Market Report, "Egypt Information Technology Report Q1 2011", published

Feb. 1, 2011 - PRLog -- Egypt's IT spending is expected to increase from US$1.6bn in 2011 to US$2.9bn by 2015. BMI forecasts that the Egyptian IT market will grow at a double-digit rate in 2011, as economic recovery, tenders previously delayed because of the economic situation, and higher incomes boosted by pay rises for civil servants and other groups keep sales on an upward trajectory.

Over BMI's five-year forecast period, Egypt will also benefit from youthful demographics and improving information and communication technology (ICT) infrastructure, despite several constraints and a suboptimal distribution network outside Cairo. The Egyptian market is one of the most resilient in the region, but a steep fall in imports in 2009 provided a warning that the impact of the global slowdown on consumption may not have played out yet.

Growth is expected to bounce back in 2011 as the external and public sectors lift the Egyptian economy, although a weak external demand picture and elevated borrowing costs are potential constraints. However, businesses and consumers will remain cautious, despite a continued government stimulus.

Industry Developments

In April 2010 the Bank of Alexandria signed an agreement with the International Finance Corporation (IFC) arm of the World Bank to support Egyptian small and medium-sized enterprise (SME) informatisation. Under the agreement, the Bank of Alexandria will launch a localised and freely available version of the IFC's SME Toolkit web platform in both English and Arabic. The SME Toolkit offers online business management information and other interactive tools and educational resources.

Meanwhile, in March 2010, Egypt's Minister for Communications, Information and Technology Tarek Kamel announced the government would launch a new innovation strategy later in 2010. The strategy will mirror initiatives such as the recently established entrepreneurship and innovation centre in Smart Village, as well as the Technology Cluster and Business Park. The aim behind the strategy is for Egypt to move up the value chain from basic business process outsourcing (BPO) and call centre services.

In 2010, the Egyptian government continues to award tenders to raise the levels of IT use in schools and promote computer literacy. In June 2009, the Ministry of Communications and Information Technology (MCIT) announced plans to purchase 10,000 computers to distribute to students and teachers, in what was described as the largest procurement tender by a government body in Egypt. MCIT has since pledged further initiatives to promote the use of technology in education.

Competitive Landscape

In November 2010, HP signalled its intent for the Egypt market by signing an agreement with its former distributor Mantrac to distribute its computing and storage products. Mantrac, one of the largest IT distributors in Egypt, had previously been an HP distributor for 9 years, but its contract was terminated in 2008. Meanwhile HP also plans to roll out new retail stores in Egypt in an attempt to tap into the growing retail segment.

Vendors continue to target computers for schools procurement opportunities. In July 2010, chipmaker AMD announced it was implementing a tender from Egypt's Ministry of Education to deploy computers for schools based on its Phenom II X2 processors and AMD780 chipsets. In 2009, Fujitsu Technology Solutions was the winner in a 10,000-notebook procurement by the MCIT.

In June 2010, Raya announced that it had implemented a Windows 7 Upgrade Project for Banque du Caire, one of the oldest banks in Egypt. Raya upgraded the bank's desktop operating system on computers in its head office and supplied services including application compatibility testing for the bank's existing applications with Windows 7.

Computer Sales

Egypt's computer hardware sales are projected at US$987mn in 2011 and are forecast to reach around US$1.7bn in 2015. However, computer penetration is forecast to rise from 10% now to above 20% by 2015, and annual computer sales could increase to around 500,000 by the end of BMI's forecast period.

Software

Overall spending on software remains rather low, being projected at US$227mn in 2011. The estimated 14% share of total Egyptian IT spending on software reflects the relative immaturity of Egypt's IT market. However, the domestic software market is expected to grow at a CAGR of 14% over the forecast period until end-2015. Access to credit remains a barrier for smaller Egyptian companies, but initiatives such as that launched by the Bank of Alexandria in April 2010 will help smaller Egyptian companies invest in IT.

Services

IT services revenues are forecast at around US$407mn in 2011, accounting for about 25% of Egypt's total spending on IT. A market CAGR of 17% is projected for the forecast period through 2015. The Egyptian IT services market is dominated by demand from government, finance and telecoms sectors, which account for more than half of total spending.

E-Readiness

In 2008, Egypt continued to liberalise the telecoms market by awarding a second national fixed licence. This development, which followed the award of 3G licences to three mobile telecoms service providers in 2007, is likely to drive new opportunities for IT vendors. As well as generating additional spending on IT products and services from the telecoms sector, the spread of internet should provide a boost to the PC market over the next few years.

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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.