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Qatar Information Technology Report Q1 2010
Business Monitor International, Jan 2010, Pages: 51
Business Monitor International's Qatar 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 Qatar's information technology industry.
Market Overview
Qatar may not have the largest IT market in the Gulf, but in 2010 it appears better positioned than some other markets in the region to benefit from economic recovery. Despite a deceleration in many market segments in 2009, 2010-2014 IT spending CAGR is forecast at 10%, with opportunities in sectors such as hydrocarbon, banking and telecoms.
In 2010, IT managers will probably remain cautious, after some projects were scaled back last year. There could be a boost, particularly in the second half of the year, from computer hardware tenders delayed from 2009. BMI's core scenario is for Qatar's total IT market to reach US$406mn in 2010 and US$599mn by 2014.
The Qatari IT market has a number of positive factors that should help it going forward. The government remains keen to promote economic diversification, and aside from oil & gas, banking is likely to be the one of the more important sectors in terms of IT investments.
Industry Developments
Qatar's IT sector received a boost in 2009 when incumbent telecoms company Qatar Telecom (Qtel) announced that broadband internet speeds had been doubled to 1 Mbps from 512 Kbps. Research recently released by Qatar's Supreme Council for Information and Communication Technology in Qatar (ictQatar) showed mobile penetration exceeding 120%. Qatari ICT authority ictQatar has a number of priority policy areas, including telecoms liberalisation, online government, e-learning, e-health and small to medium-sized enterprises (SMEs). A government target is to increase utilisation of ICT by SMEs. The government is also implementing a major IT initiative in the healthcare area, namely the development of an integrated national health information platform.
Competitive Landscape
Because of the economic headwinds in 2009, PC vendors focused on motivating channel partners, who were under pressure from the slowdown and credit restrictions leading to late payments from endusers. Lenovo said that partner engagement was key to its strategy for the SME segment, while Toshiba also planned to use channel incentives to drive sales.
One of software giant Microsoft's leading regional partners in the enterprise sector, Colombus IT, opened its first office in Qatar in 2009, two years after it first revealed plans to enter the market. Colombus is targeting sales growth of 60-70% in 2010 and in the Qatari market has signed a joint venture with the Ali Bin Ali Group. Meanwhile, Qatar University became one of the first GCC region institutions to publicly announce Windows 7 plans last year. Local and regional IT services players such as GBM, MEEZA, Almasa, al-Futtaim and Injazat are well placed to win major contracts due to relationships and cultural background. Despite these advantage, international vendors are increasing activity. Fujitsu Services believes that it is well positioned to expand in the regional market, following the recent buyout of former joint venture company Fujitsu-Siemens.
Computer Sales
Qatari addressable computer hardware market including PCs, notebooks and accessories are forecast at around US$223mn in 2010, with demand from an expanding hydrocarbon sector among the positive drivers. BMI forecasts higher single-digit growth in 2010, compared with 2009 when there was a deceleration, due largely to the impact of exogenous factors such as falling oil prices and credit tightening.
The Qatari computer hardware market is projected to grow at a CAGR of 9% between 2009 and 2013. An evolving retail landscape will help to stimulate sales, with the traditional domination of smaller stores having been diluted by the appearance of multi-brand electronics sections in hypermarkets and monobrand stores in malls. A growing population has also helped expand the consumer segment and attract new retailers into the market.
Software
BMI forecasts a software market value of US$77mn in 2010, up from US$69mn in 2009. With the evolution of the Qatari IT market, a stronger strategic focus on software spending is being seen, with procurement decisions often taken at a higher executive level. Software spending is expected to grow to at a CAGR of 10% during BMI's five-year forecast period. Growth areas include business intelligence and other information management applications, as Qatari companies seek more efficiency in both internal collaboration and relationships with international customers and partners. There remains demand for basic enterprise resource planning (ERP), however, even among larger manufacturing and service sector companies. A Qatari government report found that software piracy had declined by almost 10% within the last five years.
IT Services
The IT services market is forecast to be the fastest growing segment of the Qatari IT market between 2010 and 2014, outperforming the hardware and software sectors. Indeed, it has steadily increased for the last 10 years. With IT services spending estimated to grow to US$165mn by 2014, the next period promises to see more opportunities in sectors such as financial services, healthcare, education and communications.
In 2009 new tenders were still being awarded by banks, educational institutions and hospitals. Large construction projects such as the US$5.5bn five-stage 'Heart of Doha' project were still moving ahead, despite the credit crunch. Oil and gas remains a key IT spending vertical.
E-Readiness
Qatar's broadband market continues to suffer from a lack of competition, and the sector has been criticised for its high subscription fees. These factors could account for the relatively slow growth that has characterised the broadband market and the wider internet subscriber market. This should change during 2009 as Vodafone Qatar gears up to launch services. Although ADSL will be the strongest driver of broadband subscription growth, the publisher expects to see an increasing focus on wireless broadband services such as WiMAX.
Qatar was one of the regional movers in the UN's most recent e-readiness survey. Qatar moved up four places to 32nd, due to government initiatives and expanding broadband penetration. The country performed even better in the e-government rankings, moving from 62nd to 53rd. In 2008 the government has launched a new e-services portal and is rolling out new initiatives in various areas.
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