"Saudi Arabia Information Technology Report Q3 2010" now available at Fast Market Research

July 19, 2010 - PRLog -- Saudi Arabia has the biggest IT market in the Gulf region, with a forecast value of US$3.3bn in 2010 expected to rise to US$4.6bn by 2014. Despite the economic slowdown last year, the Kingdom will continue to be a lucrative market for technology products and services over the forecast period as it invests to upgrade its IT and communications infrastructure. Certainly Saudi Arabia appears better placed than some other markets in the region to recover strongly from the current economic slowdown.

In 2010, Saudi IT spending is forecast to record higher single-digit growth compared with 2009. pick-up in the flow of projects was reported in H110 and a number of complex projects are being commissioned by the public sector and the large company sector.

Saudi Arabia's IT market has a number of positive drivers, including a growing population and government projects. BMI predicts that per capita IT spend will reach US$173 by 2014, as PC penetration rises to more than 30%. Youthful demographics and a growing population will support a positive market trajectory.

Industry Developments

The government continues to regard development of the kingdom's information communications technologies (ICT) industries as a national priority. Saudi Arabia's governing Shoura Council has a strategic objective for the IT industry to raise its contribution to GDP to 20% by 2020. Another key goal is to raise broadband penetration to 31% by 2013.

Despite the economic downturn in 2009, Saudi Arabian government bodies pressed ahead with ambitious e-government and IT projects. Among major projects, the Medical Services Division (MSD) of the Ministry of Defence and Aviation (MODA) was implementing a nationwide unified medical system. The system aimed to link all 26 MSD hospital and 68 medical centres and clinics across six of the kingdom's regions.

In 2009 the Saudi government signed off on a US$3.1bn plan to improve the education system. The focus of the plan, approved by the Saudi cabinet, is to equip schools to keep pace with scientific and technological activities. The King Abdullah Project has allocated around half the funds (SAR4.2bn) to improve the education environment and another SAR3.58bn for extracurricular activities.

Competitive Landscape

There were signs in early 2010 that the flow of enterprise projects had picked up after a slowdown due to business uncertainty. In January 2010, SAP announced that Chemanol, a leading Saudi producer of methanol-based chemicals, had fully upgraded its SAP software system. In September 2009 SAP had won a contract from Saudi's Arabia's first private power plant, NOMAC, to implement an enterprise resource planning (ERP) solution.

Strong oil and gas output growth potential means that in H110 software vendors were positioning themselves to take advantage of an expected new wave of investment by the energy sector. In May 2010, Elecsys, a provider of data acquisition, telemetry and analysis systems for critical industries, announced that it had appointed Saudi company Gulf Energy Solutions Corporation (GESCORP) as a distributor partner.

Meanwhile, in January 2010, Sahara Petrochemicals Company adopted HP systems to improve its data centre infrastructure. The company selected several key systems from HP, including ProLiant blade servers, to improve the performance of its data centre operations. The project was part of a wider technology overhaul by Sahara to support its growth plans.

Computer Sales

Computer hardware sales including PCs, notebooks and accessories are estimated at US$1.8bn in 2010, after the market contracted in 2009 as a result of the global economic downturn. Sales fell across both notebook and desktop segments, and across major industry verticals. In 2010 Saudi businesses are expected to remain cautious, but there could be a boost from computer hardware tenders delayed from 2009.

Software

BMI forecasts a software market value of US$611mn in 2010, up from US$558mn in 2009. The software segment is projected to grow at a CAGR of 10% over the forecast period, driven by an increased focus by Saudi Arabian enterprises on more sophisticated solutions that still offer value for money.

IT Services

The Saudi Arabian IT services market is estimated at around US$971mn in 2010 and is expected to grow at a CAGR of 9% over the 2010-2014 forecast period. The economic slowdown has inevitably had an effect on demand in some of the key IT spending verticals. The next period promises to see more opportunities in sectors such as oil and gas, financial services, healthcare, education and communications. Support and maintenance account for around one-third of spending on IT services, but the market for more complex services such as outsourcing has grown.

E-Readiness

Increased public awareness of the internet, the growth of broadband services, the decreasing cost of internet access and computers (both PCs and laptops) and a wider range of internet services have all been cited as reasons for the strong internet usage growth.

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Fast Market Research is an online aggregator and distributor of market research and business information. We represent the world's top research publishers and analysts and provide quick and easy access to the best competitive intelligence available.