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Kuwait Information Technology Report Q4 2009Published by: Business Monitor International Published: Oct. 14, 2009 - 53 Pages Table of Contents
AbstractMarket OverviewKuwait, as the third largest computer market in the Gulf, is not immune to the regional slowdown, andlocal IT spending is expected by BMI to dip to US$736mn in 2009. Despite the challenging tradingenvironment, the market is relatively well placed to withstand current economic headwinds and shouldcontinue to be a lucrative one for information technology vendors over the forecast period. In some respects the Kuwaiti market appeared relatively well placed to withstand the slowdown. Themarket is quite self-contained, being less dependent on re-export than the UAE. The market also haspotential for a strong recovery after 2010 and, if potential is met, could possibly outperform many othermarkets in the region. Kuwait's IT market has a number of enduring strengths. These include its relatively small but tech-literateand wealthy population, which makes Kuwait an important regional testing ground for new products. InH109, there were signs that the slowdown was not too severe, but distributors were being more cautiousabout awarding credit, or ordering stock, and this is likely to remain a restraint. Industry Developments In 2009, directors of the Central Agency for Information Technology (CAIT) called for an updating ofbusiness laws and legislation dealing with e-commerce. CAIT has led the drive to launch the Kuwaitigovernment's new portal for e-services, making all government services available through a single site,and eventually over a mobile platform. With CAIT playing a co-ordinating role, Kuwait has ramped up itse-government efforts, rolling out a number of new services for citizens in 2008. 2008 saw an acceleration of projects from various state organisations. The social welfare ministry, thedefence ministry and the finance ministry are recognised as particularly advanced. Despite such progress,big challenges remain to Kuwait's e-development, particularly excessive bureaucracy and laggingeducation systems. Company News The Kuwaiti PC market remains dominated by global vendors, such as Acer, HP and Dell, withinternational players holding most of the top 10 spots in the PC rankings. In 2009 the emergence of smallform factor notebooks as a PC market growth area have attracted vendors such as Toshiba to attemptto strengthen their presence in this segment with new product releases. There were signs that some leading vendors were looking more closely at in-country distribution. In 2009,Dell signed a contact authorising regional IT distribution giant Redington to carry its consumer productline-up in Kuwait. The tie-up with Redington is merely the latest in a series of new partnerships for theregion that Dell has announced recently. Microsoft was among vendors who reported that regional sales in the oil and gas segment had beenaffected by the economic crisis, with some clients cutting back spending on systems. The companywarned of 'challenging conditions'. Microsoft's local clients in the oil sector include Kuwait OilCompany (KOC), but the company's local oil and gas operations are now run from Dubai. Meanwhile,Gulf Business Machines (GBM), partner of IBM and Cisco, believes that new and emergingtechnologies will enable it to keep growing despite the current more difficult situation. Computer Sales In 2009, the Kuwaiti computer hardware market is forecast at US$317mn, with a single-digit contractionfrom last year, as the economic slowdown belatedly hits home. Despite the global financial crisis, overallcomputer hardware sales was estimated at around US$330mn last year, making Kuwait the third largestmarket in the region after Saudi Arabia and the UAE. In H209 businesses are expected to maintain acautious attitude to IT investments due to the economic headwinds, but there should still be growth areas. Over BMI's five-year forecast period, demand is expected to grow at a compound annual growth rate(CAGR) of 7% to around US$414mn by 2013. The public sector and e-government projects will continueto be a mainstay of the market, with sizable budgets allocated. Privatisation initiatives will boostspending, as will retail channel evolution, and more foreign investment. Small and medium-sizedenterprises (SMEs) will be a key segment, as growth in regional trade encourages many to invest ininformation systems. Software In 2009, total spending on software is forecast at US$199mn, down from US$207mn the previous year.The market decelerated in H109 as enterprises came under pressure to focus more on the bottom line.With trade liberalisation and growing regional competition continuing to fuel enterprise spending onsoftware and systems, however, there should still be opportunities across many sectors. Commercial organisations remain the most significant driver of Kuwait's IT spending. In the mediumterm, facing change and seeking efficiencies, SMEs are likely to generate opportunities. Manufacturingand trading firms are both seeking to transition from manual environments to full automation of backofficesystems. Services The Kuwaiti IT services market is projected to be worth around US$221mn in 2009 and is forecast togrow at a 10% CAGR to a value of US$277mn by 2013. The economic situation, and credit tightening, islikely to have an impact on projects in some key verticals that have been driving IT spending. Theseinclude not only oil and gas but the financial, government, education, construction and healthcare sectors.In 2009, there were reports of IT managers in various areas looking to cut costs. However, the emphasisoften seemed to be more on scaling back projects by 10-20% rather than cancellation. In the near term,budgets have often already been commissioned, and so the effects are more likely to be felt in H209 and2010. E-Readiness Kuwait is one of the most advanced technological markets in the Gulf, but high subscription costscontinue to restrict broadband penetration, which has exhibited stagnant growth and was estimated at just1.3% in 2008. According to BMI figures, the number of internet subscribers is projected to increase toover 1.5mn by 2013. Growth in the numbers of broadband subscribers seems much stronger, but the numbers are still very low.Competition is limited in the supply of broadband services, and thus prices have remained high, deterringmany potential subscribers. The government is hoping to drive IT development with its new broadband access initiative. Alcatel waschosen by Kuwait's State Ministry of Communications (MOC) to supply a gigabit passive optical network(GPON) solution that will serve about 60% of access areas involved in the ministry's present roll-out. TheMOC's access network is gradually being upgraded by replacing the existing copper access with a passiveoptical fibre infrastructure. Even so, there will only be slightly more than 100,000 broadband subscribersby 2013, on latest BMI projections. Get Full Details About This Report >> |
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