BMI's Executive Summary

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Market Overview

Kuwait is the third largest computer market in the high-growth Gulf region and the total size of the domestic IT spending is expected by BMI to increase from US$539mn in 2008 to around US$833mn in 2012. This double-digit compound annual growth rate (CAGR) makes Kuwait one of the faster-growing IT markets in the region, due partly to its relatively small but tech literate and wealthy population, which allows it to adapt faster to trends. Having received a windfall from record high oil prices, the country is continuing with a programme of modernising its oil sector, while the booming property and newly liberalised telecommunications sectors are also providing plenty of opportunities for vendors of IT products and service

With the government's expansionary budget for FY06/07 having also boosted both consumer spending and infrastructure investment, the signs are positive for Kuwait's IT sector in 2008. Oil and gas companies are looking to optimise cost structures, while in the financial sector banks are implementing solutions to increase business flexibility and introduce new services, including Islamic banking. The government is also getting in on the act, with new waves of new e-government initiatives set to be launched in 2008, and an increasing number of state institutions offering online services.

BMI expects oil prices to remain relatively high, with the economic activity prompted by this development boosting employment, consumer spending and gross fixed capital formation. Government spending will also remain a key driver of growth. However there is a concern that Kuwait's economy remains quite heavily dependent on oil. We do see overall GDP expansion slowing gradually over the coming years, as oil prices moderate, with our 2011 forecast being 3.0%.

Industry Developments

The Chairman of the Central Agency for Information Technology (CAIT) Ali Al-Sharida said recently that new services were being developed as part of the Kuwait government's e-government project. According to Al-Sharida the new services are to be launched in February 2008. While BMI reports have highlighted Kuwait's progress in the e-government area, big challenges remain particularly in excessive bureaucracy and lagging education systems, both of which stifle technological innovation.

In a major related initiative Kuwait is to launch what is being described as a 'digital awareness programme' to train hundreds of thousand of employees in the government and other sectors in IT skills. The programme will aim to train 100,000 government employees and 200,000 in other sectors over a period of five years. CAIT described the initiative as 'the launching pad' to develop ICT skills capabilities with the government and society. The government is also promoting an e-citizenshipprogramme which aims to provide citizens with the skills to allow them to use e-services such as bill payment, booking, visa issuance and so on.

Company News

Competition is intensifying in the Software segment. SAP and Oracle continue to lead the local market, followed by Microsoft with its Dynamics brand. At the end of 2007 SAP AG announced that it would acquire all of partner SAP Arabia's software licences and customer maintenance products. The new direct presence should bring SAP closer to its customers and partners. An eventful 2007 for IT distribution channels in Kuwait and the Middle East included the announcement that Microsoft is expending its agreement with Dubai based distributor Mindware to cover the Kuwait market.

Meanwhile, regional consolidation in the services space continued with HP's purchase of Atos Origin Middle East, formerly the largest systems integrator in the region. AOME employed 450 people in the region but will now be integrated into HP and the brand Atos Origin Middle East will be gradually phased out. Highlighting the growing focus by leading vendors in the region on services, HP last year announced an agreement to form a new joint venture in Kuwait with National Computer Services Company WLL (NCS), under which it will acquire the IT services business of NCS.

Computer Sales

In 2007 the Kuwait computer market, driven by demand for high-end brand notebooks, grew to a value of around US$185mn. Overall hardware sales were US$237mn, up from US$215mn the previous year, making Kuwait the third largest market in the region after Saudi Arabia and the UAE. Demand for notebooks in particular should be buoyant for several years, with the availability of wireless access technologies driving popularity among small and medium businesses in particular. Notebooks are already the dominant form factor, and should account for around 60% of PC sales over the next period. The public sector and e-government projects will continue to be a significant demand driver during this period as sizable budgets have been allocated. Privatisation is also encouraging spending, as are moves to make foreign ownership of businesses easier.

Software

In 2007 total spending on software is estimated to have reached US$140mn, up from US$124mn the previous year. With high oil prices and growing regional competition continuing to fuel enterprise spending on software and systems, there should be many opportunities across many sectors. Facing change and seeking efficiencies, SMEs are likely to lead spending growth, with manufacturing and trading firms both seeking efficiencies by transitioning from manual environments to full automation of back-office systems.

Services

The Kuwait IT services market is expected to be worth around US$162mn in 2008, with double-digit CAGR growth during the 2007-2012 forecast period. Market size should reach around US$258mn by 2012. Telecoms, banking, and retail sectors are all providing strong demand for project implementation, managed services and outsourcing. There has been a recent trend towards larger deals, particularly from government. Meanwhile, a more volatile environment for the oil industry is encouraging companies to look for solutions that will increase operational efficiency and boost overall business agility.

E-Readiness

Kuwait is one of the most advanced technological markets in the Gulf, with most homes now covered by DSL or wireless internet access. According to BMI figures, the number of internet subscribers is projected to increase to 660,000 by 2012. The planned award of a third mobile licence should help spur telecoms development.

The government is also helping to drive IT development with its new broadband access initiative. Alcatel was chosen by Kuwait's State Ministry of Communications (MOC) to supply a gigabit passive optical network (GPON) solution that will serve about 60% of access areas involved in the ministry's present rollout. MOC's access network is gradually being upgraded by replacing the existing copper access with a passive optical fibre infrastructure. There should be around 443,000 broadband subscribers by 2012.

Contents

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Chapter 1 - Executive Summary

Market Overview

Industry Developments

Company News

Computer Sales

Special Focus: Real Estate

E-Readiness

Chapter 2 - SWOT Analysis

Table: Kuwait IT Sector SWOT

Table: Kuwait Business Environment SWOT

Chapter 3 - Middle East Regional IT Markets Overview

IT Penetration

Market Growth & Drivers

Sectors & Verticals

Chapter 4 - Market Overview

Government Authority

History and Market Structure

Hardware

Software

Services

End-User Analysis

Industry Developments

Chapter 5 - Industry Forecast Scenario

Table: Kuwait Historical Data and Forecasts

Chapter 6 - Macroeconomic Outlook

Table: Economic Activity

Chapter 7 - Country Snapshot: Kuwait Demographic Data

Section 1: Population:

Table: Demographic Indicators (2005)

Table: Rural/Urban Breakdown

Section 2: Education & Healthcare

Table: Education

Table: Healthcare: Vital Statistics

Table: Healthcare: Expenditure

Section 3: Labour Market And Spending Power

Table: Employment Indicators

Table: Consumption and Stratification

Chapter 8 - Competitive Landscape

Company Monitor

Selected Profiles

Microsoft

IBM

HP

Oracle

Al-Alamiah

Khorafi Business Machines

Chapter 9 - BMI Forecast Modelling

How we generate our industry forecasts

IT Industry

Sources

Chapter 10 - Appendix: Regional Demographic Data

The Long View: Data Over The Economic Cycle (2000-2007)

Population

Household Spending Per Capita, US$

Private Consumption Per Capita, US$ PPP

Market Size, GDP, US$bn

Competitive Landscape for Middle East & Africa Information Technology: Sample of  
Companies Ranked

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Company profiles, including SWOT (strengths, weaknesses, opportunities and threats) analyses, business activity, leading products and services. BMI forecasts for all headline macroeconomic indicators, including real GDP growth, inflation, fiscal balance, trade balance, current account and external debt. Company profiles and SWOT analyses covering competitive positioning; leading products, services and brands; annual sales and share of domestic hardware, software and components markets; headline financials and M&A; pan-regional expansion strategies and strategic partners. Companies covered include:

Network of Information Technology Sources

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BMI's Middle Eastern and African IT Reports are based on an extensive network of multilateral organisations, government departments, IT industry associations, chambers of commerce and company reports. Information sources include: