The total size of the addressable Bahrain IT market in 2012 is forecast by BMI to be US$373mn, up from an estimated US$345mn in 2011. BMI forecasts a CAGR of 7% for 2012-2016. Bahrains government has responded to its domestic political turmoil in 2011 through a massive fiscal stimulus package, which was projected to boost total IT spending in 2011-2012. Meanwhile, global IT trends such as cloud computing, virtualisation and convergence will continue to gain ground in the Bahraini market.
There should still be significant opportunities. Bahrain is becoming an important regional financial hub and there should be substantial spending in this sector. Economic reform and trade liberalisation will fuel spending by public sector organisations and private enterprises to bring their IT levels up to international standards. The country will benefit from trade liberalisation, strong demand from the financial sector, egovernment and broadband.

Industry Developments

In 2011, Bahrains IT strategy supervising body the Central Informatics Organisation (CIO) launched a project for consolidation and virtualisation of its IT infrastructure. The initiative was seen as the first step of a pan-governmental move towards cloud computing. The virtualisation project was expected to result in a number of benefits, including unification of the governments IT infrastructure, scalability for future applications and growth, enhanced security and the real ability to offer IT as a service.

Meanwhile, the drive to modernise healthcare IT should generate opportunities for IT vendors in 2012. The government has mounted a drive to create unified systems for inpatients, outpatient and emergencyrelated information. In 2011, the King Hamad University Hospital in Bahrain launched a project to develop the infrastructure for a new National Healthcare System being established.

The Bahraini governments 2011-2014 e-government strategy was unveiled for implementation in 2011. Bahrains e-Government Authority (eGA) worked with US networking giant Cisco to develop the plan. Government ICT initiatives are ultimately overseen by the CIO, which was founded in 2005 by an edict from the prime minister.

Competitive Landscape

The Bahraini PC market remains dominated by international players such as Acer, HP and Dell, with the strongest challenge coming from other multinationals such as Toshiba. HP is the top PC vendor in the Middle East, with a share of more than 20% and a strong position in both consumer and business segments. The company has rolled out financial support programmes for large and medium HP channel partners to increase sales force. However, rival vendors such as Acer and Lenovo could receive a boost as a result of HPs recently announced plans to sell all or part of its PC division.

In 2011, Microsoft highlighted the growing importance of the Omani market by unveiling plans to form a new sub-region comprising of Bahrain and Oman. The restructuring is expected to underpin Microsofts ambitions for further expansion within the region. Microsoft plans to expand offerings of productivity, business intelligence and virtualisation software to meet the requirements of its customers. In 2011, Microsoft won a project to implement a virtualisation software solution for Bahrain Islamic Bank.

The IT services market is dominated by a few big vendors, with major local players including Zayani Computer Systems and Bahrain Business Machines (BBM). In 2011, BBM won a share of the project to develop an infrastructure that will form the basis for the new National Healthcare System. Meanwhile, HP has strengthened its service capabilities in Bahrain through the purchase of NCS, a Bahraini company, resulting in a new company called HP Services Bahrain.

Computer Sales

Bahraini computer hardware sales (including notebooks) are projected to reach US$231mn in 2012, up from US$215mn in 2011. The computer market should grow at around 7% a year to US$299mn by 2016. Wireless connectivity will be one factor boosting demand for notebooks, stimulated by new technologies and infrastructure investment.

As elsewhere in the Gulf, notebooks are projected to account for more than 60% of PC unit sales over the forecast period. However, tablets have emerged as a growth area, with Bahraini telecoms companies such as Zain offering bundling deals. Small and medium-sized enterprises (SMEs), which account for up to 35% of IT spending in the region, will drive PC market demand as smaller companies face increased competition and take advantage of regional opportunities.

Software

The Bahrain addressable software market is projected by BMI at US$47mn in 2012 and is expected to grow at a CAGR of 9% over 2012-2016 forecast period. There should be a boost from systems upgrades previously deferred as a result of the impact of the economic crisis in public and private sectors. The domestic software market is expected to grow steadily as Bahraini companies look to meet growing regional competition.
Bahrain is becoming an important financial hub and there is a substantial opportunity as banks invest to support new services and regulatory compliance. Enterprise applications should account for around 30% of software spending, as the market for enterprise resource planning (ERP) applications is far from saturated. New cloud computing offerings should fuel further demand from end-users to utilise this technology.

Services

The Bahraini IT services market is expected to be worth US$95mn in 2012, according to BMI, accounting for roughly 26% of all IT spending in the country. Spending on services is forecast by BMI to continue expanding as banks, telecoms companies and government agencies in particular invest in IT that will enable them to compete in a changing environment.
IT services CAGR for the sector over 2012-2016 is forecast at around 9%. Most vendors in the region see an opportunity to expand the services portion of their revenues, as enterprises demand more from vendors and look to get more out of their IT investments.

E-Readiness

Bahrain has among the highest penetration levels for internet and telephony of all Arab countries, alongside Qatar. Fees for internet access have fallen in the past two years, providing a boost to uptake. Batelecos three to five year BHD21mn Broadband Bahrain programme, providing national high-speed access to individuals and corporate users, should also drive adoption of broadband services.

Bahrain moved up six places in the World Economic Forums respected e-Readiness index in 2008 to 45th place, which was the biggest improvement in the region. Bahrain was third in the region behind the UAE and Qatar. It also rates quite highly in regional rankings for e-government development.

With the resulting increase in the number of citizens using e-government services to interact with government departments, the Central Informatics Organisation (CIO) is implementing a training programme to improve the e-literacy of civil servants. The government also claimed to be the first in the Middle East to adopt open standards for its e-government initiatives.