Kuwait Information Technology Report Q2 2016
BMI View: The growth outlook for Kuwait's IT market is weak, with the slowdown in private consumptionin a saturated retail PC market the main factor in a hardware centric IT market. We forecast total ITspending will increase at a CAGR of 1.4% over 2016-2020, with software and services expected tooutperform. Although the hardware segment has the weakest outlook, and is expected to contract slightlyover the medium term, it will nonetheless remain highly lucrative due to the large premium segment.
Meanwhile, software and services have a brighter outlook as the low oil price acts as a catalyst fordiversification and investments in cost-saving and flexibility-enhancing IT solutions.
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Hardware: Sales in Kuwait will decrease from KWD154.0mn in 2016 to KWD151.0mn in 2020,recording a compound annual growth rate (CAGR) of -0.6%. Weak consumption outlook in a saturatedmarket will result in mild contraction of retail hardware spending.
Software: Spending is forecast to increase from KWD57.0mn in 2016 to KWD62.0mn in 2020, at aCAGR of 2.0%. Weak economic sentiment a drag on spending growth, but this will be offset bymodernisation initiatives as enterprises look to cut costs.
Services: Spending is forecast to increase from KWD106.0mn in 2016 to KWD123.0mn in 2020, at aCAGR of 3.9%. The cost savings and increased flexibility offered by services such as cloud computingand outsourcing will support IT services outperformance in an environment of elevated economicuncertainty.
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