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Bahrain Information Technology Report 2010
Business Monitor International, Nov 2009, Pages: 47
The Bahrain Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Bahrain's information technology industry.
Market Overview
The total size of the Bahrain IT market in 2010 is estimated by BMI at around US$366mn, up from US$345mn in 2009. BMI expects a market compound annual growth rate (CAGR) of 7% for 2010-2014. The IT market is expected to pick up in 2010 following a weaker 2009, when lower oil prices, economic uncertainty and tighter credit conditions led to an IT market slowdown.There should still be significant opportunities going forward. Bahrain is becoming an important regional financial hub and there should be substantial spending in this sector. Meanwhile, economic reform and trade liberalisation will fuel spending by both public sector organisations and enterprises to bring their IT levels up to international standards. The Kingdom will benefit from trade liberalisation, strong demand from the financial sector, e-government and broadband.
Industry Developments
In 2009, the Bahraini government commenced work on a 2011-2014 e-government strategy. The new three-year plan was scheduled to be unveiled in the middle of 2010 with approval in time for implementation in 2011. Bahrain's e-Government Authority (eGA) was working with US networking giant Cisco to develop the plan.
Meanwhile, the eGA continued to work towards implementation of current targets, with the number of cyber services scheduled to be increased to 130 in 2009 and 200 by 2010. Three new portals for Bahrain gate, mobile phones and public services were also launched. In 2009, the government cited a study as showing 85% satisfaction with its e-government strategy in the kingdom. 2009 brought more innovation in the area of e-government. Bahrain's High Information and Telecommunications Committee (HITC) announced plans to set up a company to help streamline government services. The National Portal also received an infrastructure upgrade in 2009, which increased its capacity tenfold and resulted in a more unified platform.
Competitive Landscape
The Bahraini PC market remains dominated by international players including Acer, HP and Dell, with the strongest challenge coming from other multinationals such as Toshiba. The high demand for notebooks, which remains the most dynamic form factor, is reinforcing major vendors' position. In 2009, HP signed Metra Computer as a new distributor for its Personal Systems and Imaging and Printing Groups in the Bahraini market.
The software segment has seen some recent competitive manoeuvring as vendors love to take advantage of growing opportunities. In summer 2009, Microsoft continued to lay the groundwork for the launch of its new operating system, Windows 7, which was unveiled in October. Meanwhile, Oracle benefits from a strong pre-installed base in the Middle East region.
The IT services market is dominated by a few big vendors, with major local players including Zayani Computer Systems and Bahrain Business Machines (BBM). However, HP has strengthened its service capabilities in Bahrain through the purchase of NCS, a Bahraini company, resulting in a new company called HP Services Bahrain. HP also received a boost in Bahrain from its acquisition of Electronic Data Systems (EDS), which had its regional headquarters in the Kingdom, and a major client in Gulf Air.
Computer Sales
Bahraini PC sales are projected to reach US$194mn in 2010, up from US$184mn in 2009. The computer market should grow at around 6% a year to US$241mn by 2014, according to BMI estimates. Wireless connectivity will be one factor boosting demand for notebooks, stimulated by new technologies and infrastructure investment.
As elsewhere in the Gulf, notebooks are projected to account for more than 60% of PC unit sales over the forecast period. Small and medium-sized enterprises (SME), which account for up to 35% of IT spending in the region, will also drive demand as smaller companies face increased competition and take advantage of regional opportunities.
Software
The Bahraini addressable software market is projected by BMI at US$45mn in 2010 and is expected to grow at a CAGR of 8% over the 2010-2014 forecast period. In 2009, the economic slowdown meant that enterprises were tempted to focus more on the bottom line. The domestic software market is, however,expected to grow steadily as Bahraini companies look to meet growing regional competition. Bahrain is becoming an important financial hub and there is a substantial opportunity as banks invest to support new services and regulatory compliance. Enterprise applications should account for around 30% of software spending, as the market for ERP applications is far from saturated. With the evolution of Bahrain's IT market, a stronger focus on software spending is now being seen.
Services
The Bahraini IT services market is expected to be worth around US$81mn in 2010 according to BMI estimates, accounting for around 22% of all IT spending in Bahrain. Spending on services is predicted by BMI to continue expanding thereafter, as banks, telecoms companies and government agencies, in particular, invest in IT that will enable them to compete in a changing environment. IT services CAGR for the sector for the 2010-2014 period is forecast at around 11%. As a result of the economic slowdown in 2009, many institutions spent more cautiously and focused on ROI and 'good enough' solutions. Despite the economic headwinds, however, there continued to be opportunities in key IT spending verticals.
E-Readiness
Bahrain has among the highest penetration levels for internet and telephony of all Arab countries, along with Qatar. Fees for internet access have fallen in the past one or two years, providing a boost to uptake. Batelecom's three-to-five-year BHD21mn 'Broadband Bahrain' programme, providing national highspeed access to individuals and corporate users, should also drive adoption of broadband services post- 2008.
Bahrain moved up six places in the World Economic Forum's respected E-Readiness index in 2008 to 45th place, which represented the biggest improvement in the region. Bahrain ranked third in the region behind the UAE and Qatar. It also rates quite highly in regional rankings for e-government development. With the resulting increase in the number of citizens using e-government services to interact with government departments, the Central Informatics Organisation (CIO) is currently implementing a training programme to improve the e-literacy of civil servants. Bahrain also claims to be the first government in the Middle East to adopt open standards for its e-government initiatives.
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