Ukraine Slump Hurts Microsoft Sales Growth, Shymkiv Says

Microsoft Corp. (MSFT)’s sales growth to Ukrainian companies this year will slow along with the economy, said Dmitry Shymkiv, the U.S. company’s Ukrainian general manager,.

“Sales in the corporate sector increased by more than 30 percent in 2012,” Shymkiv said in an interview in his Kiev office. “It is going to be slower this year.”

Microsoft expects sales of hosting services for businesses to increase by more than 50 percent this year, according to Shymkiv. There are around 2,000 corporate clients in Ukraine who are actively using cloud-computing service, he said.

Ukraine’s economy slipped into recession last year as demand for chemistry and steel fell on global markets. Goldman Sacks Group Inc. (GS) expects the economy to contract 1.8 percent this year. Gross domestic product slipped 0.5 percent in January, according to the central bank, while Prime Minister Mykola Azarov wants 2013 growth of between 3 and 4 percent.

Sales potential for the Redmond, Washington-based company is highest in the public sector, where more than 74 percent of software used is unlicensed, Shymkiv said.

“For Microsoft, Ukraine remains a country of high potential for growth,” he said.

Piracy remains a problem in Ukraine and has not been properly addressed, he said. Between 2 percent and 5 percent of unlicensed software is used in the telecommunications industry, while copyright compliance in the banking industry is between 65 percent and 70 percent and overall corporate compliance is between 60 percent and 70 percent, he estimated.

Windows phone sales in Ukraine is also a “very dynamic” market, with sales of Windows phone and Windows 8 software expected to be boosted by a higher supply of touch-screen devices on the market, Shymkiv said.

To contact the reporter on this story: Kateryna Choursina in Kiev at kchoursina@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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