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Qatar Information Technology Report Q2 2010
Business Monitor International, April 2010, Pages: 53
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 early 2010 it appeared 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 compound annual growth rate (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, however, 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$372mn in 2010 and US$550mn 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 and gas, banking is likely to be the one of the more important sectors in terms of IT investments. Large planned government investment in education should also help to boost the PC segment.
Industry Developments
Qatar’s IT sector should benefit after incumbent telecoms company Qatar Telecom (Qtel) announced in 2009 that broadband internet speeds had been doubled to 1Mbps from 512Kbps. Research released by Qatar’s Supreme Council for Information and Communication Technology in Qatar (ictQATAR) showed mobile penetration exceeding 120%.
Qatari information and communication technology (ICT) authority ictQATAR has a number of priority policy areas, including telecoms liberalisation, online government, e-learning, e-health and small and 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 recent global economic headwinds, PC vendors have focused on motivating channel partners. In Q110, Japanese giant Toshiba held its first channel event in Qatar to market its one-year partnership with distributor PC Dealnet. PC Dealnet distributes Toshiba PCs and accessories and Toshiba claimed that in 12 months of partnership, Toshiba’s market share in Qatar has increased by 10%. Multinational software vendors continued to find opportunities in the Qatari market in early 2010, amid signs that the flow of tenders had picked up. In February, GE Intelligent Platforms announced that it had been selected by Qatar Steel to provide a US$2mn production management solution. Meanwhile, in March, banking software specialist Misys won a contact from Qatar National Bank to implement Misys’s BankFusion Equation core banking platform.
Indian IT services giants are on the rise in the Gulf. In January, Tata Communications launched a cooperation with local telecoms company Qtel to provide a range of enterprise network services. Meanwhile, Satyam has been operating in Qatar for about one year and hopes to grow its regional consulting and outsourcing businesses by 100% over the next few years.
Computer Sales
The Qatari addressable computer hardware market including PCs, notebooks and accessories is forecast at around US$205mn 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 2010 and 2014. 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$71mn in 2010, up from US$64mn in 2009. With the evolution of the 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$151mn 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 was expected to change during 2009, however, as Vodafone Qatar geared up to launch services. Although ADSL will be the strongest driver of broadband subscription growth, we expect 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. The government launched a new e-services portal in 2008 and is rolling out new initiatives in various areas.
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