Research and Markets: Egypt Information Technology Report Q3 2010 - Overall Spending On Software Remains Rather Low, Being Projected At US$197mn In 2010

DUBLIN--(BUSINESS WIRE)--Research and Markets (http://www.researchandmarkets.com/research/b080e7/egypt_information) has announced the addition of the "Egypt Information Technology Report Q3 2010" report to their offering.

Business Monitor International's Egypt Information Technology Report provides industry professionals and strategists, corporate analysts, information technology associations, government departments and regulatory bodies with independent forecasts and competitive intelligence on Egypt's information technology industry.

Market Overview Egypt's IT spending is expected to increase from US$1.4bn in 2010 to US$2.6bn by 2014. BMI forecasts that Egyptian IT market growth will remain below pre-economic crisis levels in 2010. Growth is expected to bounce back in 2010/2011 as the external and public sectors lift the Egyptian economy, but unemployment and the threat of inflation could act as an inhibitor on spending. Over BMI's five-year forecast period, Egypt will also benefit from youthful demographics and improving information and communication technology (ICT) infrastructure, despite a number of constraints and a sub-optimal 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.

In 2010, a number of factors should help IT spending growth to recover, including new hardware and software upgrade cycles as well as sales of Microsoft's new Windows 7 operating system. Economic recovery, tenders delayed from 2009 and higher incomes boosted by pay raises for civil servants and other groups should help to keep IT sales on an upward trajectory.

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, Egypt's Minister for Communications, Information and Technology Tarek Kamel announced that the government would launch a new innovation strategy later in 2010. The new 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. The Egyptian minister of state for administrative development said that 200 government services will soon be available online through a new e-government portal. The portal will offer 70 services in both English and Arabic. According to the Ministry for Administrative Development, more than 20 government agencies currently offer services and licences online.

Competitive Landscape In 2009, Fujitsu Technology Solutions was the winner in a 10,000-notebook procurement by the MCIT. HP planned to roll out new retail stores in Egypt in an attempt to tap into the growing retail PC segment. The company will open outlets within malls. Acer, the notebook segment leader, has leveraged its distribution agreement with Egyptian company Interact as part of its strategy to expand its channel network in Egypt. In 2010, Microsoft hopes that sales of its Windows 7 operating system, launched in October 2009, will boost its sales in the Egyptian market. In the summer of 2009, Microsoft continued to lay the groundwork for the new operating system launch and released the enterprise version of the software in August. Indian IT services companies have increased their presence in Egypt. Mahindra Satyam, the new brand identity of Satyam Computer Services, aims to grow its consulting and outsourcing businesses by 100% in the next few years, leveraging its Global Development Centre in Cairo's Giza Smart village.

Computer Sales Egypt's computer hardware sales are projected at US$862mn in 2010 and are forecast to reach around US$1.6bn in 2014. Computer penetration is forecast to rise from a little above 10% currently to about 19% in 2014, and annual computer sales could increase to nearly 470,000 by the end of BMI's forecast period.

Egypt's IT market will stay hardware dominated, with spending on PCs sustained by initiatives like the Computer For Every Student and PC for Every Home programmes. Hardware accounted for an estimated 61% of Egypt's IT spending last year. Households account for 20-25% of unit sales, with 1.0- 1.5mn households said to possess a computer at present.

Software Overall spending on software remains rather low, being projected at US$197mn in 2010. The estimated 14% share of total Egyptian IT spending accounted for by software reflects the relative immaturity of Egypt's IT market. However, the domestic software market is expected to grow at a compound annual growth rate (CAGR) of around 11% over the forecast period until end-2014. 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 to invest in IT. One market driver has been a significant fall in software piracy, with the illegal software usage rate, as measured by the Business Software Association, falling a further 1% to 59% in 2008. While large corporations have long understood the business case for deploying technology, SMEs are increasingly beginning to see such investments as important if they are to avoid being overtaken by more techcompetent competitors.

Services IT services revenues are forecast at around US$349mn in 2010, accounting for about 25% of Egypt's total spending on IT. A market CAGR of 14% is projected for the next period through to 2014. The Egyptian IT services market is dominated by demand from government, finance and telecoms sectors, which account for more than half of total spending. Vulnerable sectors include construction and real estate. Government spending, the largest segment, is projected to be maintained, or even increased, as a countercyclical stimulus to flagging domestic demand. One key driver is likely to be the continued expansion of Egypt as an international outsourcing destination.

E-Readiness In 2008, Egypt continued liberalisation of the telecoms market, with the award of 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.

A similar story could be told about broadband, although cost remains a big barrier to broadband subscription in Egypt. It has been well documented that private broadband subscribers often club together with two or three neighbouring families to get a shared broadband subscription and Wi-Fi router. More competition in the market should hopefully bring prices down in the future and lead to subscriber growth.

Key Topics Covered:

Executive Summary
SWOT Analysis
IT Business Environment Ratings
Middle East & Africa Business Environment Ratings
Table: Regional IT Business Environment Ratings
Middle East & Africa Regional IT Markets Overview
Industry Forecast Scenario
Table: Egypt's IT Sector Historical Data & Forecasts (US$mn Unless Otherwise Stated)
Country Context
Table: Rural/Urban Breakdown
Table: Consumer Expenditure (US$)
Internet
Table: Telecoms Sector Internet Historical Data & Forecasts
Macroeconomic Forecast
Table: Egypt Economic Activity, 2007-2014
Competitive Landscape
Hardware
Software
Company Profiles
Country Snapshot: Egypt Demographic Data
Section 1: Population
Table: Demographic Indicators, 2005-2030
Table: Rural/Urban Breakdown, 2005-2030
Section 2: Education And Healthcare
Table: Education, 2002-2005
Table: Vital Statistics, 2005-2010
Table: Employment Indicators, 2001-2006
Table: Consumer Expenditure, 2000-2012 (US$)
Table: Average Annual Wages, 2000-2012
BMI Methodology