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Lebanon Information Technology Report 2011
Business Monitor International, Jan 2011, Pages: 48
The Lebanon 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 Lebanon's information technology industry.
Market Overview:
The total size of the Lebanese IT market in 2011 is forecast by BMI to be US$321mn, up from nearly US$287mn in 2010. Lebanon’s IT market is set to benefit from a massive investment in telecoms infrastructure, aimed at significantly scaling up the country’s inadequate broadband facilities.
There are potential opportunities for IT vendors in sectors such as telecoms, banking, utilities, real estate and government, but much will depend on the political stabilisation necessary to implement economic reforms. Many uncertainties continue to surround the Lebanese IT market, with considerable latent potential mitigated by an unstable political outlook and a mixed picture regarding economic policy.
Smaller businesses are a key opportunity, as small and medium-sized enterprises (SMEs) account for a majority of Lebanon’s 700,000 businesses, although lack of access to financing is a barrier. Growing internet penetration should gradually boost IT demand, given that internet penetration in Lebanon is among the lowest in the region.
Industry Developments:
During BMI’s five-year forecast period, Lebanon’s telecoms infrastructure is set to receive significant investment, estimated at around US$500mn. While BMI acknowledges that this will provide an important boost to the IT market in the years ahead, the focus on fixed broadband does mean that the long overdue privatisation of the country’s two mobile operators is highlighted yet again.
Following the elections in June 2009, Lebanon faces a wide variety of challenges. These include infrastructure rebuilding, economic and social stabilisation, restoring trust in politics and improvement of the security situation. There are also a number of specific ICT challenges on the government’s agenda, such as improving ICT infrastructure, overcoming the digital divide, investing in IT skills, making businesses more efficient through technology and e-government.
As reconstruction continues following the 2008 Doha agreement, a number of international initiatives are focusing on IT as an engine of development. The government’s Council for Development and Reconstruction (CDR) is in charge of procurement for various ICT programmes such as the purchase of computer equipment for public school classrooms. Funds and programmes from the EU and other supranational organisations will remain an important driver of IT development over BMI’s five year forecast period. The Lebanese government is also implementing a comprehensive overhaul of the public healthcare system.
Competitive Landscape:
The regional PC market remains dominated by international players such as HP, Acer and Dell, with the top five brands taking at least 50% of the market. The share held by local assemblers continues to dwindle, part because of their relative weakness in the growing area of notebooks. In 2010, multinational IT vendors continued to work to gradually improve distribution and logistics in Lebanon and strengthen their cooperation with regional partners.
The 2006 conflict with Israel had a disruptive impact on vendor distribution channels in the previously emerging market of Lebanon and beyond. The disruption led to a complete shutdown in some cases and in many cases the damage has still not been fully repaired. Sales remain below their potential and another challenge for vendors is the size of the informal sector and the ‘grey market’.
Computer Sales Lebanese computer sales are projected to reach US$164mn in 2011, up from US$147.5mn in 2011. Consolidating the recovery from 2010, the computer market should grow at a compound annual growth rate (CAGR) of 11% per year over 2011-2015, according to BMI forecasts, boosted by economic growth, broadband infrastructure development and government programmes.
The market is still far from saturated, with PC penetration at about 15%. Much will depend on the ability of government to push through reforms in various industries and unlock credit flow for smaller businesses in particular. Higher fixed and mobile broadband penetration would also be a key driver.
Software BMI forecasts that legal software market will be worth US$38.5mn in 2011 and grow at a CAGR of 14% over 2011-2015. Due to the continuing problems with piracy, the domestic software market is expected to grow relatively slowly but it should be boosted by some government projects. The dominance of locally assembled PCs in the Lebanese computer market is a major barrier to reducing software piracy.
The market is predominantly an SME market, with most business customers prioritising affordability. Most smaller companies are still in the developmental phase in terms of IT infrastructure, which presents a big potential market for basic enterprise resource planning and management (ERP and ERM) applications.
Services The Lebanese IT services market is expected to be worth over US$80mn in 2011, according to BMI forecasts, accounting for about 24% of all IT spending in the country. Spending on services is forecast by BMI to continue to expanding as government agencies, telecoms companies, banks and other customers spend on modernisation.
A pickup in the flow of projects was reported in 2010, with some complex projects commissioned by the public sector and large private companies. The government granted licences to five international companies to establish contact centres in the country and the growth of this area should generate opportunities for IT vendors.
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