Market Overview Qatar's may not be the largest IT market in the Gulf, but in H109 it appear better placed than some other markets in the region to withstand the current global economic headwinds. Despite a forecast deceleration, IT spending growth in 2009 is forecast at around 4%, with opportunities in sectors such as hydrocarbon, banking and telecoms. Government spending, investment and private consumption growth are all expected to remain in positive territory.

Qatar cannot expect to be immune to the troubles of the global economy, and lower oil prices, economic uncertainty and tighter credit conditions have led to an IT market slowdown in 2009. IT managers remain cautious, and some projects have been scaled back in key sectors for IT projects, such as oil and gas. However, 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 IT spending in core verticals such as telecoms and banking should be relatively immune to the slowdown.

The report's core scenario is for Qatar's total IT market to reach US$394mn in 2009 and US$576mn by 2013. Industry Developments Qatar's IT sector received a boost in 2009 when incumbent telecoms company Qatar Telecom (Qtel) announced that broadband internet speeds had been doubled to 1 Mbps from 512 Kbps. Research recently released by Qatar's Supreme Council for Information and Communication Technology in Qatar (ictQatar) showed mobile penetration exceeding 120%. Qatar's e-government programme reached a landmark in 2008 with the launch of Hukoomi - the new onestop shop portal for Qatari government entities. Qatari ICT authority ictQatar recently released its inaugural annual report which highlighted a number of priority policy areas, including telecoms liberalisation, online government, e-learning, e-health and small to medium-sized enterprises (SMEs). A government priority 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

Establishing the right distribution strategy for the relatively small Qatari market is a key challenge for vendors. Laptop vendor Toshiba has strengthened its coverage of the Qatari market with the appointment of Lebanon-based PC Dealnet as a new distribution partner. Toshiba intends to use the appointment of its new distributor as an opportunity to promote a new set of standards for after-sales service in Qatar. One of Microsoft's leading regional partners in the enterprise sector, Colombus IT, has opened its first office in Qatar, two years after it first revealed plans to enter the market. Colombus is targeting sales growth of 60-70% by 2010 and in the Qatari market has signed a joint venture with the Ali Bin Ali Group, one of the largest distribution and retail groups in Qatar. Ali Bin Ali already has an established Oracle business.

Computer Sales

Qatari computer sales including PCs, notebooks and accessories are forecast at around US$179mn in 2009, with government tenders and demand from an expanding hydrocarbon sector among the positive drivers. In H109 there were concerns that businesses had cut back spending because of economic uncertainty, with hardware replacements an easy target for IT budget cuts. However, the Qatar computer hardware market is projected to grow at a CAGR of 9% between 2009 and 2013. 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

The report forecasts a software market value of US$71mn in 2009, up from US$68mn in 2008. With the evolution of the Qatari 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 12% during BMI's five-year forecast period. The economic slowdown represents a challenge to vendors, however, as enterprises are tempted to focus more on the bottom line. The market must also contend with a relatively high rate of software piracy, although a recent 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 2009 and 2013, 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$157mn by 2013, 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 should change during 2009 as Vodafone Qatar gears 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. In 2008 the government has launched a new e-services portal and is rolling out new initiatives in various areas.