Since the Spanish hardware market has been colonised by Japanese and US companies, observers are wondering if software and services are about to suffer the same fate. The hardware sector boasts only one manufacturing company that can be described as homegrown. The $28m APD ranks around 24th, and the major players are foreign multinationals like IBM, Olivetti, Nixdorf and Fujitsu. They have the advantage of manufacturing in Spain, and being able to import from their other European bases. Yet, compared with the rest of Europe, Spain’s personal computer sales are booming, and the software and services sectors are experiencing an impressive growth. The initial costs of software are relatively low, and value added products can bring in between 34% to 78% of a company’s turnover. As consumption increases and there is widespread user maturity, new areas of business are opening up. The range and quality of Spanish products is claimed to match that of many European counterparts, and another fillip to the software sector is the current merger trend in Spain. Newly merged companies are crying out for services to link disparate computer systems, networks, packages and custom-made products. In 1988, software and services grew by 22% and 23% respectively, turning over $1,154m and $461m. Forecasts suggest that the services market will increase by a further 17% in 1993, approximately 5% above the rest of Europe. Yet, despite the internal demand for software and services, the market is still dominated by multinationals. Most of the larger companies are foreign owned or have large numbers of foreign shareholders. France is particularly dominant with 75% of the Compagnie Internationale de Service Informatique, 93.3% of the Sema Group, and GSI Seresco is wholly owned. According a recent report from the Board of Electronics and New Technologies, less than 40% of the software industry is in Spanish hands. An increasing number of foreign companies are competing on the Spanish market, and recent entrants include Alcatel, Olivetti, Cap Gemini Sogeti, and Arthur Andersen. Nonetheless, the invasion is undoubtedly benefiting Spain’s software industry, primarily through distribution agreements and an increased presence in other EC countries. The indigenous industry is also coming round to the idea of strength by collaboration. The concept of a national software holding company was first mooted in 1988, and the various parties appear to be ready to go ahead.
Underfunding
Eria and Entel are to merge their application software activities. Ibermatica, Ecotel, Maptel, Seinca, Erdisa, Sadiel, and Eria-Eurosoft BV are also involved to varying degrees. The new company is expected to do $128m a year and employ 1,700 staff in the initial phase. Entel’s telecommunications software assets are to remain separate, and Eria will have a 51% shareholding. The company is due to start trading in March, and the merger is expected to take the best part of a year. The new venture could be regarded as recognition of the importance of software and services to the Spanish computer industry. Yet, critics say that the Spanish government is dragging its feet, and State consumption is far below the European average. To date, the two main areas of computerisation have been the Ministries of Finance and Social Security. However, the lack of state investment is only one criticism levelled at the the administration. Observers say that there is a tendency towards Unix, but a lack of direction and coherence between various departments. All of which is compounded by under-funding and consequent loss of skilled personnel to the private sector. Many proponents of software and services see the Single European Market as some sort of White Hope. They say that it may force change in the public sector, and promote a pan-European attitude.
