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Oman Information Technology Report 2010
Business Monitor International, Nov 2009, Pages: 50
The Oman 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 Oman's information technology industry.
Market Overview
The total size of the Oman IT market in 2010 is estimated by BMI at around US$327mn, up from US$308mn in 2009. BMI expects a market compound annual growth rate (CAGR) of 5% for 2010-2014. Oman's economy is relatively well positioned for the post-credit crunch era, but IT spending is not seen as returning to its previous rate of growth over the forecast period.
Oman's IT market is only about 10% of the size of the Saudi Arabian market, but the Omani government is investing in IT as part of its Digital Oman initiative and strategy to diversify the economy. In addition to ongoing demand from the oil and gas sector, this should generate IT spending in verticals such as telecoms, financial services and aviation.
Economic reform and trade liberalisation will fuel spending by both public sector organisations and enterprises. Growth in e-commerce will also drive spending by enterprises on e-commerce platforms and back-office systems. Oil and gas remain a pillar of the local economy and will generate spending on customised solutions, hardware and software support.
Industry Developments
In August 2009, Oman's Information Technology Authority (ITA) unveiled a new 'e-Oman' brand. The government's e-Oman goals include bridging Oman's digital divide and making e-government service available to all citizens and residents. In 2009, the ITA was preparing to launch an E-Government Services Portal, a gateway to services offered by government departments via the internet. A key driver of Omani e-services development is expected to be tbe e-Purse initiative, launched in 2009. The e-Purse, which will be embedded in national ID and residence cards, was being implemented by the ITA in association with the Royal Oman Police and BankMuscat. During the first phase of the project, the E-Purse can be topped up only at BankMuscat branches, but project was due to be extended. IT was expected to be one of the key sectors to benefit from the US-Oman free trade agreement signed by former US president George W. Bush in November 2006. The agreement came into effect on 1 January 2009. US IT vendors were among the major backers of the agreement in the US Congress.
Competitive Landscape
The Omani PC market remains dominated by international players such as Acer, HP and Dell. Oman has a high-end niche market that is interested in form factors and aesthetics. There is also demand for lowerpriced products like netbooks, however, and this segment attracted a series of product launches in 2009. Part of the challenge for vendors in the region is to establish the right distribution strategy to take advantage of an evolving retail segment.
Previously, many software vendors served their customers from out of the UAE, but a growing number of customers in the Sultanate have tempted more vendors to establish new bridgeheads to expand partner channels. Microsoft has strengthened its presence in the Sultanate with a dedicated in-country partner account manager and stronger support infrastructure. The company was counting on a successful launch of its new operating system, Windows 7, in October 2009.
Most IT services vendors were focused on opportunities in major IT verticals such as oil and gas, government, financial services and aviation. HP is mid-way through a five-year deal with Petroleum Development Oman. IBM partner, Gulf Business Machines (GBM), received a share of the egovernment portal project from the ITA. Meanwhile in 2009, air transport IT specialist SITA signed a five-year US$4.6mn contract with Oman Air.
Computer Sales
Oman is one of the Gulf region's less developed PC markets. The Omani PC market should grow at around 6% a year to US$190mn by 2014, according to BMI estimates, with drivers including the growing popularity of notebooks, falling prices, the government's 'Towards Digital Oman' strategy and the elimination of custom duties within the Gulf Cooperation Council (GCC). Wireless connectivity will boost demand for notebooks, stimulated by product innovation and new technologies. Small and medium-sized enterprises (SMEs) as well as large enterprises are expected to invest in equipment to deal with increased competition and take advantage of regional opportunities.
Software
The Omani addressable software market is projected by BMI at US$62mn in 2010 and is expected to grow at a CAGR of 5% over the 2010-2014 forecast period. In 2009, the economic slowdown meant that some enterprises were tempted to focus more on the bottom line. Faced with economic uncertainty, however, some Omani customers deployed ERP and CRM solutions to streamline business operations. Real estate is one sector where CRM deployments are being seen, as Omani developers and sales organisations look to capture customer data and requirements in one centralised system. With the evolution of the IT market, a stronger enterprise focus on software spending is also being seen, withcompanies preparing to compete in a regional environment of greater trade freedoms. Government initiatives are also a driver.
Services
The Omani IT services market is estimated at around US$85mn in 2010, accounting for around 19% of overall IT spending in Oman. Spending on services is predicted by BMI to continue to expand thereafter as banks, telecoms companies and government agencies, in particular, invest in IT that will enable them to compete more efficiently in a changing regional environment.
BMI projects that about one-third of spending will be on support and maintenance, with SI the second largest category and managed services/outsourcing at about 20%. Many vendors see an opportunity to expand their services portfolios, as enterprises demand look to get more out of their IT investments.
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