Boston, MA -- (ReleaseWire) -- 04/29/2014 -- Clear government support for IT in Saudi Arabia will ensure that it remains the biggest IT market in the Gulf region. While clearly defined ICT policies, helped by the country's relative political stability, aim to increase the sector's contribution to overall economic growth, high income levels in Saudi Arabia reduce consumers' appetite for counterfeit products, with well-developed formal distribution channels making it easier for vendors to reach customers. We note, however, that the effects of 'Saudisation' have yet to run their course, with potential reductions in consumer spending a downside risk to our forecasts.
Headline Expenditure Projections
Computer Hardware Sales: SAR8.36bn in 2013 to SAR8.73bn in 2014, +4% in local currency terms. Although PC sales are slowing, growth in the segment is being driven by a deepening of the tablet market and evolution in form factors.
Software Sales: SAR3.04bn in 2013 to SAR3.22n in 2014, +5.9% in local currency terms. Upgrades to Windows 8 will boost sales in 2014, while modernisation by enterprises will provide momentum for the business software market over the medium term.
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IT Services Sales: SAR4.88bn in 2013 to SAR5.20bn in 2014, +6.6% in local currency terms. Investments in smart cities' projects and the adoption of cloud computing services will drive growth.
Risk/Reward Ratings (RRR): Saudi Arabia scores 59.2 out of 100.0 in our rankings. This is a substantial increase from 55.8 in Q114, meaning the country has risen one place in our rankings to fifth place out of the 13 markets in our assessment, falling behind Kuwait but ahead of South Africa.
Key Trends And Developments
- In January 2014 Al Hammadi Development and Investment Company, the parent company of Al Hammadi Hospitals, signed an agreement with technology firms Cisco and Wipro to launch three smart hospitals in Saudi Arabia as part of a SAR90mn (US$24mn) commitment to offer premium healthcare services. Many other public and private healthcare institutions in the country are also investing in new technologies and IT solutions to improve efficiency and patient care, a trend that underscores the growing importance of the healthcare sector to the country's IT market.
- Saudi Arabia's government has made IT development a focus for development and has seen its investments in e-government services pay off, with several awards given for its efforts. In December 2013 it was announced that the country's e-governance project is set to enter its second phase, running to 2016, with the focus on regulations and legislation as well as security. BMI believes the government's forward-looking plans will maintain Saudi Arabia as the GCC's largest IT market.
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