organisations, etc.

181 countries took part in Ranking Doing Business.

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Fig. 8: Doing Business in Turkey and Germany Turkey Doing Business 59 Starting a Business 43 Dealing with Construction Permits 131 Employing Workers 138 Registering Property 34 Getting Credit 68 Protecting Investors 53 Paying Taxes 68 Trading Across Borders 59 Enforcing Contracts 27 Closing a Business 118 Source: Doing Business 2008 rankings.

Germany 25 102 15 142 52 12 88 80 11 9 33

Calling attention to the Information Society Index (ISI) that has been formulated to measure the ability of 53 nations, according to their access and absorb information as well as information technology; 6 we can again clearly see some weaknesses of Turkey in terms of information technology usage, telecommunications and social factors. The total Ranking of Turkey accounts for the 50th position (out of 53 countries). 7 The last index, which will be introduced in this study, is an E-readiness index. It measures the capacity of a population to use ICTs by looking at how many people have the necessary skills and by identifying how they are currently used. Despite rapid growth in Turkey, the country received the 43rd position (out of 65) and lag far behind other countries in 2005. Low levels of investment as well as limited sources of financing constitute the primary reasons for the slow development and show the increasing importance of ICT sector in the country. 8 Represented above indexes, show that the backlog demands at ICT sector are huge. The following table reflects the obstacles that influence ICT development.

The ISI combines 15 variables arranged in four infrastructures to calculate and rank nations in one overall index and four subindexes (IT, telecom, Internet, and social measurements). Data includes penetration rates for IT spending, PC households, Internet access, broadband connectivity, mobile phones, online households, mobile Internet access, and telecom spending, alongside education enrollment and ranked scores for civil liberties and corruption, creating a map for understanding the overall fabric of a country' s information society landscape. 7 Cp. http://www.idc.com/groups/isi/main.html. 8 Cp. http://globaltechforum.eiu.com/index.asp?layout=rich_story&doc_id=6427.

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Fig. 9: Obstacles to ICT Adaptation (%)

Source: State Planning Organisation.

In addition to all these weaknesses, there are also some political and economic aspects, which we should keep in mind talking about economic development in Turkey. Fig. 10: Turkey: risk assessment, September 2008 Sovereign risk BB Currency risk B Banking sector risk BB Political risk BB Economic structure risk B Source: Turkey: Country risk summary.

1.2 Demographic Data Political, economic and social changes in Turkey influence the demographical structure of the country. The following table clearly reflects todayâ&#x20AC;&#x2122;s demographic situation. Fig. 11: Demographic Data 2000

2005

2006

2007

Population, total (millions)

67.42

72.07

72.98

73.89

Population growth (annual %)

1,7

1,3

1,2

Income share held by lowest 20%

6.0

Life expectancy at birth, total (years)

Fertility rate, total (births per woman)

2,6

2,2

Adolescent fertility rate (births per 1,000 women ages 15-19)

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Contraceptive prevalence (% of women ages 15-49)

Births attended by skilled health staff (% of total)

Mortality rate, under-5 (per 1,000)

Malnutrition prevalence, weight for age (% of children under 5)

Immunization, measles (% of children ages 12-23 months)

Primary completion rate, total (% of relevant age group)

Ratio of girls to boys in primary and secondary education (%)

Prevalence of HIV, total (% of population ages 15-49)

Source: http://ddpext.worldbank.org/ext/ddpreports/ViewSharedReport?&CF=&REPORT_ID=9147&REQUEST_TYPE= VIEWADVANCED&HF=N/CPProfile.asp&WSP=N.

The Turkish Statisticians signify that nowadays the majority of the population is under the age of 30 (55%) and that the individuals under the age of 15 constitute 28.1% of the society. According to the Turkish expertsâ&#x20AC;&#x2122; opinion, the 25-39 age group will be the biggest population cluster and will dominate the labour market in 2020. 9 These facts can be seen as a sign of great potential for Turkey and mean that the 25-39 age group will create the highest value added in tomorrowâ&#x20AC;&#x2122;s knowledge economy. Therefore the particular attention should be given to the encouragement and development of human capital, where the investments in education system, organisation of training programs in the areas of information and communications technology are the most important elements for supporting the Turkish generation. Taking into consideration the aforesaid, we can conclude that if Turkey exploits the potential imparted by her demographic structure by making wise choices and by bridging the digital divide among different population segments, she will make successful progress towards transformation into an information society. 10

2 ICT Market in Turkey The main key sectors of the Turkish economy are banking, construction, automotive, home appliances, electronics, textiles, oil refining, petrochemical products, food, mining, iron and steel as well as machine industry. The other dynamic sector in Turkey depicts the ICT sector. In 2007 the market volume of ICT sector was about USD 23,5 billion with annual growth rate approx. 20%. The share of ICT in GDP was around 2,5% compared with 8%-10% in the EU. Telecommunications accounted for USD 18 billion, while information technologies corresponded for USD 5,5 billion. The growth in information 9

Cp. https://www.bfai.de/nsc_true/DE/Navigation/Metanavigation/Suche/sucheUebergreifendGT.html. Cp. https://www.bfai.de/nsc_true/DE/Navigation/Metanavigation/Suche/sucheUebergreifendGT.html.

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and communication technologies sector is assumed to be the same 20% in 2008 compared to the previous year. 11 Fig. 12: Turkish ICT market, 2005-2007

Source: InterPro Marketing Services and Research Group, Turkish Informatics Industry Association (TÜB‹SAD).

The rapid growth of ICT sector in Turkey can be explained through different factors: •

Increasing usage of technology: Private users as well as enterprises recognise the value of information, communication, productivity and innovation dealing with other economic groups or expanding the business volume and analysing the customer requirements.

•

Positive economic performance: On the whole, the economic situation in Turkey is characterised by stability. As a result, it makes a positive impact on the Direct Foreign Investment Inflow above all on the IT investments and boosts the Turkish economy.

•

Change of economic structure: Such key sectors of Turkish economy as food production, home appliances and agriculture display a stable growth. But the most important development in economy is that nowadays the relevance of service sector increases and instigates the IT investments in retail, wholesale, professional and personal services market. In this process the service providers try to pay much attention on special features of the products, quality standards and customers’ options. Besides, the strong development of banking, public and logistics sectors gives new impulses for the increasing usage of communications and information technologies as well as for additional investments in these sectors.

Cp. InterPro Marketing Services and Research Group, Turkish Informatics Industry Association (TÜBISAD).

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As a result of these occurrences, the Turkish ICT market expands and automatically supports the development of the other sectors of the Turkish economy. Fig. 13: Turkish ICT Market (Million USD)

Source: http://www.interpromedya.com.tr.

The ICT sector consists of two sub-sectors, namely information technologies and telecommunications. The ratio of the telecommunications sector size to GDP (3.3%) in Turkey is close to the OECD average (3.2%), whereas for information technologies the same ratio (0.8%) is way behind the OECD average (2.9%). It is important to note that the Turkish government recognizes ICT sector as a driving force of economic and social change and appreciates the value of information and communications technology in private usage as well as in business. The Turkish government prioritisation of the ICT sector averages 4,4 points (1-7, 7=the highest). 12 Besides the government plays a major role in leading and creating the momentum for greater ICT usage and spending. The government has spent USD 555 million for ICT investment in 2007, up from USD 534 million in 2006. 13

12 13

Cp. http://devdata.worldbank.org/ict/tur_ict.pdf. Cp. http://www.igeme.org.tr/Assets/sip/san/ICT.pdf.

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Fig. 14: Public ICT Investments (on 2006 prices)

Source: State Planning Organisation

Nevertheless, the backlog demand in the ICT sector is characterised by a large number of different obstacles such as high costs, skills shortages, poor telecommunication infrastructure and lack of central government ICT strategy. With a goal to improve the structure of ICT sector, to get a bigger share from the world production and to raise the level of social welfare by increasing competitive power, the government of Turkey takes the radical supporting measures within action schedule â&#x20AC;&#x153;eTransformation Turkey Project, 2006-2010â&#x20AC;?. This project includes a number of strategies for the further development of the information society 14 and can be seen as a fundamental instrument in coordinating all actors of the economy. It aims to carry out the process of transformation into an information society in a harmonious and integrated structure all over the society with all citizens, enterprises and public segments. 15

14 15

Cp. https://www.bfai.de/nsc_true/DE/Navigation/Metanavigation/Suche/sucheUebergreifendGT.html. Cp. State Planning Organisation.

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Fig. 15: The Information Society Strategy Approach

Source : State Planning Organisation.

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2.1 Telecommunication Turkey has a large telecommunication market that accounted for USD 18 billion in 2007. The main reason for the telecommunication boom can be explained by the market liberalisation designed to enhance competition. The following tables reflect the telecommunications revenue and telephone subscribers in Turkey. Fig. 16: Telecommunications Revenue, 2000-2006

Source: http://devdata.worldbank.org/ict/tur_ict.pdf. Fig. 17: ICT Access indicators, 2000-2006

Source: http://devdata.worldbank.org/ict/tur_ict.pdf.

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By means of the next table we can see that, while the number of fixed telephone subscribes raises rather slowly, the number of mobile phone subscribers grown dramatically in the last 5 years and achieved approx. 63 million in 2007. Therefore the penetration rate in terms of mobile telephone subscribers was also the highest in the last 5 years, compared to fixed line subscriber or internet user penetration rates. Fig. 18: Telephone Subscribers

Source: Yusuf Türkoğlu (2008), p. 5. Fig. 19: Usage of Information and Communication Technologies by Years

Source : State Planning Organisation.

According to the “eTransformation Turkey Project”, the mobile phone subscribers’ market is posed for substantial growth over the next five years, with penetration reaching over 90% by 2010. 16 In terms of internet user penetration rate, it generally has to increase from 14% to 51% in 2010: from 53% to 96% at pupils, from 17% to 77% at adults, from 21% to 56% at unemployed persons. The proportion of companies with PCs has to increase 16

Cp. InterPro Marketing Services and Research Group, Turkish Informatics Industry Association (TÜBISAD).

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from 61% till 95%. Besides 90% of companies have to be able to exchange information per e-mails. The proportion of households with e-government service has to rise from 5,9% till 35%. The main mobile phone service operators in Turkey are: • Turkcell • Vodafone • Avea Fig. 20: Turkish mobile phone service operators, 2007

Source: InterPro Marketing Services and Research Group, Turkish Informatics Industry Association (TÜBISAD).

The number of Internet users in Turkey has increased more than 30% in a year on average in last years and accounted for 19 million Internet users by the end of 2007. Fig. 21: Internet Users

Source: Yusuf Türkoğlu (2008), p. 5.

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Nevertheless, there is still a long way to go in terms of increasing computer and Internet usage by citizens. The following table provides a set of explanations why individuals donâ&#x20AC;&#x2122;t use the Internet more. Fig. 22: Reasons why Internet users* do not use the Internet more (%), 2008 Turkey

Urban

Rural

48,9

46,6

58,5

Lack of time

59,4

60,1

57,0

Cost of online content

38,0

35,5

46,6

Foreign language skills are inadequate

16,4

17,6

12,5

Lack of skills or knowledge ( e.g. Sites are not user-friendly or too complicated)

12,4

12,2

Additional connection or per-volume download cost

10,5

10,8

9,4

Security or privacy concerns

7,8

7,7

8,3

Connection is too slow

5,1

5,7

3,0

Content ( what is there is not interesting enough to make more use of the Internet)

2,4

2,5

2,2

Other

5,9

5,4

7,3

The percentage of individuals who wants to use the Internet more Reasons for not use the Internet more

16-74 age group. Source: http://www.turkstat.gov.tr/PreHaberBultenleri.do?id=2055&tb_id=25.

What is more, ICT usage in Turkey differs widely depending on the employment status such as; employed, unemployed, students, housewives, retired, etc. and also by income level, education, gender, age groups and geographic locations. In other words, Turkey faces a digital divide both in the national and international context. According to the results of the ICT usage survey on households and individuals, Internet is mostly used for obtaining information and playing games or for communication. Approx. 67% of the Turkish population have never used PC, where 70% of the Turkish population have never used internet. In rural areas, the population who has never used computer and internet is more than 81%. 17 Only a small proportion of the Internet users access the Internet specifically for training related to employment and for ordering or selling goods and services. The most prevalent venues of access in Turkey are internet cafes and workplaces. In 2007 only approx. 19% of households had an Internet access; in 2008 the proportion will increase but still it will stay low.

Cp. http://www.index.com.tr/borsa/index_ing_07.pdf.

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Fig. 23: Households with access to the Internet, 2004-2008, % Households with access to the Internet

2004

2005

2006

2007

2008

7,0

8,7

18,9

24,5

Source: http://www.turkstat.gov.tr/PreHaberBultenleri.do?id=2055&tb_id=25.

The main reasons for low Internet usage in households are reflected in the following table. Fig. 24: Reasons for not having access to the Internet at home for households (%), 2008 Turkey

Urban

Rural

As a percentage of all households with not having access to the Internet at home Reasons, among the households not having access to the Internet

75,5

69,1

87,9

Equipment costs too high

35,8

37,0

34,0

Donâ&#x20AC;&#x2122;t need Internet

29,6

28,5

31,4

Lack of skills

21,6

19,3

25,0

Have no idea about the Internet

19,0

14,9

25,2

High connection costs (subscription fee etc.)

10,6

11,8

8,9

Have access to the Internet elsewhere

8,4

11,5

3,8

Donâ&#x20AC;&#x2122;t want Internet

7,2

9,3

4,0

Privacy or security concerns

0,7

1,0

0,2

Physical disability

0,7

0,6

Other

1,6

1,3

2,1

Source: http://www.turkstat.gov.tr/PreHaberBultenleri.do?id=2055&tb_id=25.

While the problem of high costs is something that can be tackled relatively more quickly with the development of infrastructure and the establishment of a competitive market structure, developing competency requires a more long-term effort. In Turkey the proportion of individuals who have not received any education/training on information technologies (IT) is very high. The segment trained on IT usually consists of young people who benefit from the basic computer literacy programs, which are becoming more and more widespread in educational institutions, and those who usually need IT skills to find a job.

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Fig. 25: Where/how Internet users* obtained Internet skills (%), 2008 Turkey Self study in the sense of learning by doing

Urban

Rural

62,8

64,8

54,5

Informal assistance from colleagues, relatives, friends

57,2

57,9

54,1

Formalized university)

25,7

25,5

26,8

8,9

8,6

10,1

8,4

8,0

7,4

8,0

4,8

0,4

0,3

educational

institution(school,

collage,

Training courses in adult education centre, but not on employer's initiative Vocational training courses (on the demand of the employer) Self study using books, CD Roms, etc. Other

16-74 age group. Source: http://www.turkstat.gov.tr/PreHaberBultenleri.do?id=2055&tb_id=25.

According to the ICT usage of enterprises, it is estimated that the rate of computer usage and internet access in micro enterprises is lower as in medium and large scale enterprises. It can be explained through the expense factor. As a result of it, the availability of modern technology seems to be limited in small firms. Although the awareness of enterprises on the importance of ICT is rising, the rate of usage of modern business applications such as enterprise resource planning (ERP) or customer relationship management (CRM) by medium and large size enterprises was around 3% at the most in 2005. The main reasons for this low rate of ICT usage in enterprises are insufficient competency in this area, high costs, and insufficient awareness of opportunities offered by ICT and security concerns. According to appraisals, the proportion of enterprises using Enterprise Resource Planning (ERP) will be 15%, enterprises using SCM will be 12%, and enterprises using CRM will be 5%. 18

State Planning Organisation.

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2.2 Information Technology Turkey’s IT market reached USD 5.5 billion in 2007. According to the “eTransformation Turkey Project, 2006-2010”, the Turkish government is going to invest about euro 1,5 billion in the IT sector. The domestic IT market is targeted to achieve an annual average growth rate of 24% and reach USD 9,160 million in 2010. The realisation of this goal will be possible because the accomplishment of the “eTransformation Turkey Project, 2006-2010” stimulates demand and starts up production. As a result, the IT usage of households as well as of enterprises will increase and keep the investments on. 19 In terms of IT market division into segments, it is dominated by hardware sales (53%), on the second place are services (33%). 20 Fig. 26: Sectoral IT market division in different countries

Cp. http://www.index.com.tr/borsa/index_ing_07.pdf. Cp. InterPro Marketing Services and Research Group, Turkish Informatics Industry Association (TÜB‹SAD). 20

- 21 -

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

Furthermore we will enlarge on several sectors of the IT market.

2.2.1 Computer Market The Turkish Computer market goes from strength to strength and dominates the whole ICT sector. Therefore it is the fastest-growing sector within ICT. In 2007 the hardware market reached a size of almost USD 3,4 billion. PC and notebook sales in Turkey showed a steady increase between 2002 and 2007 years. In 2007 nearly 2,6 million personal computers and 1,1 million notebooks were sold in Turkey. This increase of sales is connected with a high interest for internet and decrease of the notebook and PC prices, which makes these products affordable for small and medium enterprises as well as for home users. Besides, the project under e-Government and the educational sector with the goal of escalating computerisation of schools impacts the increasing computer sales.

Fig. 27: Turkish PC Market in Terms of Main Groups (Quantity) 2006-2007

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

Cp. http://www.index.com.tr/borsa/index_ing_07.pdf.

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Fig. 28: Turkish PC market, in terms of type, 2007

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

The high interest for Internet/PC and recovery of national economy resulted in increased personal IT expenditures. According to the results of ICT Usage Survey on Households and Individuals, carried out in 2007 by Turkish Statistical Institute, 19% of households have access to the Internet at home. According to the survey results 80% of households with Internet access at home connect to Internet via PC. Broadband connection (ADSL etc.) is the most widely used Internet connection types with 78%. The main market players on the hardware market in Turkey are Beko, Asus, Vestel, Escort, Dell, HP, Compaq, Epson, Brother as well as Vestel (targets to have an important share in the notebook sector in the European marketplace), Beko Elektronik, Casper and Escort. Fig. 29: Distribution of sales in terms of sellers, 2007

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

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2.2.2 IT-Services IT services are becoming more and more important as the major contributor to ICT sector. They include outsourcing and projects services, IT services, consulting, and development of software applications. The IT services market volume of Turkey reached nearly 1100 million USD in 2007; the growth rate was approx. 12%. The increasing role of the IT services sector can be explained through the further development in Hard- and Software markets as well as in the economy on the whole. As a result of the necessity to have special products or services, private users as well as enterprises make great demands on IT-service companies, which try to satisfy the consumer needs. The main goal in IT-Services sector for 2010 is to achieve the market volume of 1525 million USD.

2.2.3 Software Market In the last four years the Turkish software market expanded successfully and achieved the market volume of USD 1 billion in 2007 up from 880 million for 2006. Turkish software industryâ&#x20AC;&#x2122;s growth rate was about 42% in 2006 and approx. 30 % in 2007. According to â&#x20AC;&#x153;eTransformation Turkey Project, 2006-2010â&#x20AC;?, the main goal in the software sector is to achieve the market volume of USD 1267 million in 2010. The most important forces, which make the Turkish software industry dynamic, are well educated and energetic pool of computer and software engineers who receive a very high qualified education at the universities and the well developed creative skills of self-taught computer enthusiasts. Besides, there are some lawful changes that boost the sector and give positive stimuli for allowing the establishment and operation of techno parks and technological development zones with participation and leadership of universities. As a result, the software houses with promising capabilities will now be able to complete their institutionalization and growth processes in these techno parks and technological development zones, by benefiting from significant tax and investment incentives provided by the government. Nevertheless the current share of software in total IT market is 15%, which is far below worldwide averages. The main problem of the software market in Turkey is a piracy. According to some estimation, the rate of the software, which is illegally used in Turkey, constitutes about 75%. 22

Cp. http://www.index.com.tr/borsa/index_ing_07.pdf.

- 24 -

There are approximately 20 large companies competing for the software market in Turkey. The product lines of these companies include the ready-to-use packages as well as software developments for specific needs. Among these large companies Microsoft ranks at the top of the application software category with 12 percent of the market and IBM is the leading supplier in the system software business with 22 percent of the market. The other major players of the software market in Turkey are Milsoft, Havelsan, Meteksan, Logo Business Solutions, Ayesas, Likom, Gantek Technology, Koc System, Oracle and Microsoft. Besides, the software market can be characterised through a big number of JointVenture companies. Such foundations give a possibility to share know-how and experiences.

3 IT trade In Turkey Analyzing the Turkish ICT trade it is to point that Turkey has the same structures and trends as the most European countries. Unlike the European Non-EU members Russia and Ukraine, Turkey managed to aggregate the international experiences and organise the distribution channels through cooperation with international companies gradually.

3.1 Specific Nature Of ICT Trade’s Landscape 3.1.1 Turkey’s ICT foreign trade Turkey’s ICT foreign trade grew rapidly during the period of 2004-2007, contributing to the Turkey’s substantial economic performance.

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Fig. 30: ICT goods trade, 2005

Source: http://oberon.sourceoecd.org/vl=1066346/cl=15/nw=1/rpsv/sti2007/ge13-2.htm.

Foreign trade of Turkey reached nearly USD 15 billion in 2007, up from USD 10.9 in 2004. The major export markets of Turkey were the UK, Germany, France, Romania, Italy, Spain, the Netherlands, Kazakhstan, Ukraine and Greece, Iraq, the USA and Syria. Fig. 31: Turkish ICT Foreign Trade (million USD)

Source: Yusuf TÜRKOĞLU (2008), p. 5-6.

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3.1.2 Affinity To Europe In Construction Of ICT Trade According to the the Turkish Retail Market, it is characterised by the variety of foreign enterprises, which try to achieve the total dominance on the Turkish market. The best example of this statement is the second large retail chain in Turkey, represented by the French enterprise, called Carrefour, which intended to buy the biggest Turkish retailer Migros Turk TAS. In terms of the ICT sector in Turkey, it is very important to note that such European companies as Media Markt, Saturn, Cash&Carry (Metro), Electronic Partners (EP), Asbis entered the Turkish market some years ago. The other special feature of the Turkish market can be described through establishment of the modern retailing structure, called organised retailing. It was developed in 1995. Why is it important for the private as well as for the public sector to look at the development of the organised retailing? The components that build up the retail chain such as its size, storesâ&#x20AC;&#x2122; numbers, integration in the competitive business channels and optimal allocation of the resources may have the unstructured or organised character. The organised retailing means the unity of the multiple, completely synchronistic operations and workflows. Such organisational system in retail requires the high value of shopping stores area per inhabitant, which is measured through GLA 23 index. The increase of GLA means that preferences of the consumers and suppliers in terms of technological development in retail will also raise which leads to the adaptation between market actors on the higher level. Turkey is oriented towards Western Europe, where we can observe the higher level of GLA. Therefore, the country tries to achieve the higher GLA in order to accelerate the process of technological catching up in terms of trade.

The GLA includes the complete area of all shopping malls, lifestyle centres, outlet malls and other stores.

- 27 -

Fig. 32: Total GLA per 1000 inhabitants

Source: http://www.mapic.com/images/100543/pdf/cw_turkey_full_report_july08.pdf.

Reflected in the figures, the complete store area includes 154 shopping centres, which are located on the 2.8 million square meters in Turkey. 24

3.1.3 Affinity to Japanese and Korean Entrepreneurships: Technological Structures of Turkish Companies in IT Sector Looking through the specification of the technological landscape in Turkey, it can be recognised that the determinants in terms of business structures between Turkey and Japan, Korea are very similar. The both countries Korea and Japan have not only caught up the western countries in terms of technology, innovation and establishment of knowledge intensive industries, they have also formed their economies of scale in some specific way: The large-scale enterprises, mainly family enterprises, known also as “keiretsu”, used the intersectoral penetrative leading power, in order to generate their specific knowledge and capital within the separate units as well as within the whole enterprise. The main goal of these “keiretsu” was to realise the positive scale effects in a short period of time. The establishment of keiretsulandscape appears to be very widespread evidence in the Turkish business structures as well as in various sectors of the economy. The phenomena of keiretsu can be explained on the example of Teknosa. Being established only 2000 and belonging to Sabanci Group with a share percentage of 100%, the company became the leading chains with 230 stores in 56 cities in Turkey. This fast expansion was really possible because of massive leverage effects, coming from the whole emprise. The market entry of Teknosa was not only rapid but it was also based on the very innovative facilities, high investments and top organisational method. Being the pioneer, Teknosa invested not only in multi-branding or new kinds http://www.mapic.com/images/100543/pdf/cw_turkey_full_report_july08.pdf.

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of stores (e.g. Teknosa Cep Stores, Teknosa Planet) but it also dealt with the establishment of Teknosa Akademi with the goal to create their own infrastructure for innovation transfer and support their own IT retail chain within the keiretsu. 25 The decision of Sabanci to go in IT retail sector seems to be - in any cases - more than coincidence. In 2007 the company earned USD 750 million, achieving the growth rate of 36%. In the future the IT and electronic retail market is expected to expand and reach approx. USD 10 billion. Looking through the example of Teknosa, we can conclude that the company managed to realise the returns of scale in short time and enhanced its competition, defending itself through the many-sided measures. Therefore we can underline that the experience of keiretsu as an intersectoral power ensured success was successful for Sabanci Group. The other case of keiretsu’s expanding in IT sector can be explained from the intersectoral “keeping up” point of view. The holding, called Koç, was established in 1926 and in terms of organisational structure, is similar to Sabanci holding. The main business fields of the holding are agricultural sector, food industry, automotive and finance sectors, etc. Besides, Koç is engaged in IT sector (Koç System), where ICT based affiliates possess the high level of autonomy but don’t play the substantial role for the holding. Looking through the experience of the company Koç System, it is important to note that we cam see that it works in the knowledge intensive and expensive fields such as Business Process Outsourcing Services, Information Technology Services, Business Solutions, Technology Solutions. Being an “ingredient” of the holding, the company managed to realise the challenging projects of CRM, ERP, RFID, CIS etc. The solutions of Koç System will be not only offered to the external companies but they also make a “big haul” under price factor for the whole group.

The whole area of Academy is now about 1800 square meters, it has 13 classrooms and about 350 trainees.

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3.2 Causality between Technology And Consumption: The magic Triangle Of Turkey Despite the criticism in terms of statistics about the regional structures in Turkey, which seem to be out-dated and not exact, we would try to represent general data in terms of division of Turkish economic potentials. The Turkish production, consumption, as well as innovation power are hard coded in the triangle model â&#x20AC;&#x153;Istanbul-Izmir-Ankaraâ&#x20AC;?. More than a half of the Turkish population lives in this triangle, thereby the area of this triangle accounts for approx. 75000 square kilometres. Fig. 33: Figures Regional Clustering in Turkey

Source: original illustration.

Each of these three metropolis (Istanbul is the largest, Ankara is the second largest, Izmir is the third largest) plays a key role. On the one hand they pull in the consume power and labour power from the neighbouring regions; on the other hand they produce impulses for the economic development back. Although Istanbul, Ankara and Izmir belong to one and the same triangle and have similar business structures, the relations among these metropolises can be described as competitive. Looking through examples of Istanbul, we can see that this city with 11 million inhabitants can not completely dominate Izmir and Ankara in social and economic aspects. According to some Turkish experts, the internal harmonization of business structure will be achieved in triangle area in long terms. - 30 -

The next consolidating cluster in the Eastern South is characterised through absolutely different nature of the development than the triangle in North Western. Its size and power cannot be compared with the triangle’s. Turkish cities Adana (fives largest) and Gaziantep (sixth largest) show high growth rates in different spheres of economy in the last years and represent “vibrancy sources” along the axis Mersin – Diyarbakir. However, the Eastern-Anatolian cluster suffers from the low buying power and from the pre-eminence in the agricultural sector. Because of the low income situation and low developed logistic sector these regions seem to be not for expansion of IT companies at the present time. Analyzing the main regions in terms of GLA, we can underline that such metropolis as Istanbul, Ankara, Bursa, Izmir have the best positions in the ranking. In contrast to their rankings, Gaziantep belongs to outsiders. The GLA index of Adana is a little bit higher but, nevertheless, this city takes only the 11th position among 20 Regions up. According to GLA analysis, which represents the total area of stores per habitant, we can maintain that the biggest sales revenues of IT companies will be achieved in those regions where the GLA indexes are high. Fig. 34: GLA per 1000 habitants

Source: http://www.mapic.com/images/100543/pdf/cw_turkey_full_report_july08.pdf.

For example, the 7th largest Turkish IT company called Index, cumulates 62 % its sales revenues alone in the triangle, in Marmara Region. In Izmir and Ankara, the Turkish IT companies achieve approx. 70% of sales revenues.

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Fig. 35: The structures of sales revenue depended of the region

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

Therefore we can conclude that Izmir-Ankara-Istanbul depict the biggest cluster not only because of their area sizes, high GLA rankings but also because of the beneficial revenue sales.

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3.3 IT Retail In Turkey 3.3.1 Retail Index There are a lot of instruments, in order to estimate the market attractiveness of markets. One of them is the well known Retail Index of A.T. Kearney, which measures emerging markets annually, using the score system of several categories such as country risk, market attractiveness or time pressure. Looking through all the economies of emerging countries, the A.T. Kearney Retail Index 2008 represents the positive results in terms of Turkish development. Gaining three points in the ranking during this year, Turkey managed to reach the Top 10 of the best attractive retail market in the world, catching up such countries as Russia, India, China or Brazil. According to the Global Retail Apparel Index, the Turkish Republic accounted for the fourth position after Brazil, China and India in the ranking. Especially, at the category â&#x20AC;&#x153;Consumer affluenceâ&#x20AC;? Turkey has an absolute advantage in comparison to the other global rivals. Fig. 36: Global Retail Apparel Index, 2008

Source: http://www.atkearney.com/main.taf?p=5,4,1,131.

The sensibility of the Turkish consumers could be observed also on the IT market in long terms. The most successful companies in Retail are Bimeks and Vatan Computer, which managed to achieve beneficial results in terms of different business aspects. For example, Bimeks grew in the period between 1990 and 2005 with the average growth rate 45% annually 26 . The other big rival Vatan Conputer plans for the next three years to expand the turnovers earning till USD 3 billion 27 .

3.3.2 Retail Trade Market Taking into consideration the aforesaid, the ITC market in Turkey has not been saturated yet. Encouraged with prosperity of fast growth, many companies operating 26 27

http://www.bimeks.com.tr. http://www.vatanbilgisayar.com.

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in retail try to accomplish their expansion. Up to date there are many chains on the retail market such as Media Markt, Vatan Computer, Teknosa, Tiger Computer, Bimeks, Electroworld, Electronic Partners (EP), Dixons, Evkur, Darty, Teknolojiks, NT, Vestel Shop, and Metro.The biggest retailers in ICT- Sector are Vatan Computers, Teknosa and Bimeks. Fig. 37: The leaders on the Retail market, 2007 Total Stores Area,m2 Vatan Computer 1983 500 61000 Teknosa 2000 750 55000 Bimeks 1990 200 10000 Source: http://www.teknosa.com; http://www.bimeks.com.tr; http://www.vatanbilgisayar.com; Established Sales revenue, m USD

http://www.pclabs.com.tr/2007/06/20/teknosa-ep-centeri-satin-aliyor/.

The top three chains compete with other retail companies. The rivals Hızlı Sistem (sales revenue about USD 100 m), Teknolojix (sales revenue USD 75 m) and EnPlus (sales revenue USD 60 m) became even more popular in Turkey. The next top Top Retailer is the company Gold Computer in Turkey. According to the rough estimation of PC Labs in 2007, the Gold Computer has realised the sales revenue of USD 250 m 28 but this company calculates the added turnovers of all partners who are under franchise contract Gold Computer. According to strategic direction, all chains use different instruments in order to strengthen their competitive positioning, for example, Teknosa established the academy for the employees, Gold Computers offers the franchise models under very attractive conditions, Bimeks sells its products through catalogue. According to the market coverage, these companies expand differently within Turkey. If Teknosa tries to open its stores in many cities within Turkey, the Gold Computer concentrates primary on Anatolian province. For all IT retailers in Turkey it seems to be typical that they offer different services of high quality. More over, the service can be defined a “technological term” for them, because Turkish market actors pay much attention on the importance of customer oriented dealing. Analyzing the IT retail chains, the Turkish experts and media go into details, taking not the whole valuation of the chain but the separate stores into account. The well known Turkish newspaper, called Turkish Daily News, publishes regularly different articles in terms of retail market, giving information about beneficial retail companies as well as their ranges of products. 28

http://www.pclabs.com.tr/2007/06/20/teknosa-ep-centeri-satin-aliyor/.

- 34 -

Fig. 38: Main Stores in Turkey Company

Area, square meters

Average number of visitors per day

Average visitor factor (visitor per 1 square meter)

Vatan Computer Bornova (Izmir)

7000

700

0,1

EP: Center Cevahir (Istanbul)

2000

35004500

Special Details Bonus, Finans Bank and Axess cardholders benefit from discounts. Online shopping also available at their web site. Main products: PC, multimedia, TV, telecom devices, white goods, and music. In Turkey is the company a sole supplier of Intel Core 2 Duo Double Core Processor notebooks. 400 brands and 4000 categories. Bonus, Shop&Miles and Worldcard

Teknosa Metrocity 1022 2133 2,08 (Istanbul) Gold Bilgisayar KadikĂśy 300 1500 5 Online shopping on the web site. (Istanbul) Teknosa Kanyon 996 1670 1,78 400 brands and 4000 products (Istanbul) Source: original illustration to the data from http://www.turkishdailynews.com.tr.

According to the table above, we can note that the storesâ&#x20AC;&#x2122; efficiency (expressed in form of average visitors per 1 square meter) among different retail chains is different and depends on special services (volume-based rebates, integrative CafĂŠ) that are offered be retailer. In terms of foreign retailer, which have the leading positions in Turkey, it is important to underline the German B2B as well as B2C operator, called Metro. At the present time the company has 11 stores of Real Chain and 5 stores of Saturn Chain and Media Markt in Turkey. The next example of the successful company, which works in B2B and B2C interface, is Metro with 11 Cash &Carry stores in Turkey.

3.3.3 Wholesale Market Analyzing the distribution systems on the ICT market in Turkey, it is important to say that the distribution companies have their specialities in terms of organisational structures. That means that the existence of intersectoral companies influences the landscape of distribution. Concerning our research, the number of distributors, who work for the purpose of classical distribution (Arena, eSys, Akora, Asbis, Multimedya etc.), accounts for approx. 80. The IT distribution companies operate in various fields, thereby the B2C field effects the B2B. As in other countries, the Turkish distributors concentrate their focus on the business activities.

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The following table represents the Ranking of Top 20 IT companies in Turkey (2006), thereby some of them e.g Türkcell and Vodafone deal with a distribution of GSM equipment in the telecommunication sector, the others (Index Bilgisayar, Arena) work in the information sector and specialise on the distribution of portable computers, servers, printing systems, data communication equipments etc. Looking through the Turkish distributor companies, we can see that some of them prefer to concentrate on so-called “narrow distribution channels” (e.g. Özel delivers only NEC and Sony products and services), providing the dealers and other companies with exclusive services and brands as well as with a wide range of products. As a result, there is a new trend at the ICT distribution market in Turkey, which can be explained through the change of the preferences and concentration on specialised trade. Fig. 39: Top 20 ICT companies’ sales revenues Ranking, 2006

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

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In the next chapter we will represent some Turkish companies, paying attention to their establishment, organisational structures, economic data as well as their positions at Turkish ICT market.

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4 The Turkish Companies’ Profiles Taking into consideration the aforesaid, finally we would like to introduce some medium and large size enterprises, which deal with information and communications technologies in Turkey.

4.1 Teknoloji

Teknoloji: http://www.teknoloji.com/english/ HO 29 : Istanbul Teknoloji is a holding, consisting of such group companies as: • • • • • • •

Exim: established in 1988, line of business: automatic identification and data capture (AI/DC) technologies Teknoser: established in 1998, line of business: service Provider Company (for various institutions in the industry) with its 54 offices and over 300 field technicians throughout Turkey. Embrio: established in 2006, line of business: “e-business”, concentration on high-potential projects and creative business ideas in the mobile and online world. Data Profil: is the first enterprise of Embrio, line of business: marketing service, the first product: superteklif Kolay Tedarik: is the second enterprise of Embrio, established in 2007, is a B2B platform Vendio: is the third enterprise of Embrio, established in 2007, is a online shopping channel Belge Turk: established in 2007, line of business: e-Document management

Affiliates: • Bilyoner: established in 2004, with cooperation of Techloji Holding (Turkey) and Intralot (Greece), line of business: platform of Turkey's first electronic chance game

HO - Head Office

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4.2 Koç Holding

Koç Holding: http://www.koc.com.tr/en-US

gfcc

Koç Holding: •

established in 1926, is a industrial and services group, with leading positions in four core sectors that offer strong growth potential: energy, consumer durables, automotive and finance

•

Consists of 16 subsidiaries

•

Number of employees: 78,905 and 14,000 dealers, agencies and after-sales service providers Total exports and international revenues of Koç Group companies (2007): USD11.8 billion and USD13.3 billion.

•

Fig. 40: Main financial highlights

Source: http://www.koc.com.tr/en-US.

Koç Holding Sectoral Group Companies: • • • • • • • •

Ford Otosan Group Tofaş Fiat Group Other Automotive Companies Group Food-Retail and Tourism Group Durable Consumables and Construction Group Energy Group Financing Group Other : In Tourism: • • • •

Setur The Divan Group Setur Marinas RMK MARINE

Ark İnşaat; Zer Merkezi Hizmetler; Ram Dış Ticaret

- 39 -

In Information Technology sector: • • • • •

KoçSistem Koç.net Bilkom Promena Tanı:

KoçSistem: http://www.kocsistem.com.tr/eng/ KoçSistem is an Information Technology Company with a 100% Turkish capital • • •

line of business: customized technology solutions and outsourcing services; market share in IT services segment 10%, in IT outsourcing segment 16%; revenue growth of 30% in 2007

Fig. 41: Business Partner Network Hardware Personal Computer, Server and Data Storage Systems

Call Center Services Softwares

Training

Cisco, Enterasys, Juniper Networks, Nortel Networks, 3COM Beko, Dell, EMC, GlassHouse, HP, IBM, Lenovo, Lexmark, Netapp, Sun

Avaya Actimize, ACL, CA, CheckPoint, McAfee, Microsoft, Novell, Oracle, Oracle-Hyperion, Oracle-Siebel, SAP, Sun, Symantec, Trendmicro, Websense CA, CheckPoint, DynED, Enterasys Networks, Microsoft, Oracle, Redhat, Sun

Source: http://www.kocsistem.com.tr/eng/.

Koç.net: http://www.koc.net/ • • •

line of business: integrated communications solutions, including network and security services, hosting and ASP services, campus solutions, multimedia services, and long distance, international and GSM telephone services. Partnerships: British Telecom, KPN (Royal Dutch Telecom), Global Crossing and Bezeq Koç.net increased its total revenues by 21% and exports by 25% in USD terms in 2007

Bilkom: http://www.bilkom.com.tr/bilkom_hakkinda.html •

line of business: distributor of all Apple products in Turkey since 1984 - 40 -

• • •

locations : more than 700 Turnover up 23% number of Apple Premium Reseller stores: 12

Promena: http://www.promena.net/EN/INDEX/default.asp • •

line of business: Effective and efficient procurement services (vendors) total volume sales and procurement transactions: USD 740 million

Tanı: •

line of business: data security and privacy, and superior infrastructure

4.3 Sabanci Holding Sabanci Holding: http://www.sabanci.com/en/sabanci_toplulugu.asp

Strategic business units: • Financial services • Tire, Tire Reinforcement Materials and Automotive • Retail • Cement • Energy • Trading and Industry Business • Social and cultural activities • Other activities In terms of IT sector:

Teknosa: line of business - the technology retail sector Establishment: in 2000,is wholly owned subsidiary of Sabancı Number of cities: 56 Number of stores: over 230, 30 are targeted for 2008 Space: over 55,000 m2 of total retail space Wide assortment of technology products Sales revenue: by 36% to USD 750 million

- 41 -

Organisational structure: • • •

Teknosa Cep stores: 2007, line of business: small products such as mobile phones and MP3 players Teknosa Planet, 2008, line of business: distinctive design and differentiated concept demonstrating Teknosa's vision in technology retailing in a large store format. Teknosa Akademi: line of business: creation of infrastructure for career planning and a back-up program, transferring sector innovations and developing individual

Honours: Quality Management System Document in 2007, in recognition for all its activities.

4.4 Index Index: http://www.index.com.tr/english/aboutindex.asp Establishment: 1989, in 2000 Pouliadis Group (Greece based company) bought 50% share of Indeks Turnover: USD 788 million in 2007 Distributor in IT industry of nearly 200 Brands, approximately 90% of the sales volume consists of the products of international companies. Fig. 42: Distribution of sales

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

Number of employees: 323 - 42 -

Company’s ranking (2007): 7th position 30 Fig. 43: Global Brands of Index

Source : http://www.index.com.tr/english/aboutindex.asp.

Product range: desktops, laptops, servers, pc peripherals Fig. 44: Structure of Product Supply and Distribution

Source : http://www.index.com.tr/english/aboutindex.asp.

Company’s ranking was performed by Interpro Medya A.S.

- 43 -

Organisational structure: Indeks acting as a holding company has 6 affiliates and subsidiaries. Fig. 45: Subsidaries of the company Subsidiaries

Share Percantage

Datagate Bilgisayar Malzemeleri A.Ş(*)

59,24%

Neteks İletişim Ürünleri Dağ. A.Ş.

50,00%

İnfin Bilgisayar Ticaret A.Ş.

99,80%

İnko İletişim ve Dijital Hizm. San.Tic.A.Ş.

69,87%

Neotech Teknolojik Ürünler Dağıtım A.Ş.

80,00%

Teklos Teknoloji Lojistik A.Ş

99,99%

(*) Shares of the Datagate Bilgisayar Malzemeleri A.S. were offered to public in February 2006. After the Public Offering, Indeks A.S. share percentage dropped from 85% to 59.24% and capital of the Datagate A.S. is increased to YTL 10.000.000 YTL from YTL 6.600.000 YTL.

Source: http://www.index.com.tr/english/arze.asp.

Each of affiliates and subsidaries operates in different fields of technology products:

Fig. 46: Product groups by company

Source: http://www.index.com.tr/borsa/index_ing_07.pdf.

- 44 -

Datagate Bilgisayar Malzemeleri A.S. • Establishment: 1992, Istanbul • Line of business: sales, distribution, marketing, logistics and after sales services of the various brands producing IT components Fig. 47: The main product groups and brands of Datagate

Source: http://www.index.com.tr/english/arze.asp.

Neteks Iletisim Ürünleri Dagitim A.S. • Establishment : 1996 • Line of business: network and communication products Fig. 48: The main product groups and brands of Netex

Source: http://www.index.com.tr/english/groupcompanies.asp.

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Neotech Teknolojik Ürünler Dagitim A.S • Establishment : 2005 • Line of business: wholesale marketing of consumer electronics and communication products Infin Bilgisayar Ticaret A.S. • Establishment: 2001 • Line of Business: sales and export operations within the framework of investment operations Inko Iletisim ve Dijital Hiz. A. S • Establishment: 2004 • Line of business: Long Distance Telephone Services (intercity calls, international calls and other mobile phone calls from a land line)

Teklos Teknoloji Lojistik A.S Establishment: 1973 Line of Business: logistics services for group companies and other companies in IT sector

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5 Conclusion In this study, we examined the Turkish ICT market as well as represented some relevant trends of its different segments. Our particular attention was given to the introduction of various companiesâ&#x20AC;&#x2122; profiles with the goal to define special features of the ICT market as well as ICT trade in Turkey. Looking through the Turkish example we can conclude that with young and dynamic demographic structure, growing economy and experienced entrepreneurs who can take the advantages of the globalizing world economy in an ever-improving way, Turkey offers great opportunities both at home and abroad. Thanks to beneficial geographical position, Turkey takes part in different international projects, offers outsourcing services, and makes deals in domestic as well as in international trade. On the other hand, such a beneficial geographical position seems to be very attractive for international partners. Therefore the capital of the country, Istanbul and some other big cities such as Ankara or Izmir can be already seen as major hubs for Turkish trade. Moreover in the coming periods the Turkish ICT market will be shaped by stronger players. Nowadays, the ICT sector is far from saturated and has plenty of room for growth in all segments (software and application development, content aggregation, content creation, creation of mobile community sites, outsourcing projects, eTransformation as well as government projects), offering opportunities for existing and new global players as well as attracting many local and foreign investments in various capacities. The quality of services and new infrastructure come to the fore. Moreover the value-added services can be seen as the main way for companies to maintain competitiveness. Nevertheless there are many obstacles at the ICT market in Turkey, which are caused by low ICT competence of employees, lack of investments and know how. Also the high costs and insufficient national and local telecoms and Internet infrastructure 31 can be seen as the primary obstacles in Turkey. As a result both ICT

Cp. http://it-online.co.za/content/view/456621/129/.

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companies and private households are not able to obtain the technologies that they need. Therefore Turkey needs a serious jump if the country is going to realize the anticipated development by ICT. The obstacles in the ICT sector can be overcome by the establishment, reinforcement and development of organizational structures, which will ensure coordination, implementation and monitoring of strategies and actions determined in the process of transformation into an information society. Thereby it is very important to ensure an effective lawful, political, and social environment and R&D activities. Development of new technologies in this field and transformation of these technologies into products will be encouraged. Also an international competitiveness based on knowledge and productivity as a result of the network effect, which will be created by constructing the relationship between and within the government, the citizens and the businesses based on the ICT are sufficient components of this development. Furthermore, the co-operation between industry and universities, the support through ITC experts and consultants, organisation of training programs in the areas of technology, management and marketing are fundamental characteristics of economical success.

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URL: http://www.index.com.tr/borsa/index_ing_07.pdf. URL: http://www.index.com.tr/english/aboutindex.asp. URL: http://www.index.com.tr/english/arze.asp. URL: http://www.index.com.tr/english/arze.asp. URL: http://www.interpromedya.com.tr./irishfinancenews/article_1014752.shtml.countrysnapshot/Turkey. URL: http://www.it-online.co.za/content/view/456621/129/. URL: http://www.koc.com.tr/en-US. URL: http://www.kocsistem.com.tr/eng/. URL: http://www.mapic.com/images/100543/pdf/cw_turkey_full_report_july08.pdf. URL: http://www.oberon.sourceoecd.org/vl=1066346/cl=15/nw=1/rpsv/sti2007/ge132.htm. URL: http://www.pclabs.com.tr/2007/06/20/teknosa-ep-centeri-satin-aliyor/. URL: http://www.teknosa.com. URL: http://www.turkishdailynews.com.tr. URL: http://www.turkstat.gov.tr/PreHaberBultenleri.do?id=2055&tb_id=25. URL: http://www.vatanbilgisayar.com.

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