Monday, 11 April 2011

Why do forecasters still split Eastern & Western Europe?

I'm up to my ears in M2M forecasts at the moment and one of the things we decided to do at Machina Research was to abandon the old split of Eastern vs Western Europe. Why? Here's the reasons...



  • Geographically it's a nonsense. I don't want to dwell on this one too long as it's not really a big deal but there's lots of W Europe that's actually pretty east. Greece and Finland were historically western Europe even though they're way east of Prague. That's fine. But, for instance, where do I put Turkey in my forecasts? If we're considering it to be Europe (and we at Machina are), does it go in Western or Eastern? Neither make sense according to the old definitions.

  • The market dynamics are broadly the same. OK, so Belarus and Belgium are pretty different, but there's little to choose between say Czech Republic and Austria in terms of fundamental dynamics of the telecoms markets.

  • In terms of wealth, it's becoming less and less relevant. Czech, Hungarian, Slovenian and Baltic GDP/capita is catching up and in some cases exceeding those for Portugal and Greece.

  • In terms of politics and regulation it makes no sense at all. OK, so it made sense in 1988 when there were Soviet and US spheres of influence, but last time I looked the iron curtain had well and truly rusted. Today half of what makes up E Europe is in the EU. So they're following the same rules as most of W Europe. It would surely be more sensible to split EU vs non-EU. But Norway and Switzerland tend to follow the same rules as the EU and (as noted above) they don't have a lot in common with Ukraine, Belarus and Moldova. Also, as new countries accede to the EU the definition would keep changing.

  • Telcos don't see it that way. Many many European MNOs have presence in both Eastern and Western Europe. Vodafone, T-Mobile, Telefonica/O2, Orange. For the most part they consider them as part of a single European footprint. And so should we. Most of my contacts within European operators want to know about implications for the whole of their footprint. It makes no sense for me to have to say "I can tell you about France and Denmark, but you'll have to wait 3 months before I can tell you about Estonia and Romania". As it happens, at Machina ALL our forecasts are global, so for any given sector we'll always have all countries covered.

So, the only real argument is that (a) we've always done it that way and (b) you have to split it some way or it's too big to do. The former is a nonsense argument. The latter has some credibility. As forecasters you need to segment. For instance, we have 6 global regions. However, the fact that a European telco wants Europe level data and that the countries have such fundamental similarities means that the old Eastern/Western split for Europe makes little sense.


Machina Research will soon be publishing our market forecast reports for embedded connectivity/M2M in the Utilities and Health sectors. The reports include detailed market forecasts for 54 countries. If you'd like more details, email me.

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